restaurant inventory management | 7 mins read

6 Common Restaurant Inventory Management Errors and How to Avoid Them

6 common restaurant inventory management errors and how to avoid them 1648703977 4735
Sanchari Chatterjee

By Sanchari Chatterjee

What is Restaurant Inventory Management?

Apart from their service, restaurants thrive on their inventory quality and management. It is ultimately the efficiency of a restaurant's inventory management that determines if it's going to be profitable or not. So what is restaurant inventory management?

Managing restaurant inventory is a combination of inventory tracking and maintaining the right stock levels so that you don't overstuff your inventory, nor run out of stocks. It is also about getting the right supplies to the right place at the right time. Inventory management involves keeping tabs on what you have on hand and ensuring it's used efficiently.

Restaurant managers need to be aware of their stock levels at all times so that ordering, purchasing and supply chains can be managed well. You also need to know your inventory levels to manage your costs. Restaurant inventory management encompasses everything, from accurately tracking food and supplies, to ensuring your kitchen staff makes the right amount of each dish consistently.

Why is Inventory Management Important?

why is inventory management important 1648806197 3996

  • Inventory management is important to any foodservice establishment or bar because its service to customers depends on what it has in stock. How many of its bestselling dishes ought to be produced daily, how long should the restaurant remain open for business to stay profitable these factors depend on inventory levels.
  • Inventory management also affects customer service and the restaurant's bottom line as it drives revenues. If you stock up your inventory levels with goods that you don't need, your expenses will go up while your precious inventory space will be wasted.
  • Regular inventory management and inventory tracking also help businesses forecast their inventory needs at the right time and place purchase orders accordingly.
  • Inventory tracking and management are also essential for managers to analyze their inventory usage patterns, plug gaps and prevent thefts and other malpractices.
  • With the right inventory management methods, you can also reduce food wastage and losses.

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6 Common Mistakes of Inventory Management

1. Manual inventory management-
By spurning automation and technology-driven solutions for their inventory management, restaurant managers end up practicing time-consuming and inaccurate inventory tracking methods. Manual systems introduce errors when you take inventory, and make kitchen management and customer service more challenging.

2. Systems in silos- Cloud based inventory management systems are capable of integrating with all other software solutions such as POS systems, online ordering platforms, and so on. Done the old-fashioned way, restaurant management will have to manually transfer and compete data from different functions and departments using spreadsheets.

3. No inventory forecasting- When managing food inventory manually, it is not humanly possible to make accurate forecasts of your future supply needs, demands and sales patterns. However, an automated inventory management system can do this and more.

4. No analytics- Manual inventory management will not provide reports and insights into your inventory usage, sales or purchase orders. You will also not receive automated revenue analysis and cost of goods sold (COGS) reports to evaluate your business operations.

5. Lack of recipe management- Restaurants need to keep track of their food inventory to manage recipes and efficiently run the kitchen. However, if your inventory management system doesn't produce real time updates of inventory stocks after each dish is prepared, managing menu items can become tricky. If any of the ingredients run out, your inventory software must be able to make real time updates to the menu item accordingly.

Drawbacks of the Manual Method of Inventory Management

The manual method is an old-fashioned inventory management system. It is also the least efficient and accurate inventory tracking method.

  • The manual method involves physically counting inventory items in a food inventory and recording those counts in a log. This process is prone to human error and also takes days to complete the entire inventory. This is why businesses are now shifting to automated inventory management systems.
  • It's hard to make inventory forecasts with a manual inventory management system.
  • With the manual method, it's difficult to track wastage, theft or inventory misuse. This leads to increased inventory expenses and losses.
  • When the food inventory is not managed well, it will end up affecting your customer service and may even cost you a few customers. If your inventory is not updated in real time, you will not be aware of which menu items cannot be served because of a lack of ingredients, and end up disappointing customers.
  • Tracking dead stock or products with a limited shelf life is essential when managing food inventory. If you end up overlooking a product 'use before' date, you may end up violating food safety norms and risking your customer's health.
  • The manual method of inventory management doesn't give you much flexibility to move around stocks and adapt to the dynamic needs of the food and beverage industry. Your manual method will not be able to adapt to sudden changes in sales, supply chain or demand patterns, for example.

Advantages of Automated Inventory Management

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  • Use restaurant inventory management software to make sure your inventory management is accurate, timely and efficient. The automated system leaves no scope for error, does the job in minutes and is far more efficient at inventory tracking than the manual method.
  • Inventory management software offers restaurants real time inventory tracking. This will keep managers updated about stock levels at all times, eliminating the worry of running out of stock during business hours.
  • You can also integrate your restaurant inventory software with other restaurant management systems like the POS system (point of sale), online ordering tools and accounting software to have all your vital restaurant information at your fingertips.
  • Restaurant inventory management software also generates reports and insights on your inventory usage, sales orders and purchase orders. This will help you better analyze and optimize your business operations.
  • With the restaurant inventory software, you can put an end to wastage, theft and unnecessary losses due to mismanagement of food inventory.
  • The inventory software will also help you provide better customer service as you will never run out of stock. The system will send out alerts and notifications about low stocks and you can replenish them accordingly.

Online employee scheduling software that makes shift planning effortless.
Try it free for 14 days.

Top 3 Inventory Management Systems for Restaurants

1. Zip Inventory-
The Zip Inventory software by Hubworks is a complete inventory management system that takes care of all your shelf-to-sheet inventory counts, tracks waste and variance, allows easy transfer of inventory items and makes the entire inventory tracking and management process smooth. With real timeinventory management and analytical reports, you will significantly reduce wastage.

Zip Inventory tracks your inventory levels, ingredient usage and sales data to forecast purchase order requirements and prompts ordering at the right time. In addition, the Zip Inventory mobile app allows increased mobility for business owners to manage operations on the go.

2. Toast POS-
This is an all-in-one restaurant management software that takes care of inventory management, restaurant POS, warehouse management, table service and online ordering and delivery. Toast is also a cloud based software that allows users to manage their inventory, sale and supply chain on the go via the mobile app.

3. Lightspeed Restaurant-
This is another restaurant inventory management software that works for all full service, quick service restaurants, bars, cafes, and other formats. In addition to inventory Cycle Counts, Lightspeed provides tools for customer care, restaurant POS, and menu management. It also creates a link between the kitchen and service staff for efficient restaurant management.

Inventory Management FAQs

Q 1. Why is third-party software integration important in restaurant management?
A- Most inventory management software allow third-party integration with accounting, supply chain and CRM software and business intelligence and analytics solutions. Without integration, a restaurant will have to manually process different data sets. Integration allows easy access to various verticals of the business so that owners and managers can gain a comprehensive overview of the operations and can make better decisions.

Q2- Can small businesses also use inventory management software?
A- Be it a small eatery, a roadside cafe or a fine dining restaurant, all establishments need to manage their inventory. Good inventory management impacts the management of a restaurant, its revenues, reputation and customer service. Inventory management software takes care of all these needs. Moreover, if you are a struggling new business, you can find a number of free-to-use inventory software in the market that will offer you handy inventory tools without burning a hole in your pocket.

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