How to Do Inventory in a Restaurant [An Expert Guide]

Luke Januschka

October 18, 2024

Ever had that sinking feeling when you discover $500 worth of prime steaks gone bad in your walk-in?

Or realize you’re out of a key ingredient right in the middle of the dinner rush?

If you’re nodding along, you’re not alone.

These inventory nightmares are all too common in our industry.

However, with the right inventory management strategies, you can reduce those costly mistakes

In this article, we’ll explore the nitty-gritty of managing inventory in a restaurant.

We’ll cover everything from setting up a foolproof schedule to leveraging data for menu optimization.

By the end, you’ll have the tools to turn your inventory process from a headache into a profit-boosting powerhouse.

1. Establish a Regular Inventory Schedule

Inventory management might not be the most glamorous part of running a restaurant, but it’s certainly one of the most crucial.

A well-structured inventory schedule can mean the difference between smooth sailing and constant fire-fighting.

Here’s how to create a schedule that works for your unique restaurant needs.

1. Determine your optimal frequency

Every restaurant has its rhythm, and your inventory schedule should match it.

Given below is a breakdown of common approaches:

Frequency	Best For	Pros	Cons
Daily Counts	High-volume restaurants, new establishments	Real-time accuracy, quick problem-solving	Time-consuming, labor-intensive
Weekly Counts	Most restaurants	Good balance of accuracy and efficiency	May miss short-term fluctuations
Bi-weekly Counts	Smaller operations, stable inventory	Less time-intensive	Potential for larger discrepancies

2. Choose consistent days and times

Consistency is key when it comes to inventory management.

Just like you wouldn’t change your signature dish every week, your inventory process needs a steady rhythm.

A consistent approach helps you spot trends, anticipate needs, and catch discrepancies before they become costly problems.

Here’s how to nail it:

Pick a low-stock day: Many find the day before their main delivery works well.
Find your quiet time: Early mornings or late evenings usually work best.
Stick to your schedule: Consistency helps you spot trends over time.

For example, imagine you run a busy Italian restaurant.

You receive your main produce delivery every Wednesday.

Based on this, you might set your inventory schedule as follows:

Every Tuesday at 10 PM, after the dinner rush: Conduct a full inventory count of produce.
Every Monday at 7 AM, before prep begins: Count dry goods and non-perishables.
First Sunday of each month at 2 PM, during the slow period between lunch and dinner: Complete a comprehensive inventory of all items.

By consistently following this schedule, you’ll be able to accurately order for Wednesday’s delivery, monitor usage patterns, and catch any discrepancies quickly.

Over time, this regularity will help you identify trends, like increased tomato usage during summer months or higher wine consumption during holiday seasons.

Want to cut costs and increase profits?

2. Use the First-In, First-Out (FIFO) Method

FIFO isn’t just an accounting term – it’s a crucial strategy for maintaining food quality, reducing waste, and ultimately, keeping your customers happy.

Try this 3-step idea to implement FIFO effectively in your kitchen.

1. Get Your Storage Areas in Shape

Effective FIFO implementation starts with smart organization and clear labeling across all storage areas.

In your walk-in cooler, set up a system where new items go to the back, naturally moving older items to the front.

For dry storage, clearly mark areas for each item to avoid confusion.

In the freezer, where items tend to stay longer, date labels become crucial.

This approach can dramatically reduce spoilage and waste.

For example, imagine you’re organizing your walk-in cooler.

You might set it up like this:

Top shelf: Dairy products, arranged with the newest items at the back.
Middle shelves: Produce, sorted by type (leafy greens, fruits, root vegetables).
Bottom shelves: Meats, with older cuts in front and newer behind.
Door: Frequently used items like eggs and butter for easy access.

With this system, your staff can quickly locate items, use them in the correct order, and identify anything approaching its use-by date.

2. Label, Label, Label

Trust us, a good labeling system is worth its weight in gold:

Invest in a label maker. It’s like having a tiny, organized assistant.
Make sure your labels include:
- Item name (because “mystery meat” isn’t appetizing)
- Date received (so you know how long it’s been hanging around)
- Use-by date (if applicable)
- Any special storage instructions (in case it needs special treatment)

Consider using a color-coding system for quick visual checks.

For example:

Green: Use within 1-2 days
Yellow: Use within 3-5 days
Red: Use ASAP

3. Get Your Team on Board

FIFO only works if everyone’s playing by the same rules.

First up, make FIFO a star in your staff meetings and training sessions. It should be as familiar as your most popular menu item. Don’t just show them how to do it – explain why it matters. When your team understands how FIFO affects food quality and the restaurant’s success, they’re more likely to take it seriously.

Next, let’s make things visual. Whip up some eye-catching guides for your storage areas.

Think colorful posters or simple flowcharts that show how items should move from delivery to plate. It’s like having a friendly reminder on the wall.

Buddy up your staff for inventory tasks. Pair the seasoned pros with the newbies.

It’s a great way to double-check work and share knowledge. Plus, it makes inventory less of a chore when you’re not doing it solo.

Lastly, why not add a little fun to the mix?

Consider a small reward for those who nail FIFO consistently. Maybe a ‘FIFO Champion of the Month’ title or a small perk. It doesn’t have to be big – just enough to show you notice and appreciate their efforts.

3. Implement a Restaurant Inventory Management System

In today’s fast-paced restaurant world, relying on pen and paper for inventory management is like trying to chop onions with a spoon – it’s possible, but there are much better tools available.

Choosing the right inventory management system can transform your operations.

1. Choose your tool

The age-old debate: stick with traditional methods or embrace technology?

Let’s break down the pros and cons of each approach:

Aspect	Manual Spreadsheets	Digital Solutions
Cost	Low initial cost	Higher upfront investment
Ease of Use	Familiar with many staff	May require training
Time Efficiency	Time-consuming data entry	Automated, saves time
Accuracy	Prone to human error	Reduces errors significantly
Real-time Updates	Manual updates required	Instant updates across systems
Data Analysis	Limited, manual analysis	Advanced reporting and analytics
Scalability	Challenging for larger operations	Easily scales with business growth
Integration	Limited integration capabilities	Integrates with POS, accounting software
Accessibility	Limited to a physical location	Cloud-based, accessible anywhere
Inventory Forecasting	Manual calculations required	Automated forecasting features

2. Key Features to Look For

When you’re shopping around for a system, keep an eye out for these handy features:

Real-time Updates: This feature is your early warning system. Low on truffle oil? You’ll know before it becomes a crisis during the dinner rush.
POS Integration: Think of this as your sales and inventory systems having a heart-to-heart. Every salmon fillet sold automatically updates your stock. No more end-of-night counting headaches!
User-friendly Reports: You need insights, not a data dump. Look for systems that serve up clear, actionable information.
Mobile Access: Check your stock levels on the go, so you can seize opportunities without overbuying.
Customizable Categories: Your restaurant isn’t cookie-cutter, so why should your inventory system be? Find one that lets you organize things your way. Sorted by cuisine? By storage temperature? The choice is yours.

3. Think About Integration

A truly effective inventory system should seamlessly connect with your existing restaurant technology ecosystem:

POS system: Look for something that syncs up smoothly with your point of sale.
Accounting software: This can make your bookkeeping a lot easier.
Supplier ordering: Some advanced systems can even create purchase orders for you.
AI capabilities: The latest tech can help make your inventory management even smarter.

Pro Tip: Many of these systems offer free trials.

It’s worth taking them for a test drive to see which one feels right for your restaurant.

Streamline your operations, and maximize your profits.

4. Train Your Staff Properly

Even the best inventory system is only as good as the people using it.

Let’s explore how to turn your staff into inventory management pros.

1. Create a Clear Roadmap

This isn’t a set-it-and-forget-it kind of deal.

Your guide should grow and change with your restaurant, just like your restaurant specials does.
Start with the basics – how to count those carrots and record those ribeyes.

But don’t stop there!

Throw in some real-life scenarios.

What happens when the tomatoes arrive looking more like compost? Or when you suddenly run out of your special sauce ingredient mid-service?

Your team should know exactly what to do.

But make sure everyone understands why this matters.

Show them how proper inventory management can be the difference between a profitable month and a not-so-great one.

Keep this guide handy – maybe a digital copy on the restaurant’s shared drive and a good old-fashioned binder in the office.

That way, whether your staff is more tech-savvy or old-school, they can find answers when they need them.

And don’t let this guide gather dust.

Give it a good go once-over regularly.

As your restaurant evolves, so should your inventory practices.

Keep it fresh, keep it relevant, and watch your team become inventory rock stars!

2. Make Learning Fun (Yes, It’s Possible!)

Who says inventory training has to be a snooze-fest?

Get creative with your approach:

Video Tutorials: Showcase real inventory counts in your restaurant. Seeing is believing, and your staff will appreciate the real-world application.
Illustrated Guides: Cater to visual learners with colorful, easy-to-follow diagrams and flowcharts.
Hands-on Practice: There’s no substitute for experience. Set up mock inventory scenarios and let your team dive in.

3. Buddy Up

Two heads are better than one, especially when it comes to inventory:

Pair up your inventory veterans with the newbies. They can tackle real-world challenges together, and your new folks will pick up tricks of the trade in no time.
Now, don’t let these pairs get too comfy. Mix it up regularly! This way, everyone gets a chance to learn from different people. You never know – your newest hire might have a brilliant idea that even your most seasoned staff hadn’t thought of!
Create an atmosphere where everyone feels comfortable speaking up. Whether someone’s found a genius way to organize the walk-in or made a mistake that taught them a valuable lesson, encourage them to share. It’s all about learning together and making your inventory process better and better.

4. Make It Part of Your Restaurant’s DNA

Inventory management shouldn’t be an afterthought – it should be woven into the very fabric of your restaurant’s operations.

Here’s how:

Onboarding: Include inventory management training in your new hire process. This sets the expectation from day one that inventory is a crucial part of the job.
Regular Discussions: Make inventory a standing agenda item in your staff meetings. Share wins, address challenges, and keep the conversation going.
Incentivize Excellence: Consider implementing a reward system for accuracy and efficiency. It could be as simple as a gift card or as elaborate as a team outing. The key is to recognize and celebrate good inventory practices.

Put in the time to train them right, and watch your bottom line thank you.

5. Analyze Your Data and Adjust Ordering

You’ve got the data – now it’s time to put it to work.

Use these inventory insights to make smarter decisions and boost your bottom line.

1. Crunch Those Numbers

Understanding and tracking the right metrics is crucial for effective inventory management.

Let’s talk about the two essential numbers that will guide your decision-making:

Inventory Turnover Ratio

This metric shows how efficiently you’re using your inventory.

Formula: Cost of Goods Sold (COGS) ÷ Average Inventory Value

Higher is generally better – it means you’re cycling through your inventory quickly.

Example: Let’s say your COGS for the month is $50,000, and your average inventory value is $10,000.

Inventory Turnover Ratio = $50,000 ÷ $10,000 = 5

This means you’re turning over your inventory 5 times per month.

Days of Inventory on Hand

This metric tells you how long your current inventory will last.

Formula: (Average Inventory ÷ Cost of Goods Sold) × 365

Lower numbers usually indicate better cash flow management.

Example: Using the same figures as above:

Days of Inventory on Hand = ($10,000 ÷ $50,000) × 365 = 73 days

This means your current inventory will last about 73 days at your current usage rate.

Pro Tip: Aim for an inventory turnover ratio of 4-8 per month for most restaurants. For days of inventory on hand, target 30-45 days for perishables and up to 60 days for non-perishables.

These metrics can vary based on your restaurant type and menu.

The key is to track them consistently and look for trends over time. Are your numbers improving?

If not, it might be time to adjust your ordering or menu.

2. Spot the Slow Pokes

Regularly review your inventory to spot items that aren’t pulling their weight:

Check sales data for underperforming items.
Consider seasonality – is it just out of season?
Evaluate pricing – is it competitive?
Assess marketing – are customers aware of the item?

The action steps can include running specials to move slow inventory and removing consistently underperforming items from your menu.

For example, you review your inventory and notice that your roasted beet salad isn’t selling well.

Here’s an example on how you might approach this:

Sales data check:

You see that you’ve only sold 10 beet salads in the last month, compared to 50-60 of your other salads.

Seasonality consideration:

It’s mid-summer, and beets are typically more popular in fall and winter.

Pricing evaluation:

At $14, your beet salad is priced similarly to other salads on your menu.

Marketing assessment:

You realize the beet salad is listed at the bottom of your menu and hasn’t been featured in any promotions.

Action steps:

Run a “Summer Beet Heat” special: Offer the beet salad at a discounted price of $10 for a week, featuring it prominently on your specials board and social media.
If sales don’t improve after the promotion and as fall approaches, consider replacing it with a more seasonally appropriate salad, like a summer berry and feta mix.

3. Set Your Par Levels

Think of par levels as your inventory sweet spot.

Here’s how to nail them:

Set minimum and maximum levels for each item based on:
- Your sales history
- How long the item lasts
- How much storage space you have
- How long it takes your supplier to deliver
Use these levels to guide your ordering. No more guesswork!
Most importantly, regularly review and adjust these levels as things change.

Pro Tip: Many inventory systems can track par levels automatically and even create purchase orders when you’re running low.

How’s that for a time-saver?

Master your inventory, master your profits.

6. Optimize Your Menu Based on Inventory Insights

Your inventory data isn’t just about keeping track of stock – it’s a goldmine of information for menu planning.

Learn how to use these insights to create a menu that delights customers and boosts your bottom line.

1. Spot Your Superstars

Every menu has its superstars—those dishes that customers can’t resist and chefs love to prepare.

Here’s how to find and leverage yours:

Look for the Sweet Spot: Identify dishes with high sales and low waste. These are your golden tickets.
Analyze the Magic: What makes these items so successful? Is it the unique flavor combination, the presentation, or perhaps the price point?
Give Them Center Stage: Once you’ve identified your stars, consider featuring them more prominently. This could mean moving them to the top of the menu or creating a “Chef’s Favorites” section.

2. Get Creative with Extras

Overstocked on an ingredient?

Don’t let it go to waste.

Instead, see it as an opportunity for culinary creativity:

Challenge Your Chef: Organize a weekly “Surplus Challenge” where your chef creates a special using overstocked items. It’s like your own private episode of Chopped!
Cross-Utilization is Key: Look for ways to incorporate excess ingredients across your menu. That surplus of bell peppers could find a home in salads, sandwiches, and even as a pizza topping.
Preservation Techniques: For items with a short shelf life, consider pickling, fermenting, or dehydrating. These techniques can extend shelf life and add unique flavors to your dishes.

💡 Pro Tip:

Create a “Chef’s Special” board where you can feature dishes made from surplus ingredients. It’s a great way to reduce waste and offer customers something new and exciting.

3. Roll with the Seasons

Seasonal ingredients aren’t just fresher and more flavorful—they’re often more cost-effective too.

Make seasonality work for you:

Data-Driven Predictions: Analyze last year’s sales data to predict seasonal trends. Did pumpkin spice lattes fly off the shelves last October? Stock up early this year.
Align Your Menu: Develop seasonal menus that showcase ingredients at their peak. This not only ensures the best flavor but also often means better pricing.
Strategic Pre-Ordering: For popular seasonal items, consider pre-ordering to secure better prices. Just be sure to balance this with accurate demand forecasts.
Seasonal Menu Calendar: Create a year-round calendar highlighting key seasonal ingredients and potential menu items. This helps your team plan ahead and gets customers excited about upcoming offerings.

4. Engineer Your Menu

Categorize your menu items based on popularity and profitability:

Category	Description	Action
Stars	High popularity, high profit	Feature prominently
Plow Horses	High popularity, lower profit	Look for ways to increase margins
Puzzles	Low popularity, high profit	Improve marketing or placement
Dogs	Low popularity, low profit	Consider removing or revamping

7. Conduct Regular Audits

Regular audits are your safety net in the world of inventory management.

They help ensure accuracy, prevent losses, and keep your team on their toes.

Make audits a valuable part of your inventory process.

1. Surprise Spot Checks

Unexpected inventory checks keep your team alert and can reveal issues that might be missed in routine counts.

Conduct these checks periodically, varying the timing to prevent predictability.

Focus on high-value or high-risk items, such as expensive proteins or alcohol.

For example, you can use a random number generator to select 10 items for a weekly spot check.

This week, it might include filet mignon, top-shelf vodka, and saffron – all high-value items prone to discrepancies.

2. Reality Check: Physical vs. Digital

Let’s make sure what’s on the shelves matches what’s in the system:

Regularly compare your physical counts to what your digital records say you should have.
Set a “close enough” threshold – say, plus or minus 2%. Anything beyond that? Time to investigate.
Keep an eye out for patterns. If the same items keep coming up short, you might have a bigger issue on your hands.

For instance, if you consistently find less tequila in stock than your system shows, it could point to over-pouring or even theft.

By addressing this promptly, you could potentially increase bar profits by reducing waste and loss.

3. Tackle Issues Head-On

When discrepancies arise, tackle them head-on.

You’ll want to have a protocol for handling inventory variances.

This might involve a step-by-step investigation process, from recounting to reviewing security footage if necessary.

Using these hiccups can be a golden opportunity to level up your operation.

Did you find out that your new hire was counting the Roma tomatoes as beefsteaks?

Time for a fun, interactive training session!

Got a staff member who’s a whiz with spreadsheets?

Maybe they can help streamline your tracking process.

And if your current system is giving you more headaches than help, don’t be afraid to shop around for new inventory management software.

Sometimes, a tech upgrade can be a real game-changer.

4. Always Be Improving

After each audit, take a moment to reflect:

Gather your team for a quick debrief. What went smoothly? What was a bit bumpy?
Brainstorm ways to make the next audit even better.
Don’t just talk about changes – make them happen! Keep refining your process.

Remember, audits aren’t about playing “gotcha” with your staff.

They’re about making sure your system is humming along nicely and finding ways to make it even better.

Your menu deserves data-driven decisions.

8. Create an Inventory Management Calendar

Think of an inventory management calendar as your restaurant’s game plan for the year.

It helps you stay on top of things, see what’s coming, and keep your inventory running like a well-oiled machine.

Let’s create a calendar that works for you:

1. Build Your Calendar

Set up your digital command center:

Pick your favorite digital tool – Google Calendar, Microsoft Outlook, or maybe a fancy restaurant management app.
Get colorful! Use different colors for different tasks:

Red for those big inventory counts
Blue for surprise spot checks
Green for ordering days
Yellow for menu shake-ups

Set up repeating events for your regular to-dos:

Weekly inventory counts
Monthly number crunching
Quarterly menu reviews

2. Ride the Seasonal Wave

Seasonal ingredients can make or break your menu.

Map out their ebb and flow.

For instance:

Spring: Asparagus, artichokes, strawberries
Summer: Tomatoes, corn, peaches
Fall: Pumpkins, apples, squash
Winter: Citrus fruits, root vegetables

Use this information to plan seasonal menu changes, anticipate ordering shifts, and create specials that make the most of end-of-season ingredients.

This proactive approach can help you stay ahead of the curve and delight your customers with fresh, timely offerings.

3. Schedule Your Inventory To-Dos

Break it down by timeframe:

Yearly tasks:
- Big year-end inventory count (your accountant will thank you)
- Review and tweak your par levels
- Give your inventory system a performance review
Quarterly tasks:
- Deep clean those storage areas
- Hunt for slow-moving items
- Play menu Tetris based on your inventory data
Monthly tasks:
- Make sure your physical and digital inventory match up
- Check your inventory turnover
- Give your staff a refresher on inventory procedures
Weekly tasks:
- Full inventory count
- Look for any hiccups from last week
- Adjust your upcoming orders based on what you’ve got

Your calendar should be a living document.

Don’t be afraid to tweak it as you go along.

The goal is to create a tool that works for you, making inventory management feel less like a chore and more like a well-choreographed dance.

💡 Pro Tip:

Set reminders a few days before each task to ensure you’re prepared and have the necessary resources available.

Turn Your Inventory into a Profit-Boosting Machine

You’ve just gotten the inside scoop on turning your inventory management from a necessary evil into your secret weapon for success.

Remember, great inventory management isn’t just about counting bottles and boxes.

It’s about understanding the flow of goods through your restaurant, making smart, data-driven decisions, and ultimately serving up an amazing experience for your customers while maximizing your profits.

Why not pick one or two of these strategies and give them a shot this week?

You might be surprised at how quickly you start seeing results.

And if you’re looking to really kick things into high gear, why not consider giving your marketing a boost too?

At Restaurant Growth, we’ve helped thousands of restaurants just like yours not only streamline their operations but also double their guests and triple their profit margins.

We know just how to create campaigns that’ll have new customers lining up at your door.

Want to chat about how we can help you grow your restaurant beyond 7 figures with 18%+ margins?

Book a free strategy call with us today.

FAQs

1. What do restaurants use to keep track of inventory?

Most restaurants use digital inventory management systems. For smaller operations, well-organized spreadsheets can work too.

2. How often should inventory be done in a restaurant?

Weekly counts are standard for most restaurants. High-volume or new establishments might benefit from more frequent counts.

3. How do you calculate food inventory?

Simple formula: Beginning Inventory + Purchases – Ending Inventory = Usage. Multiply Usage by the cost of your food cost.

4. Who is responsible for inventory in a restaurant?

Typically, it’s a team effort led by the chef or kitchen manager, with involvement from other staff members.

Luke Januschka

Luke Januschka is a pivotal partner at Restaurant Growth, where he spearheads strategies that have generated over 30 million dollars in tracked sales for our valued restaurant clients.