How to Create a Food Inventory Management System that Improves Profit Margin (and Sleep)

book with question mark icon in white with red circle outside
How to Create a Food Inventory Management System that Improves Profit Margin (and Sleep)

Running restaurant stock orders smoothly and consistently is hard. Especially when it all hinges on having access to accurate food inventory data.

“Did I order enough?”
“Did I overstock?”

You can never be quite sure until it’s too late to fix. Meanwhile, the nagging doubt eats away at you at 4am. The uncomfortable industry truth is that restaurant managers face these scenarios more often than not.

With profitability hinging on notoriously fine margins, a lot rests on food-inventory accuracy. This is why it’s crucial that your food inventory management system is consistent, reliable and easy to manage. 

So what does an effective food inventory management system look like? We promise to show you the way. First, let’s touch on some of the key benefits of implementing a better food stock control system.

Benefits of having a food stock control system

Food inventory management is your system for tracking the stock that you buy, the stock that you sell, and what’s leftover.

A foolproof food inventory management system provides insight into how much stock you have on hand at all times to plan better, calculate food costs and spot potential issues with waste and pilferage.

Let’s get into some of the important details. 

Keep track of waste (and reduce it!)

Managing your food costs and controlling your food inventory go hand-in-hand. In fact, according to Eat.Drink.Sleep magazine the Hospitality and Food Service are responsible for 22% of industry’s waste. The publication said that 97p is lost from each meal served that could be avoided. 

To combat this, you need a strategy that allows you to be well-informed at all times.  From implementing reliable stock take procedures like FIFO (first in, first out) to staying on top of your sales data. Ultimately, the goal should be to have control of stock levels so that you know how much stock to buy before using more.  

Lower the cost of goods sold (COGS)

Food costs lie below 35% of the total cost of the restaurant. This means that anything you can do to lower the cost of goods sold, helps you in turn to improve your profit margin.

You can lower your COGS by only ordering the exact quantities you’re going to be able to sell for any given period (therefore reducing waste), adapting your recipe management to create more profitable recipes and/or increasing the prices of your best sellers. Basically, you have options!

Read more on how to calculate COGS for your restaurant.

Track your stock in real-time

A strong food stock control system means you’re aware of what inventory you have available, and when you’re running low. Not only does this improve operational efficiency (no staff selling burgers when you’ve run out of beef patties!), it also helps you keep things profitable. By minimising over-ordering and using older stock first, you’ll reduce waste and get a handle on your restaurant’s costs.


How to create a food inventory management system

With the risks associated with mismanagement of your food inventory and the benefits of having an inventory management system as your foundation, you can create a food management system. This entails implementing a procedure, ordering only what’s needed, using the FIFO method and keeping an eye on waste.

1. Implement a food stock control procedure

Think about your food stock control procedures like how your chef prepares a meal. The result is clear and so is the flavour profile but the process to achieve it needs to be laid out so that you get it just right. 

A stock management procedure is an essential aspect of creating a proper food inventory management system. Without it, you’re running your restaurant blindfolded and quite possibly your profits into the ground. 

To effectively create this procedure there are three things to determine: 

  • How often you intend to run stocktakes and the procedures needed to ensure this happens with the right team members, at the right time
  • How you’ll maintain accuracy and the physical process you’ll use to log stock (whether barcode scanning in a system such as growyze, or sheet-to-shelf pen and paper)
  • Where you’ll store your entries so you can refer back to them as and when the time arises

growyze effectively records and tracks your inventory in one place so that you have an aerial view of your food inventory at all times. Complete checks in record time with a system that allows staff to do stocktake simultaneously and error-free. 

2. Only order food items that you need

It sounds simple, doesn’t it? That’s because it is, but only when you have a good stock management procedure in place. 

Say, for instance, that you’ve found a surplus in ingredients after stocktake that are on the brink of expiration. Instead of ordering more stock, you can creatively find ways to incorporate what you already have into dishes before the stock expires. 

Only ordering the food items you need works for both fast food inventory management and fresh food management.

In growyze there’s also the ability to set up order reminders. This means that you can ensure you’re ordering in time, and before supplier cut-off dates. Reducing the “panic buying” that can occur when you’re close to running out of items, and ensuring you always only order the food stock that you need.

3. Use the FIFO method

To reduce waste, organise new deliveries and stock with the first-in, first-out approach. That means that whatever stock is received first is stored on shelves that are close to the door for easy access. Another trick is making use of containers specifically designed for FIFO dispensing. 

4. Keep an eye on food waste

A food waste sheet is just as important as an inventory sheet because it shows you where the inventory not accounted for by sales alone is going. Solutions for what to do with ingredients that need to be used quickly can be made, resulting in less wastage. 

A food sheet over time will reveal which foods spoil quickly so that you can buy less of them. An effective food waste sheet should include columns for time and date, item, amount of weight, the reason for waste and the employee's details making the entry. 

Read more on how to improve managing waste in your restaurant.

5. Calculate recipe profitability

Money gets tied up in inventory in almost every restaurant. Your head chef has the idea to create a gourmet dish with ingredients that are hard to find and, for the most part, expensive. It doesn’t sell well but it’s on the menu and you still have ingredients in stock.  

Calculating recipe profitability can only happen once you know the total cost of the recipes on your menu. A food stock control system gives you the flexibility to plan your menu for profitability.

If that gourmet meal your chef recommended isn’t performing well, remove it from the menu completely. If, however, things aren’t that drastic and the menu item is salvageable, order fewer ingredients in the future, replace expensive ingredients with cheaper ones or alter the recipe to not include these ingredients. Learn more how to make your food menu more profitable.

When your food costs are optimised, your restaurant will achieve maximum profits. With the knowledge at your fingertips, you’ll easily see how each order impacts your profits. 

6. Involve your team in stock management

Imagine a hectic night of service where the restaurant was at 90% capacity from morning to night time. Each server has waited on a minimum of 20 tables each for the day. With the energy at an all-time low, you have a stock take scheduled.

Without a quick and easy stock management system in place, your team is going to be flagging and counting accurately may be near-on impossible leading to increased errors.

But with the right system in place for stock management, where team members can easily scan items using their smartphone and work together simultaneously at logging products, you’ll get an accurate stock take completed in record time. 

By making stock take a team sport instead of a one-person exercise, you make each member in the team accountable for accurate results.

How often should you complete food inventory?

Like with anything, when you follow the best practice you very seldom will go wrong. When it comes to completing food inventory, answer the following question:

Do I need a daily or weekly food inventory sheet?

The answer to this question will lie in what your restaurant sells and how busy it is. If you’re so busy there’s a waiting area and a queue that goes around the block then chances are you’d benefit from a daily food inventory sheet.

If you want to keep good control over your stock regardless of how busy it is, you may benefit from weekly stocktakes. Once you’ve identified your restaurant as a daily/weekly inventory-taker, make provision for this procedure to happen at the same time, when your restaurant is least busy.

Knowing what figures you open and close with will help you plan with a profit mindset instead.

Check out this 5-minute guide on how to do your inventory better and faster.

Make food inventory management a breeze with growyze

With the right tools, managing food inventory can become a breeze. You’ll do more in less time, maintain better accuracy and strengthen loss aversion.

growyze’s point-snap-and-tap stock management app is great for easily controlling your margin gap. Try saying *that* after a glass or three.

growyze puts smart inventory management on your smartphone and in the palm of your hand. It’s quick, error-free and empowers you with business analytics for profitable data-assisted decision making.

At every stage of your inventory management, from stock orders and vendor management, growyze is by your side, helping you run your business with precision and accuracy. 

Book a demo to have a walkthroug how growyze can transform your food inventory management and loss aversion.

By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.