Chefs at the top of their game run diligent inventory strategies that keep things connected and organised. Here, we’ll explore what those strategies are and how you can take inspiration from them to sharpen your own.
First, let’s take care of the definitions of housekeeping. It's important that you know exactly what inventory management strategy achieves from a ground-level start.
What is kitchen inventory management?
What is kitchen inventory management and why is it so important?
From ordering, storage and the movement of stock, good inventory management ensures that inventory is consistently tracked. Stock inconsistencies will be minimised as there’d be no need to replenish low stock promptly to meet demand.
In the long run, it prevents loss and provides visibility and control over your margins while ensuring you always have the stock you need to meet customer expectations.
It's one thing to notice that your recent shipment of prawns is decreasing at an alarming rate. But it's another thing to know the reason why. Maybe they were used to turn a popular menu into countless satisfied customers. If so, fantastic.
Ultimately, kitchen inventory management is a restaurant costing game-plan that affects your restaurant's food costs, profitability, cash flow and revenue. In that sense, an inventory management system should help you attribute every ounce of those prawns to a price point.
Negative cash flow and food wastage stem from having too much cash tied up in expired inventory. On the other hand, when inventory fails to meet customer demand, customer loyalty pays the price.
How do restaurants manage inventory?
With so much riding on inventory management, you may find yourself asking “how do restaurants manage inventory?”
Depending on the size and type of your restaurant, you may take inventory differently. The most common is the manual inventory process. However, more chefs and restaurants are turning to kitchen inventory management software to streamline the process while getting better results with less time and energy investment.
Manual restaurant inventory management
Chefs that have learned inventory management before restech (restaurant technology) prefer to do things the old school way. This means referring back to the inventory file that has all the manual entries from the period before.
Here are six common inventory steps that experts recommend when following a manual process.
Step 1 - Create a table
Your inventory table should consist of five columns across the top. The columns should have the following headings: item, unit measurement, current count, unit price and total cost.
Step 2 - List items
On the inventory table, list all of the items in individual rows. You may find that grouping similar items will make it easier.
Step 3 - Record the amount
Using the logical unit of measurement, record the amount of an item. A good example to follow is listing hamburgers by grams or by the number of 1kg packages.
Step 4 - Record price
Document the unit price for each item in stock. A rule of thumb is to use the recent price you’ve paid for that item. This brings into view the current cost of goods so that you know how much is needed to replenish them.
Step 5 - Determine the cost
Multiply the inventory count by unit and by the last price of the item.
Step 6 - Use par inventory sheets
Par level is the minimum amount of inventory a restaurant sets aside to meet customer demand. It’s meant to handle unexpected inventory fluctuations that come as a result of demand increases and restaurant food waste.
A par inventory sheet is the document that shows how much of an item the restaurant always wants on hand and when to purchase more.
Shelf-to-sheet is a common manual inventory management system that chefs use to keep on top of their inventory. Shelf-to-sheet entails ticking off the stock in the stockroom off the inventory taking form. Other employees are then assigned to double then triple-check the stocktake. In essence, stocktake is performed 3 times and though it sounds accurate, it most often isn’t.
Mistakes after a long day are inevitable no matter how many people check. It’s very easy for employees to count the same number entered by the stocktaker before getting done and going home. This error-prone method is detrimental to your cost of goods sold (COGS) which if calculated incorrectly, affects every inventory decision going forward.
Interested in cutting 60% off your stocktaking, reducing erros? Why not get multiple people to do stocktakes simultaneously in different areas - kitchen, bar, cellar? Book a demo with us today!
The chef’s guide to kitchen inventory management
1. Design your menu
There’s an art to restaurant menus. They should be easy to read and understand, appealing to the eye yet not pushy. The idea is to lead the customer down the menu with a balance of imagery that you can almost smell, coupled with words that you can almost bite into. The opposite to that, is poorly taken or unprofessional images mismatched to words that confuse the reader. Or, a font that's illegible or unwelcoming.
The star of the menu, are of course the dishes. Depending on the type of restaurant or chef, they may opt for dishes that have similar ingredients to keep their cost of goods (COGS) low. This could be done by tweaking dishes to include some of the ingredients in other meals.
A restaurant that predominantly serves gourmet meals, may have a different approach to designing a menu. With a variety of meals that may not necessarily share the same ingredients, they would have to focus on over or under stocking.
Whichever type of restaurant yours falls under, your aim should be to manage your stock so that food wastage is minimised and profits are realised.
2. Know how profitable your recipes are
With profitability as the compass, you need to determine if the dishes you’ve chosen for your menu are a hit or miss.
Most head chefs calculate recipe costing once and never again because of how time-consuming and arduous the process is.
The typical manual process involves:
- Making a list of all the ingredients
- Calculating the ingredient prices and quantities by considering the unit of measure from the purchased amount to the serving amount
- Tallying the individual ingredient costs and factoring waste and labour
3. Create your opening inventory
Beginning inventory can clearly indicate if there’s been a shift in the business. For example, if the beginning inventory has decreased, it could be a sign that sales were good in the previous period. However, if there’s a significant decrease and the sales don’t add up, it may show that there’s an inventory problem.
Your initial stocktake forms the basis of your opening inventory. The equation used to calculate your opening inventory is as follows:
Opening Inventory = Cost of Goods Sold + Ending Inventory - Purchases
4. Track sales and usage
Theft and food returned from clients are examples of daily problems that could result in massive losses over a week. Not to mention the staff meals that also need to be accounted for. Therefore, keeping track of sales and having an up-to-date inventory is essential.
Chefs keep on top of the sales and usage by completing inventory close of business every day. In this way, they’re able to keep an eye on irregularities that if left to fester may be seen as massive losses over time.
5. Know when to order items
Imagine this domino effect: a regular customer who frequents your restaurant two to three times a week, is deprived of his regular meal when the stock is mismanaged. Not only will he not want to support your restaurant, but he could also deter his network from supporting your restaurant as well. Similar events with other customers over time could ruin your business.
Profit follows order efficiency. In other words, we could say that it pays to have an ordering system that avoids customer conflicts when running out of items.
TOP TIP: growyze allows you to set order reminders to suppliers and alert you when stock is getting low. You’ll never have to worry about ordering problems again!
6. Monitor the profitability of your kitchen
A restaurant in the dark could potentially be a restaurant nose-diving. That’s why having an overview of your inventory from purchase to sale, will take you from good to great. At a glance, you should have access to analytics and insights that show what you’re doing right and where you could improve.
Inventory management software for chefs
The old school way of inventory management is time-consuming and tiresome. Not to mention the extra admin that comes with an outdated pen and paper approach. To succeed in this inventory management process would need a photographic memory at all times so that zero errors are made. Something that is near impossible.
That’s why more and more restaurant chefs are turning to inventory management software like growyze. Our robust software provides accurate analytics that are conveniently accessible. Your mobile device performs stocktake and sends you order alerts and on-the-money cost of goods sold (COGS) figures – putting you at the helm of your restaurant's profits.
If you’re ready to put the pen and paper inventory management system to rest, book an obligation-free demo with us today.