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Food Business

What New Restaurant Owners Need to Know About Inventory Management

written by Amila Gamage Wickramarachchi December 24, 2020
Restaurant Inventory Management

Your dream restaurant is starting to flourish. Consumers are regularly visiting your establishment, and you are beginning to make a profit. Your team’s hard work is paying off. Life is good.

However, along the way, you begin to realize that there are many facets to owning a restaurant. There is much more to successfully running a restaurant besides preparing good food and offering patrons excellent service. To be profitable, you need to keep your costs low while maximizing your sales. A large part of keeping costs low is managing your inventory optimally. This is easier said than done.

A Crash Course in Inventory Management

Inventory management is the process of ensuring that optimal levels of ingredients in your restaurant to fulfill all customer orders for a given period. Done well, it will keep you from overspending on excess stock while keeping enough ingredients on hand to ensure all orders can be satisfied with the expected quality.

When achieved, this balance will help minimize wastage while driving sales, the critical components of a profitable enterprise. With the cut-throat competition in the food and beverage industry, how well you manage your inventory could be the difference between success and failure.

Typically, you’ll want to track three main aspects of inventory: the ingredients supplied to your kitchen, what goes out of the kitchen, and what is leftover. Keeping an accurate record of these numbers allows you to determine the inventory that contributed to your sales and how much went to waste.

The cost of goods sold, that is, what you spend on the food and drinks you sell will typically range between 20 and 40 percent of your revenue. Taking stock of this expenditure helps gauge your restaurant’s financial health and make adjustments where necessary.

Common Problems

Failure to manage your inventory well can lead to several avoidable problems. One of the critical issues is wastage, which estimates your merchandise instead of physically counting it can lead to. You could end up thinking an item was out of stock and reordering it, only to discover there was a box of the ingredient somewhere you had overlooked. Though you may be able to freeze it, its freshness may be compromised, lowering your standards.

Without an accurate inventory, you may not be able to nail down the real reason for all the stock not contributing to sales. You may conclude it was staff meals you have sanctioned when there could be pilferage going on.

On the other hand, you could be throwing away a lot of food because of the failure to track how what you buy is used. It could be that instead of ensuring what was brought first is used first, your kitchen staff could merely be using whatever ingredient is at hand, leaving others to go wrong or become stale. This can quickly happen where you have not assigned specific employees to handle inventory management.

Improving Accuracy

If you’re grappling with some of these inventory management challenges, help is at hand.

The key to the success of your inventory management is getting your staff on board. As a young restaurant, you probably won’t have the capacity to have a dedicated team to manage your inventory. That means you either handle it yourself or leverage cutting-edge restaurant technology to assist you. 

They may not be excited at the added responsibility, but the smart money is on roping your staff into this activity. Get them to understand how crucial accurate inventory management is to the kitchen operations and the restaurant’s overall profitability. When they realize that wastage can impact the restaurant’s ability to pay their wages and keep its doors open, they are likely to respond positively.

Another way to ensure inventory management is impactful is to ensure it’s done consistently. It shouldn’t be an afterthought performed during the restaurant’s downtime. For optimal results, take inventory weekly.

Employing technology can help make inventory management more effective. Using built-in POS inventory management software can help eliminate errors and help you accurately demonstrate the link between inventory and sales.

The Difference Between Sinking and Swimming

Regular, accurate inventory management is not a luxury that restaurant managers can do if they find the time. Not if you wish to establish yourself in this highly competitive space. You will need to intentionally invest time and resources into establishing an inventory management cycle that works. The rewards will show up in your margins if you remain committed to it.

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Amila Gamage Wickramarachchi

Amila Gamage is the blogger behind Food Corner. She shares her cooking adventures in this blog. Apart from recipes, you will also find travel, health and kitchen inspirations in this blog. She started writing this blog in 2011 and still continuing.

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