Restaurant inventory management is an integral part of restaurant business management. Operating a restaurant is not only about designing menus, decorating the area, and hiring qualified chefs, waiters, and bar staff. Restaurant owners need to win new customers, create repeat clients, and develop their customer base in conditions of growing competition.

Here's how you can make that happen.

What Is Restaurant Inventory Management?

Restaurant inventory management is the process of tracking products and raw materials moving into your restaurant along with the resources required to serve them to your customers. It also needs to account for overages and waste. Finally, it needs to take into account the human element in the inventory process.

Effective inventory management helps with the following:

  • Resources tracking
  • Stock control and organizing
  • Inventory monitoring
  • Supplies analysis
  • Better forecasting
  • Sales and profit improvement
  • Waste and loss reporting
  • Labor costs

The complexity of restaurant inventory management depends on the size of the business. As the restaurant grows, inventory management becomes increasingly challenging. And managing your inventory on a day-to-day basis becomes increasingly vital to the continued success of your establishment.


As a restaurant owner, you need to optimize this your inventory management. Doing so will save you time and money. It'll ensure your customers receive the freshest products. And it'll keep your staff happy by providing them with what they need to keep your customers coming back.

5 Ways to Rapidly Improve Your Restaurant Inventory Management

Restaurant businesses need to record and track all the raw materials and products in their stories. This data needs to be accurate to protect the health of your customers and the reputation of your business. That means you need more transparency and up-to-date records of your inventory.

1. Deploy an Inventory Forecasting System

It's impossible to count all the materials that you need for your business. As a result, restaurant owners tend to purchase inventory management software to control costs and optimize restaurant operations. A key component of that software is inventory forecasting.

Inventory forecasting makes it possible to plan out the use of your resources. Forecasting your inventory will help decrease your stocks to the minimum, minimizing waste and increasing revenues.


In the restaurant business, there are various factors that influence the process of resource planning. For example, the holidays or events which take place in the city might lead to a higher volume. There are also spikes in business to consider: morning rush, dinner and lunchtimes, happy hours, and more.

Unpredictable factors can influence restaurant volumes as well. For example, unexpected weather conditions (like rain) may lead to an increase or decrease in the number of customers.

Either way, you need to forecast your inventory so that you have enough resources and staff members to meet the needs of your guests.

Experts also recommend tracking the restaurant sales numbers based on similar time periods in the past.

In short, every successful restaurant business needs to have an automated system in place for inventory management in place to forecast the resources required.

2. Focus on Recipe Costing

Recipe costing is essential to effective restaurant operations. And restaurant inventory management supports this by helping plan the proper amount of ingredients needed for the menus, leading to decreased costs.

It also provides restaurant owners with an overview of which menu items attract more customers. And you can test new cuisines and get actual data on whether or not they were a success.

Recipe costing also helps you put the correct price tag to each dish. By knowing the exact prices for the materials, ingredients, and margins, you'll know what you'll need to charge for each item to stay profitable.


To set the competitive selling price for a menu, you'll need to estimate the total resources needed to create the item. This includes the financial costs, human element, inventory costs, and other costs.

And with each menu item properly priced, you'll cut down on waste, better manage staff hours, and communicate the real value of your inventory to your staff.

In short, you'll maximize the profits of the restaurant.

Plus, the right restaurant inventory management software empowers you as a restaurant owner. With the data it provides, you can monitor and update prices regularly, change ingredients in recipes, and track the sales of your menus more effectively.

3. Deploy a Restaurant Inventory Management System

Most small restaurants start off manually managing their inventory. This is a painstaking, complicated, and time-consuming task that can result in costly human errors.

Restaurant inventory management software can assist you with many operational functions. You can manage basic operations, such as inventory management, billing, ordering, and queue management. With one encompassing system for inventory management, you'll increase productivity and efficiency across your business.

Implementation of the restaurant inventory management system helps connect point-of-sale systems, kitchen operations, back-of-house applications. It also provides accurate purchasing, better inventory forecasting, and more effective staff involvement.

The restaurant inventory management system should be easy to use and must be automated. Automation reduces the risk of human error while making the process more efficient. And an easy-to-use system means that staff will easily adopt it.

4. Set up System Integrations

Every business uses multiple applications to support its customer needs. Restaurants are no different. But when you use different systems, you run the risk of disparate data (data that doesn't translate between those systems). As a result, you need a way to move that data between those platforms.

Most often, businesses use spreadsheets (this is problematic) to make that happen. It's a slow, clunky process that's prone to errors. And with margins in restaurants as low as they are, you need to reduce any chance of errors while cutting costs.

That's where integration comes in.

By Integrating your systems, you can automate processes in your restaurant business. This will allow you to synchronize the data from various software and apps, giving you a clear picture of your business.

The benefits of automating your systems are endless. You get real-time reporting, more accurate data, and a better understanding of your customer needs. You'll also reduce labor costs as many manual processes are eliminated by automation.

In short, you'll create a far more efficient restaurant.


5. Guide Your Team with Data

With all these connected systems in place, you'll gain accurate insights into your restaurant. And this will allow you and your team to make more informed decisions. As a result of the data collected, you'll better understand what materials and support you need and when you'll need them.

To get the most out of your restaurant inventory management, you need to use that data to make better decisions. Those results should fuel future successes, continuing to improve your business.

The Challenges of Restaurant Inventory Management

From the beginning of the operation, restaurant businesses are always looking for the best ways to become more competitive in the market, decrease costs, reduce waste, optimize service and improve revenues. And while restaurant inventory management can greatly assist with those goals, it's not without challenges.

  1. Adoption: There is always pushback when onboarding systems. Perceived difficulty from the learning curve can deter people from onboarding.
  2. Risk: Not knowing which system is right for your business can lead many owners to continue tracking inventory manually.
  3. Cost: Because you'll need to automate a lot of these processes, you'll need to purchase or build new software. That comes at a cost.
  4. Pushback: While the data can paint a clear picture of which menu items are more popular, it can create difficulties with staff who feel differently.
  5. Change: With a new system comes new procedures. And management will need to draft and test new ways of doing business.

Restaurant Inventory Management Best Practices

To effectively run your restaurant inventory, you need to know best practices. After all, systems alone aren't enough to yield success. You need action. These are some best practices you need to follow.

  • Leverage Mobile: Your inventory system needs to be agile. If your employees cannot take it with them onto the floor, it'll end up slowing them down drastically.
  • Integrate POS: Do not keep your POS and inventory management separate. Your POS system tracks valuable data that is crucial to effective inventory management. Connect these systems and leverage that data.
  • Prioritize Ease of Use: Restaurants are chaotic, busy places. Any effective system needs to be fast and easy to use.
  • Incorporate Shelf-Life-Management: Raw materials have a short shelf-life. You need to know what needs to be used first to reduce any potential for waste.
  • Remember Seasonal Items: Your inventory system needs to be flexible to account for seasonal items, freshness, and specials.
  • Track Waste: Waste can make or break a restaurant. You need a system that tracks it, translates it into a financial relevance, helps you find ways to reduce it.

FIFO and Restaurant Inventory Management

Dealing with non-perishable ingredients, you will need to make sure you operate on the first-in, first-out (FIFO) basis. This means that the oldest inventory ingredients need to be sold or used first.

You'll need to monitor the stock at the beginning of each day and at the end of the day. If you have multiple locations, stock monitoring becomes more complicated and needs careful attention.

Effective restaurant inventory management will show you how much time the remaining stock will last. It'll also help you to monitor raw material usage, forecast, and create future orders and supplies.

Analyzing the demand and the inventory trends is extremely important for any restaurant business. You need to stay informed about the usage of raw materials and the ingredients based on consumption.

It's important to remember that customers’ preferences change from season to season. As a result, it's hard to have an exact forecast of your future inventory.


However, an accurate list of the consumed menus will help you to monitor the usage of the ingredients during the day, week, and month. And historical data will help you create better models for predicting future outcomes.

In short, sooner is better than later when it comes to automating and tracking your restaurant inventory management.

Drastically Improve Your Restaurant Inventory Management

If you want to optimize your inventory management so you can reduce costs and dominate the competition, you need to build a system designed to optimize your resources. Depending on the size and demands of your business, that can become an increasingly complicated task.

A shortcut to success is to work with professionals who know how to streamline inventory management and procurement.

See how we've helped our clients improve their businesses and get insane ROIs by checking out our case studies below.