4 steps to ace your restaurant inventory management!

You must have come across people talking about restaurant inventory management as an important parameter of running a restaurant. So, what’s the big deal? Suppose you’re running a restaurant without tracking your inventory. You have no idea what’s in your stock and, therefore, you cannot decide when to order more. And while you’re in this clueless state of mind, some food materials would go to waste due to inefficient management, thereby increasing your costs. Since you have no idea about your inventory, you wouldn’t be able to serve your customers well. Is this a desirable situation? Absolutely not, right? This is why you need a restaurant POS software to manage your inventory levels accurately. But before that, let us first understand what inventory management is, the benefits involved and how it’s traditionally done. 

Understanding Inventory Management

Inventory management is nothing but a set of processes that covers everything from ordering and storing to selling and using a business’s stock. In the case of restaurants, the inventory would include everything from ingredients to the final dishes. 

A crucial aspect of inventory management is ascertaining the inventory turnover ratio. To put it simply, it’s the number of times you replace your inventory in a given period of time. This said period of time can be anything from a week to a year. So, how do you calculate this ratio? It’s simple:

Calculate average inventory for the given time period

Average inventory = (Cost of opening inventory + Cost of closing inventory)/2

Calculate the inventory turnover ratio

Inventory turnover ratio = COGS (Cost of goods sold)/Average inventory

Benefits of Restaurant Inventory Management

Why should you bother yourself with such a tedious process? The benefits below will let you know. 

Reduced waste – By giving you better control over your inventory, inventory management ensures that your stock is optimally utilized before you order more. 

Reduced costs – Reduced wastage ultimately leads to reduced costs of operations as you order, store and use inventory in a timely and systematic manner. 

Reduced thefts – By keeping a close check on the inventory, you’ll further reduce costs by leaving no room for thefts or mishandling. 

Master The Art of Restaurant Inventory Management

Follow these four tips below to ace restaurant inventory management. 

1. Meticulous Organization

Accurate organizing is the holy grail of inventory management. Keep a close watch on the stock levels (dry and refrigerated ones) at all your outlets. Adopt the FIFO approach for inventory usage. FIFO, or First In First Out, is a method wherein you use the ingredients which arrived first to minimize wastage. 

2. Regular Inventory Audits

Mark your calendar every week or month for inventory evaluation. This is an excellent technique of delivering on-time services. Knowing where your inventory is being utilized and how much will give you an upper hand in ensuring that your operations are cost-effective. 

3. Check on Supply Prices

Being in the food business, you’ll agree that the prices of certain inputs vary according to seasons. For instance, mangoes will be cheaper during the summer months than the rest of the year. So, how do you calculate your costs? The best practice is to value the inventory at the latest price as per the suppliers’ invoices. This will not only help you avoid overstating your profits but also give you some leveraging power over your suppliers. 


If you’re in the restaurant business, you must know certain terms. One of those terms is COGS – Cost of Goods Sold. It’s imperative to calculate the cost of the dishes you’d be putting out. Only then you can charge appropriate prices that would cover your costs and yield you a profit. 

Thrive with a Restaurant POS System

POS software is the hidden fifth way of successful inventory management. Reach out to us at Possier to find out how a POS system can boost your efficiency of inventory management.

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