Restaurant inventory management is the process restaurant managers use to track and replenish consumable products, including ingredients and kitchen supplies, in real time. Well done, this practice ensures you always have enough food on hand to serve customers — but not so much that the excess goes to waste. Managing your inventory is a critical part of daily operations; implementing a specific workflow and utilizing restaurant inventory management software can help your business meet its short-term and long-term goals.
The inventory your restaurant needs can vary based on your specific operations. In general, it’s a good idea to have 5-7 days’ worth of food inventory on hand — just enough to fulfill demand and cover any unexpected situations that arise.
What are the benefits of restaurant inventory management?
An effective restaurant inventory management system is a hallmark of every successful food-service establishment. It helps you monitor and optimize every part of your operation, which benefits your business by:
- Reducing food waste. Wondering how to reduce food waste in restaurants? Restaurant inventory management prevents over-ordering and ensures ingredients are used before their expiration date so you can increase food safety and cut back on spoilage and food waste.
- Increasing profit margins. Decreasing food waste reduces unnecessary costs, which automatically expands your profit margins. Considering that most businesses in the restaurant industry waste between 4% and 10% of the food they buy, this can have a big impact on your bottom line. What’s more, you can use restaurant inventory management software to determine the food cost of each dish and set menu prices to maximize profits.
- Meeting customer demands. When your inventory matches demand forecasts, it’s easy to fulfill orders. The restaurant inventory management process also makes it easier to spot potential restaurant supply chain management issues so you can find alternate suppliers ASAP. That way, you never need to disappoint customers by temporarily removing menu items.
- Keeping customers happy. Inventory management boosts customer satisfaction by ensuring consistent pricing, predictable menu availability, and smooth operations.
How do you effectively manage restaurant inventory?
Restaurant inventory management is a worthwhile investment for every food-service business. For every dollar you spend on reducing food waste, your restaurant can save an average of $7.
Those savings go a long way in an industry with tight margins, but how do you start? Restaurant owners use a wide variety of management methods, but the most effective inventory tracking systems feature a few common best practices:
- Determine inventory turnover. Inventory turnover helps you determine how often you restock food inventory within a specific date range, which enables tighter inventory control. To find it, divide your cost of goods sold (COGS) for any given period by the average you spent on inventory (value of beginning inventory + value of ending inventory / 2). Low turnover may indicate that you have too much inventory or that your sales are slowing down; if the number is high, it usually means you’re not ordering enough product.
- Label and organize inventory. Because food products are prone to expiration, label each one with the use-by date. Then, organize the storage area so that the newest products go at the back; this ensures the items with the closest expiration date are used first.
- Keep stock levels low. Keeping just enough stock is another way to reduce wasted and spoiled food; your kitchen crew will go through the ingredients before they have a chance to go bad.
- Track wasted food. Ask your staff to make a note every time they throw out a food item. Over time, this information can help you identify high-waste inventory usage areas and adjust your ordering or kitchen workflows accordingly.
- Monitor sell-through rates. This figure lets you know how quickly you’re selling each inventory item you buy; you can use it to find the best-selling items, suppliers or brands. To calculate the sell-through rate, divide the number of units you sell in a given period of time by the number of units you started with and multiply the result by 100. In general, higher sell-through rates indicate that the product is moving efficiently.
- Train staff on inventory procedures. As a restaurant operator, it isn’t possible to track inventory by yourself. Instead, train your staff and restaurant managers to handle the inventory count; then, you can oversee the restaurant inventory process. Implement standard operating procedures and documentation practices to ensure you always have real-time data.
As you develop a restaurant inventory management system, keep in mind that every restaurant is different. You can tweak the process over time to suit your operations, ordering timelines and staff workflows.
What do restaurants use to keep track of inventory?
Historically, restaurants managed inventory tracking with spreadsheets. While this is an affordable, low-tech option, it can put you at a higher risk for error. Restaurant inventory software and other technology tools automate and streamline the process, so you can save time and increase accuracy.
Some of the most common inventory tracking solutions are:
- POS systems. Your POS system captures sales and revenue data, which is essential in determining which ingredients to order, how much you need and how often you need to schedule deliveries.
- Electronic records. Digital versions of your inventory-related records — purchase orders, invoices, receipts, delivery records, etc. — make it easier to track food inventory. If your sales are more than $250,000 annually, these records will also help you stay compliant with the Food & Drug Administration’s (FDA) 2026 food traceability rules.
- Restaurant inventory management software. Inventory software automates the food inventory management process. It’s most effective when integrated into your POS; that way, it can monitor stock levels and help you determine when to reorder. Many programs can place orders for you, handle vendor management, and provide inventory forecasting.
Inventory software is an investment; to make sure you’re selecting the right product for your large or small business, allow plenty of time for research and testing.
Reach new customers with Grubhub
Streamlined restaurant inventory management can transform your restaurant operations. It helps you reduce food waste, control costs, ensure menu availability, and keep customers happy. Once your inventory system is up and running, Grubhub can help you reach more customers and increase delivery volume. To learn how, partner with Grubhub today.