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10 Best Practices for Restaurant Inventory Management

Jordan White

Fast food employees have one of the highest turnover rates of any other job in America. While it’s not incredibly surprising, many quick service restaurant managers may be unaware of the great cost of employee turnover.

If you’re still hand counting your inventory, human error is inevitable. Add the factor of new employees responsible for following loose inventory guidelines and you could be in deep trouble.

Properly managing your inventory, from end to end, can save your restaurant money, increase efficiency and reduce your bottom line.

“A properly managed and maintained kitchen feels fluid all around. The flow of forecasting, ordering, quality control, and inventory directly relates to the quality and consistency of dishes produced as well as customer satisfaction. If proper practices are not followed, it can be detrimental to the clientele, profits, and the reputation of the restaurant.” – Benjamin Ringer, Sous Chef, The Boathouse on the Bay, Long Beach, California.

According to the State of Small Business Report, 43% of small business owners still manage their inventory with pen and paper, a spreadsheet or don’t take the time to manage inventory at all. This can lead to a number of problems like running out of inventory in a rush, spoilage and waste from over ordering and a lack of knowledge and control over the restaurant as a whole. This can translate to lost sales, angry customers and a whole lot of wasted time and money.

While a specialized inventory management system isn’t necessary for all restaurants, an easy-to-use system like Fytics, reduces employee inventory tracking time by 90% while giving business owners real time access to inventory and automatic re-order right from their smartphone or desktop.

Whether you choose to stick with manual inventory management or upgrade to an automated system, following a set of best practices can help you maintain control and costs.

Here Are Our 10 Best Practices for Restaurant Inventory Management:

1) Categorize and Organize

Knowing where things are and being able to access them quickly increases sales and keeps your workforce on task. You might consider adhering labels to your shelves to identify what’s stored there, drawing out a map of the stockroom or creating a spreadsheet. Try chunking your inventory into groups (dry goods, freezer, refrigerator, paper supplies, office supplies, uniforms, etc.) to make it easier to locate what’s needed quickly.

2) Maintain a Low Stock Inventory

With proper planning and foresight, a restaurant can keep a minimum inventory of just what’s needed until the next shipment. Effective inventory management will help you reduce your up front inventory investment, prevent spoilage and waste associated with over ordering and reduce space required for inventory storage. By storing less excess inventory, you may find extra space for a new dishwasher to increase efficiency or an extra table to increase your capacity.

3) Monitor Sell Through

Like maintaining a lower inventory supply, monitoring sell through takes practice, but can be extremely beneficial during peak times/seasons. Proper planning and management will allow you to predict when things will run out and always have back up ready. Don’t lose sales to poor planning.

4) Track All Inventory

Regardless of whether you have a specialized inventory management system or run on a paper spreadsheet, be sure you are tracking everything that comes in and out, every time. This is where an automated system shines. With the Fytics system, receiving new inventory is easy. Simply scan each item and fill out the name, number and quantity to add it to the system. Once the item has been added, the system will remember and automatically add it to the inventory on the next scan.

5) First In, First Out

To avoid spoilage, expiration or obsolete product, always use product that arrived first. This is easy to manage by taking the extra time to organize inventory when it arrives. Scoot old inventory up on the shelves and place the new inventory behind the old so that your employees automatically reach for the older stuff first.

6) Do a Yearly Inventory Count

Yes, it can be painful, but doing a full count at least once a year solves a lot of problems. Plan your inventory count during a slow time for your restaurant, when all employees can be fully available to help. Make a plan for your inventory count ahead of time to avoid mistakes, and don’t forget to make it fun for your employees. Below are a few suggestions for your inventory count day:

  1. Set proper expectations of your employees ahead of time.
  2. Be prepared with all the necessary supplies: paper, pens, clipboards, barcode readers, snacks, drinks, etc.
  3. Organize the stockroom ahead of time so all inventory can be accessed and counted quickly. That may require moving things around or bringing boxes out of storage closets. You may find it helpful to make a map of the stockroom to avoid confusion.
  4. Divide employees into small groups as too many people can complicate counting. Assign each person a task – first counter, second counter, data recorder, etc.

7) Quality Control

Hold your employees accountable for checking inventory before signing for it. A checklist can help employees remember to check for all aspects of food and equipment orders that are important to you. Taking time to check the inventory right when it arrives minimizes downtime later.

8) Repeat Orders

Most restaurants reorder the same things on a regular basis, but waste time in finding that product and ordering it like the first time each time. Develop and follow a system for tracking tags and details to place easy repeat order rather than sourcing inventory each time. An automated system, like Fytics, makes it easy to set automatic re-order points and track food usage levels.

9) End-to-End Plan

Smart business owners look at the whole picture. Always know where you’ve been and where you’re going rather than making it up as you go. Read about and/or ask other business owners for their best practices in inventory planning or invest in a system to streamline and simplify the process. Having a plan and always knowing where you are in the process, will ease the stress of managing a busy restaurant.

10) Forecast Demand

Proper business planning and insight will allow you to predict your busy times and what will fly off the shelves quicker. Be prepared and adjust your inventory ordering for your busy times accordingly to avoid lost sales from low inventory or waste from excess inventory.

The Fytics system has been intuitively designed to let restaurant owners know and work with their food inventory every single day, while decreasing the time required for doing so. Beyond knowing and accessing inventory in real time, Fytics empowers owners to track ingredients and increase profitability like never before. The system is extremely easy to set up and allows employees to be trained in less than 5 minutes, completely eliminating the nightmare of high turnover.

So what are you waiting for? Save money, increase efficiency and reduce your bottom line with an automated inventory management system.

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