Tips for Effective Restaurant Inventory Management

Effective inventory management is one of the biggest challenges restaurants and other food businesses face.

Trying to predict consumer demand for particular dishes and ingredients can be challenging, and how much is the ‘right amount’ of inventory is often a moving target.

It can be a complicated and tedious process; however, as the cost of food continues to increase, the price of not managing it (or managing it ineffectively) is far too high to ignore.

Patterns of waste and inefficiency go unnoticed if you are not tracking and analyzing the data; as food waste increases, food costs soar and profits decrease.

Managing inventory is vital to a restaurant’s growth and long-term health, yet only 25% of operators and managers take the time to do it right.

Here are the four basic tasks that any food business must do to manage inventory efficiently.

1. Label and organize storage areas

Organizing and labeling your inventory is critical. Not only does it help to improve day-to-day efficiency and minimize food waste, but it is also important for food safety and compliance with food safety legislation.

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 organized 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. Items nearing their expiration date should be moved to the front of the shelves.
3. When moving items to the front, be sure to leave room in the back for new deliveries.
4. Consolidate boxes whenever possible to save space and keep things tidy.
5. If items are not stored in their original packaging, be sure to clearly label and date the containers they are stored in.
6. Check best-before and expiry dates frequently.
7. Discard of any food items that show signs of spoilage.

All Food Handlers in your business, especially kitchen managers and staff, should receive FIFO training. 

First In, First Out (FIFO) is covered in depth in the Canadian Institute of Food Safety (CIFS) Food Handler Certification Course.

2. Count and record what’s on your shelves

Inventory must be counted on a regular basis. To get the most accurate count, we recommend that you do the following:

• count on the same day and at the same time each day, week or month
• count outside of operating times (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 minimize 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 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 Canadian Institute of Food Safety.

3. Compare actual numbers to expected numbers

Many restaurant operators count inventory but fail to take the next crucial step — comparing the actual numbers (what is on your shelves) 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 significantly and consistently different from what you should have on your shelves, it could point to a more serious problem that needs to be corrected.

4. Look for patterns that point to bigger problems

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 make corrections — to operations, approved vendors, staff training, company policy (and so on).

Being vigilant about food waste can make the difference between a thriving business and closed doors.

It’s important to remember that one-third or more of your total operational costs are food costs; if you ignore the numbers, you’re throwing money away.