The restaurant business is highly competitive. There are over one million restaurants in the United States, and not all of them make great money. There are opportunities for your restaurant to gain and maintain a competitive advantage.

To thrive in the food industry, you must be able to effectively manage restaurant inventory. Read on to learn about 12 great practices for restaurant inventory management.

1. Restaurant Inventory Management Software

Great chefs know how to use the tools of their trade well. For example, any chef worth the title owns a set of quality knives and knows how to use them. Having effective inventory management software is one of the most important tools for a restauranteur.

The benefits of restaurant inventory management software such as marketman extend beyond controlling inventory. It also includes helping you plan and budget your ingredients. It can support your ordering process and provide you with management information.

It may be easier to set up than you think. It can also integrate with your point of sale system, giving you total control. The management information it provides helps you manage the day to day operation as well as feeding into your accounting process.

2. Use Point of Sale Data and Count Inventory

Capturing information about sales at your point of sale can give you the information you need to improve your inventory management. It’s not all you need. The food your customers buy is not the only food leaving your restaurant.

Some of your inventory is lost during the food preparation process. Some may be spoiled or spilled. No matter how wonderful your food is, you may sometimes have unsatisfied customers, so some food comes back to the kitchen and is not paid for.

Some of your inventory may never get to the food preparation process. It can go out of date or be damaged while in storage. Sadly, some of it may be stolen by your own staff.

The only way of accounting for all the inventory that leaves your restaurant is to physically count your stock periodically. Do this on a cyclic basis so you count some inventory each week and all your stored stock over a period of weeks.

3. Consistent Inventory Management Staff

Managing inventory takes care and consistency. Changing the staff who do this role for you can introduce inconsistency. Chose an able and reliable person to lead a small team with inventory management responsibilities.

Each time a new person takes on the role, they have a learning curve to go through. During this time, they can be both inefficient and inaccurate until they get up to speed. Better to have a single person or, better still, a few people who do this role for you.

A reliable small team can cover for each other while maintaining standards of performance. They learn how to count your inventory quickly and also learn how to identify items accurately. A small team allows you to have back up if one person is away but not so many people that you lose consistency.

4. Manage Excess Supplies

Excess supplies are a source of many problems in a restaurant. It might seem helpful to be able to respond to unforeseen increases in demand but there is a cost to this.

Excess stocks can lead to more waste. If the excessive stock is date sensitive, you may have to consign it to the garbage can and lose the value too. Excess stocks are also more likely to be damaged and can tie you into committing to menu items simply because you have the ingredients rather than because there is genuine customer demand for it.

Effective inventory management can alert you to high inventory levels so you can act. You may be able to return the ingredient to suppliers for a refund or credit. You could use the ingredients by incorporating them into special menu options.

5. Account for Waste

Understanding and accounting for waste can help you reduce the total amount of waste in the restaurant. Simply because your staff knows waste is accounted for, they will be more conscious of the care they take with ingredients.

Keep a waste sheet in the kitchen so you can keep an eye on spoiled food. This may help identify problems with your front of house staff, such as mistakes with orders. When everybody takes ownership of the waste, they can also be engaged with helping to reduce it.

6. It’s FIFO, Not LIFO

A consistent first in, first out accounting methodology can be followed through to the operation of your kitchen. It reduces waste, improves accounting accuracy, and gives you reliable data.

Use storage containers and food dispensers that reflect the FIFO approach. Use them in your freezer, storage shelves, and refrigerator. Always store new items behind older items and pull supplies from the front.

7. Work to a Schedule

Having a regular time and date when you do inventory management tasks helps provide timebound information. You can then identify patterns that help you plan better. Knowing how much of an ingredient you use in a time period helps drive your ordering process.

Have more frequent checks of perishable items so you can act before it’s too late. Check non-perishable items less frequently. Monitor supplies of popular, fast-moving items more frequently too in case any volatility leaves you short of supplies.

8. Order Intelligently

Have your inventory management system drive your ordering process. Inventory management is a learning process. It helps you learn whether you are holding too much or too little inventory.

When you use the insights that your inventory management system gives, you can increase profitability and service level at the same time. You are less likely to run out of ingredients and fail to satisfy customers, and you will have less waste too.

9. Train Staff in Inventory Management

Giving all your staff some basic training in inventory management will help them support the process.

Everybody needs to know the importance of FIFO. Train them on how to put stock into storage and into the refrigerator and freezer. Explain how you label food and about how it is dated.

Staff who use point of sale equipment or who order items must understand how to maintain inventory accuracy. It’s important that they can accurately identify items and match them with descriptions in your point of sale system. Be clear with staff about what authority they have for ordering and disposing of items.

10. Portion Control

Your inventory management can be undermined if portion control is inconsistent. Have strict control of portion size. Check this regularly and especially if different staff prepare the same dishes.

The consistency of portion size helps inventory management, but it is also a key customer service standard. Effective inventory management practices often have benefits that are broader than just keeping control of inventory.

11. Consistent Taste and Menu

Your customers deserve to have consistent tasting food. They may have a regular favorite or have been recommended a dish. It should be the same every time.

Variations in ingredients can make a huge difference to the taste of a dish. They can also make a difference in the profitability of a menu. Adding extra amounts of expensive ingredients such as meat, wine or spices could turn a profitable dish into a drain on profits.

Variations in recipe or ingredients can throw your inventory management into chaos too. You cannot rely on the information that is driving your order process if dishes are changing each time they are prepared. Maintain a firm grip on your recipes.

12. Keep Control

Inventory management is so important for profitability, quality, and service that it is a key management task. Don’t assign it to a member of staff and forget about it. Take a regular interest and maintain an approval role for key things such as orders to suppliers.

Carry out spot checks to demonstrate how important inventory management is to you. Check cyclic counts by actually counting the physical items and comparing your results with the numbers your staff is recording. You may find that doing this increases the reliability of their counting.

Do checks on portion size and ingredients. This can be done both in the kitchen and as food is served. It’s a quality check that increases both service standards and profitability.

A Recipe for Success

Effective restaurant inventory management is part of the recipe for success. It supports the wonderful food and great customer experience. Don’t miss this important ingredient.