4 Steps to Master Restaurant Inventory Management

When it comes to inventory, the stakes are high — especially in a restaurant, fast food chain or food retail establishment where your inventory spoils.

Effective inventory management is one of the biggest challenges that food businesses face. Depending on the resources available, inventory management can be a complicated, time-consuming and tedious chore.

It’s also not easy to accurately predict customer demand, and how much is the ‘right amount’ of inventory is often a moving target; however, if you are consistently wasting food week after week, month after month, you might not be open at the end of the year.

Patterns of waste and inefficiency can go unnoticed if you are not tracking, monitoring and analysing the data properly. Efficient inventory management is vital to the health and success of a food business — and many operators aren’t using it to its full potential.

Here are the four basic steps that every restaurant must take to manage inventory efficiently.

1. Label and organise inventory

It isn’t just helpful to organise and label your inventory — it’s critical for safety. 

All food storage areas — including walk-in and reach-in refrigerator(s), dry storage, prep areas and bar and liquor cabinets (if applicable) — must be organised using the First In, First Out (FIFO) method.

The following are examples of FIFO rules and best practices:

1. Items that are received first must be used first.
2. Move items nearing their expiration date to the front of your shelves, leaving room in the back for new deliveries.
3. Consolidate boxes whenever possible to save space and keep things neat and tidy.
4. If items are not stored in their original packaging, be sure to clearly label and date the containers they are stored in.
5. Check best-before dates and expiry dates frequently, and discard of any food items that show signs of spoilage.

All Food Handlers in your business should receive basic training on FIFO principles; kitchen managers, Food Safety Supervisors and kitchen staff should receive advanced training.

First In, First Out (FIFO) is covered in-depth in the Australian Institute of Food Safety (AIFS) Food Safety Supervisor course.

2. Count and record inventory

Inventory must be counted on a regular basis. When and how you count matters, as does the system you use to track what’s on your shelves.

To get the most accurate count, be sure to do the following:

• count on the same day and at the same time each day, week or month
• count before you open or after you close
• count on the day before food deliveries are scheduled to arrive
• take note of inventory items that are nearing their expiration date

By counting and recording inventory accurately, you can minimise food waste by making use of foods that will expire soon, working overstocked items into daily specials and ordering less of overstocked items on your next order.

It’s a good idea to train one or two trusted employees to help you count and record inventory — there is no substitute for trained and skillful employees when it comes to running a successful restaurant or food retail business. 

Trained and certified Food Handlers and Food Safety Supervisors can help to ensure safe food storage and preparation in your business, as well as help you to reduce food waste and comply with food business legislation.

To learn more, contact the Australian Institute of Food Safety.

3. Review the numbers

Counting and recording your inventory is important, but don’t forget to compare the actual numbers (what is on your shelf) to expected numbers (what is recorded in your system).

For example, if your system is showing that you should have nine chicken breasts, but you only have five in your walk-in, something may have gone wrong.

More often than not, ‘missing’ inventory can be traced to:

• orders that were rushed through ‘on the fly’ but never entered into the POS system
• food items that were sent back and remade but not recorded in the POS system
• expired, spoiled or suspected-to-be spoiled food items that were thrown out but not recorded

A restaurant can be a fast-paced and hectic environment, so it is not uncommon for mistakes to be made — especially if food workers are not trained to follow food safety and operational procedures.

However, if the actual numbers are consistently and significantly different from what you should have on your shelves, it could point to a more serious problem.

4. Look for patterns

If you notice certain patterns of waste when you compare your actual numbers with expected numbers, you will want to investigate. Upon investigation, you may discover issues such as:

• over-portioning (may indicate that cooks need refresher training on food portions)
• over-ordering (may indicate that managers are not paying attention to overages and food waste)
• above-average amount of spoilage (may indicate that your walk-in is not functioning properly, or that employees are not following FIFO best practices)
• above-average number of ‘send backs’ (may indicate that cooks need refresher training on safe cooking temperatures)

When you identify areas where unnecessary food waste is occuring, you can pivot and make corrections — which could determine whether your restaurant is in the red or the black each month.

One-third or more of your total operational costs are food costs; if you ignore the numbers, you’re throwing money away that should be in your pocket.