Restaurant Inventory

Management 101

The Restaurateur’s Ultimate Guide

& Restaurant Inventory Template

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Not taking restaurant
Food spend is 1/3 of the costs of your restaurant. Not having a firm grip on
your cost of goods sold by taking inventory means you get a false picture

inventory is like
of your restaurant’s health. Then, there’s having your money tied up in
perishable items, which eventually go to waste. Not only is inventory critical
to running your restaurant, it’s critical to your daily processes.

flushing money down There’s no way around it… taking inventory regularly

the drain.
with a proven process is a must for running your
business.
However, finding the time to work on inventory each day can feel
overwhelming. Managing your restaurant’s inventory is not a one-time thing,
or even a once a week task, it is an everyday task.

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 R E S TA U R A N T I N V E N T O R Y M A N A G E M E N T 1 0 1
Whether you already own a restaurant,
or you’re just getting into the process of
opening one, this guide is the only resource
you need when it comes to how to manage
your restaurant inventory and track it
properly. Bonus: It includes a restaurant
inventory template, too!
Inside, you’ll find:

An overview of what restaurant inventory looks like

An in-depth explanation of how to manage your

restaurant inventory

A downloadable restaurant inventory template you

can use today

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What Is Restaurant
Inventory Management?
What if you never had to 86 an item in the
middle of the dinner rush again?
Regular inventory is more than just about taking
a count. When you take restaurant inventory, it
almost guarantees you won’t run out of stock
and food won’t go to waste. Regular inventory
is the most accurate way to get a picture of your
restaurant’s health.
What is Inventory Management?
Long story short, restaurant inventory is a loss prevention tool. It’s how you
measure how profitable your restaurant is. It’s also how you can account for:
• Supplies that you need/come into your restaurant
• Menu items that go out of the kitchen
• Food ingredients leftover
Poor inventory management leads to food waste, a food cost you cannot
control, and ultimately, inconsistent profitability in your restaurant.
When you cannot understand how much inventory has been used or unused,
you cannot truly determine your restaurant’s earnings in a shift, week, month,
or year. With the right inventory management, you can understand not just
your profit, but your menu’s success, your guest satisfaction, and even server
performance!
Restaurant Inventory Basics: Terminology To Know
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Now that you understand a bit about what restaurant inventory is, you’ll want
to understand how to talk about restaurant inventory management. Here are
the terms you should know.
Cost of Goods Sold (COGS): COGS is the cost to create the food and
beverages that you sell to your guests. This number represents your
inventory during a specific time period.
Here’s how you calculate that:
Cost of Goods Sold (COGS) =
Beginning Inventory + Purchased Inventory - Final Inventory
 5 Ways To Control Fo
If you want to become a master of inventory, you can’t
Food cost percentage
od Cost Percentage
just walk the walk - you have to talk the talk. management. So here
is often one of the bigg
est
’s a quick word on that pieces of restaurant inventory
Here are a few inventory terms you should be familiar with. …
Do you spend each
month baffled at ho
you are spending on w much 2. Use seasonal fo
Sitting Inventory: This is the dollars worth of product (ingredients, etc) that food for your restau ods: Often seasonal
or do you have mor rant less expensive beca foods are
e food waste than yo use of their abunda
are sitting in-house. each month? u’d like during their harves nce
t season– think pum
zucchini, and so man pk in,
Depletion: This is the amount of product (or dollars worth of product) used Food cost relates to y more! Maximizing
how much a restaura th es e opportunities will on
in a specific period of time. This time frame can be daily, weekly, or monthly. spends on ingredie nt not only help you
nts versus the actual keep your cost in ch
menu price for your restaurant ec k, but also provides
This is often calculated using data in your restaurant POS. guests and revenue an opportunity to po
in. Calculating your you take ssibly work with loca
food costs is an easy suppliers and offer l
Divide your net food equation: 3. Menu se asonal menu items.
Usage: The amount of product (or dollars worth) of sitting inventory divided purchases by net fo changes: Are there
which brings you to od sales, dishes that guests
by the average depletion in a set period. your cost of food. or de r infrequently and/or
take up a large
portion of your food
costs? Reworking th
Variance: The difference between your product cost and the usage Depending on the ty menu a bit could he
lp the chef capitaliz
e
amount cost. pe of what’s available and
drop dishes which
e on
restaurant, the avera as popular, and may aren’t
ge food weekly specials inst
be introduce them
as
Food Cost Percentage: The percentage of your sale price that makes up costs should be no m 4. Maximize each
ead.
the cost of your ingredients. ore than ingredient and prod

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uct: Are
30% of your bottom you using your ingr
edients to their full
line* Could food scraps
like veggie peelings
extent?
be
*Important note: thi used in other ways,
Food Cost Percentage = establishments.
s percentage is often
used for fine dining
5. Don’t rely on on
like many stock?
e vendor: While shop
(Beginning Inventory + Purchases – Ending Inventory) around for best pric ping
So what if your perc es can be a time-
entage is higher than consuming busines
÷ Food Sales The secret lies in m 30%? s, it’s important to kn
aintaining a well-org w hat the competitive ow
efficient kitchen, w anized, prices are for produc
ith all staff committ as well as what fees an ts,
keeping costs and ed to d charges are built
waste low. Here are into your final bill. So
tips to keep your fo a few quick me vendors may ch
od cost percentage fre ight or delivery fees arge
Inventory Turnover Ratio: Shows the rate that inventory is used over a in check: that other vendors
may waive if you bu
specified period of time. 1. Use up what you lk purchase items fro
have and order as ne th em. All of these bill m
Are you consistently eded: amounts affect the
ordering multiples bo ttom line of food co
Waste: This is food waste before it is even served to your guests. Pre- same product but on of the st.
consumer kitchen waste could be improperly prepared food, spoiled food, ly using it a few tim
week? You could dr es per Dealing w
op your costs by ke ith keeping food co
or making too much. This type of waste accounts for up to 10% of your food. on top of the frequ ep ing something all restau st down is
ency of use and usin ra nt ow ne rs must assess
what you have in th g up routinely in order to
e dry pantry. run an effective and
Yield: The percentage of product that is actually being accounted for in profitable establish
ment.
sales vs. the theoretical amount that your restaurant POS says should have
been used.
How To Manage Your
Inventory In 4 Steps
Whether you’re a restaurant inventory
management pro or it’s your first go at figuring
out this process, we’ve put together your step
by step guide on how to manage your inventory
accurately.

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Step 1: Get Organized

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Before you can even begin to count the items you
have, you need to get organized. Take a look at the
following places and get them in shape:

—— Meat cooler
—— Produce cooler
—— Dairy cooler
—— Dry storage
—— Prep area
—— Liquor storage

The First In, First Out (FIFO) method is your best friend here. Sell the items
you received first. Use the ingredients you received first. Move those to the
front of of your shelves. This leaves room in the back for new inventory/
deliveries.
Step 2: Get Counting
It’s about when and how you count. Everyone can
count how many cups are in a gallon. But you need to
be making sure you are counting at the same time on

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the same day of the week or month. Designate a day
for inventory each week right now… we’ll wait.

• For the most accurate count, schedule inventory before

open or after close.
• Count your inventory on the day before your deliveries.

How To Count Inventory

Yes, you need to learn to count again. Here are 4 steps.
• Look: At the items on your shelves
• Count: By their proper unit of measure (e.g. bags, units, cases)
• Combine: When you can, combine units of measure
• Record: Keep track of your count on inventory sheets or in inventory
software

Bottom line: Count what you’ve got based on what is actually on the shelves,
not by what you’ve got listed on a piece of paper somewhere.
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Step 3: Price Lookups
Once you understand your inventory, you need to
know what you paid for each item.

It’s important to use the prices on your most recent

invoice. Remember: Prices can change dramatically
from week to week depending on vendor, seasonality,
and other factors. And knowing the most accurate
price helps you forecast your COGS properly.
 Calculate Your

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Step 4: 
COGS and Usage
You know this was coming. Now that you know your stock
and your pricing, you need to understand your COGS.

Why? Knowing and understanding your COGS gives you

useful information:
• How much of your budget went to food cost for the day,
week or month
• How much are your specific ingredients costing you?
• How much are your specific suppliers costing you? Can
you review them and negotiate?
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Save Money On Restaurant
Inventory In 3 (Plus 1) Steps
By taking regular inventory, you will save time in the
long run, and a whole lot of green (and by green we
mean lettuce… oh and money of course!)
The most successful restaurateurs keep track of their
inventory by following these three steps.
Step 1: Take inventory frequently.
• Some items need to be done daily and some twice a week. It truly
is a science and depends on the type of food item.
• Keep a schedule. For example, if you have more energy and hands
before open, take inventory each morning. If you are a night
owl, do it after close. Many restaurateurs think it is alright to take
inventory while on the clock, but this will be ineffective because it
varies so much from day to day.

Step 2: Clean and organize before even starting.

• What restaurateur starts work in a messy kitchen? Throw away
expired foods, and group similar foods together.
• FIFO isn’t just a type of accounting. Implement the first in first
out basis. Rotate your goods, and explain to staff the order in
which they should be using produce.
• It does take a team. Train a few trusted staff members on your
best inventory practices. This will also help you ensure that you
are counting properly and check your work.

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Step 3: Keep a record.
• Keeping organized takes time, time in which you don’t have.
But think about it like this, if you spend just a few more minutes
keeping up with an organized inventory process, you will save
time and money in the long run.
• Use count sheets or templates to keep track of your process.
This is good, not only while taking inventory but as a log to look
back and build off of in the future.

…. And on the template note.

Here’s your “Plus 1” step!
Not sure how to start
tracking your restaurant
inventory? Wishing
you had a restaurant
inventory template
or spreadsheet?

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 Download the Restaurant Inventory Tracker

Wish granted!
Use this template to keep track of your restaurant inventory – track your COGS
and more. Review to see where you have variances, make menu decisions, sales
and expense adjustments, and have a better command of your financial wellness!

D O W N L O A D T H E T R A C K E R T E M P L AT E 

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Templates are
nice, but automatic
tracking and
reporting is better….
Today, the most common practice for tracking
inventory is pen, paper, and spreadsheets.
With hundreds or even thousands items to
track, it can up to a full work day for a manger
to validate inventory numbers between
theoretical and actual inventory, and doing so

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by hand in a notebook or Excel spreadsheet
leaves room for human error.

There’s no way around it… inventory

is a long, manual process. But it doesn’t
have to be.
Streamline BOH.
Reduce Waste.
Cut Food Costs.
Upserve Inventory enables you to stay in control of Back of
House operations with real-time food costing, automated
inventory management, and 1-click purchasing.

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Stop spending hours reconciling and managing your inventory. Automate the
worst parts of inventory management in a single system - from inventory tracking
to restocking, purchasing, recipe costing, and accounting, across the entire
restaurant group.

SEE UPSERVE INVENTORY

Restaurateurs using Upserve Inventory

saved 30-50 hours a month!

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