8 restaurant inventory management tips for less food waste

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Imagine a scenario: A server approaches a newly seated customer to say, “Good evening. Is this your first time dining here? We’re sorry to say that tonight we don’t have the duck, the chicken, or the tiramisu.”

Your customer is bound to feel disappointed when hearing that certain menu items are unavailable. Restaurant owners can avoid such situations by taking control of their restaurant inventory management. Restaurants can also keep inventory costs down by understanding some key metrics as well as turning to software solutions.

Mastering the art of inventory is essential if you want your restaurant operations to run as smoothly as possible. In this article, we’ll cover 8 restaurant inventory management best practices, including how modern inventory management systems can automate your food inventory.

8 restaurant inventory management best practices

Managing your inventory matters. Profit margins improve as you lose less food to spoilage, and customers are satisfied when looking at complete menus. Restaurateurs can make better business decisions from the information their restaurant inventory management teaches them.

1. Pay attention to key metrics

Tracking a few important metrics can help you make wise decisions when it comes to menu planning, specials, and ordering inventory:

• Cost of goods sold (COGS): This metric shows you how much you’re spending on your inventory and where the money goes. To measure COGS, use this formula: Beginning inventory + purchases – ending inventory = COGS. Pay attention to discrepancies in COGS, as fluctuations may indicate you’re losing food to spoilage and/or aren’t selling enough of a certain item. This is the key to addressing inventory problems.
• Par level: The minimum inventory you’ll need to satisfy customer supply on a given day. For example, if you sell on average 50 hamburgers a day, you’ll likely want to have 60 hamburgers’ worth of beef in case there’s high demand.
• Ideal food cost: How much your dishes should cost you based on your calculations.
• Actual food cost: How much your dishes actually cost you based on real-world observation, often due to trimming, cooking methods, or other discrepancies.

2. Make a log of food waste

In addition to tracking the food that successfully gets served, make note of the source of your food waste:

• Spoiled food
• Spilled/dropped food
• Canceled meals
• Employee mistakes
• Comped meals
• Staff meals (not a waste, but a cost that can add up)

Use your food wastage list to uncover the main reasons you throw away food. This can guide decisions about the type and quantity of food you order and how you prepare and serve your food.

This insight is a bonus marketing opportunity to share how your restaurant has become more sustainable on social media.

3. Track cutlery, tableware, uniforms, and more

In restaurant inventory management, it isn’t just food we need to worry about.

A good rule of thumb is to track any item that isn’t nailed down. In addition to food, track items such as:

• Uniforms
• Cutlery
• Tableware
• Takeout boxes, bags, and utensils
• Food storage containers
• Gloves
• Menus
• Kids menus and crayons
• Table tents
• Tablets
• Outside signage
• Bathroom supplies
• Office supplies

Set time limits on your inventory sheet when item types need to be checked. For example, perishable items such as fresh food can be checked weekly, tableware quarterly, and uniforms annually.

Automated inventory solution systems can provide low stock alerts, place orders automatically, and sync with your accounting software to keep everything tracked.

4. Provide training

Keeping on top of inventory levels is no easy task. Restaurants can be busy, stressful places to work, and inventory counts can sometimes end up at the bottom of someone’s ever-growing to-do list.

To streamline restaurant operations:

• Identify and train multiple key staff members about restaurant inventory management. Relying solely on one staff member is risky since staffing situations change.
• Use the data above to educate staff on generating less food waste, whether that’s tackling oversized portions, misfires, spoilage, a disorganized pantry, etc.
• Split the work: front-of-house staff for FOH inventory and back-of-house staff for BOH inventory.
• Make sure staff cross-checks their work regularly to avoid miscounts.
• Work out what the best times would be for counting inventory and stick to them.
• Publicize all of this information in your staff rooms, storage areas, and kitchen so it’s easy to remember.
• Teach staff to use spreadsheet software to input stock levels quicker, rather than handwriting data into time-consuming paper sheets. If you use a cloud-based document service, even staff who are not at your restaurant will see which food items are in stock.

5. Get digital support

Real-time restaurant inventory management software can help automate your process to ensure an accurate inventory.

Point-of-sale systems allow you to order stock directly from their software and track inventory levels across multiple locations. Some POS systems send notifications when it’s time to restock with customizable reorder points. These platforms can help forecast and monitor your metrics with regular inventory reports. You can even stay on top of recipe costing by tracking price fluctuations of individual ingredients.

The real clincher with a restaurant POS system is that popular systems integrate with the best front-of-house solution in the industry: Yelp Guest Manager. This means that you now have all-in-one restaurant inventory software that covers your POS needs and tracks important information from FOH to the kitchen.

Some inventory management tools, like Marketman and Crunchtime, have come a long way in recent years. What restaurants need will vary widely: Large, multi-restaurant operations may need cloud-based, real-time inventory that can be tracked across multiple locations via a mobile app. New or smaller restaurants may need solid, one-on-one customer support. Automated inventory management and cloud-based inventory management can save a lot of headaches, especially when you have lots of spinning plates in the air (no pun intended).

6. Use the FIFO method

This is the most simple step you can take to improve your restaurant inventory management system.

FIFO stands for first in, first out and implies putting your oldest food at the front of the shelf to use next. It may seem obvious, but it often gets forgotten with longer shelf-life items such as dry foods and spices.

When it comes to fresh food in the fridge, instruct staff to label food with color-coded stickers that clarify expiration dates. That way, they won’t have to search for tiny date labels during rush hour.

FIFO can help your restaurant eliminate food wastage on the front lines of your operation while keeping your business sustainable and efficient. When staff regularly checks item rotations, they can also identify when stock levels are too high or too low. Knowing your sitting inventory can improve purchasing decisions and lower purchasing costs.

7. Account for online ordering

Since online ordering is more popular than ever, restaurants who aim to offer delivery and takeout need to account for online ordering in their inventory order management. A good way to do this is to look at your sales and determine what percent of your average sales come from online ordering, and adjust your purchase orders to accommodate the extra demand.

To keep track of your online ordering sales, look to systems like Yelp Guest Manager, which provides a solid breakdown of e-commerce data in a user-friendly interface.

8. Don’t be afraid to sell out sometimes: A tale of two restaurants

Of course, it’s best to have what you need on hand at all times to serve customers. But sometimes restaurants run out of dishes, especially when they’re fresh or the method of preparation is laborious. Let’s look to two extremes of restaurants who both manage inventory well, but have entirely different business models.

Large restaurant chains like Pizza Hut can’t afford to run out of inventory. As part of a huge franchise system, Pizza Huts rely on an enormous supply chain to standardize their food. Because customers have come to expect that each restaurant will have everything on their menu at all times—and the volume of sales can be exceptionally high—each establishment has to have a constantly rotating inventory. At the same time, freezing and packaging ingredients allows for longer food shelf life, preventing spoilage and wastage.

On the other hand, take a small business like a barbeque restaurant. Because of the method of preparation—multiple hours of smoking—as well as the need for meat to be as fresh as possible, it’s not advisable for barbecue restaurants to keep an oversupply of inventory. These restaurants sell out early, which is why people line up for hours in some cases. It’s simply a part of the business model, and a deeper pantry wouldn’t work.

Restaurant inventory management is easier than ever

Keeping on top of inventory is a tedious but essential job in the restaurant industry. The task has become easier and more accurate, thanks to advancements in restaurant platforms. Combine these software solutions with traditional methods like food waste logs and FIFO, and you can master restaurant inventory management. Train staff members so there is a shared understanding of how to manage all inventory, not just perishable stock. You’ll also learn crucial information about where your business model may be failing.

Modernize your inventory control by using POS systems that include inventory management solutions. And make sure that it integrates with Yelp Guest Manager. That way, you can take charge of FOH management and improve your overall customer experience. This software supports your team by handling reservations and waitlists, allowing customers to check themselves in, and much more.

Get a free demo to learn more about Guest Manager and start getting more customers. After all, restaurants that start using Guest Manager experience up to 2X the traffic on their Yelp Business Page.*