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The Ultimate Guide to F&B Inventory Management

F&B inventory management is essential to successful restaurant management. It sits at the bottom line of restaurant management because it partially affects other factors such as revenue and losses.

Proper restaurant inventory management is more than just managing your stock and supplies, it helps you make better purchasing decisions as you have an idea on which menu item is selling quickly compared to others. This way you’ll minimize your food waste, and at the same time, you’re keeping track of your profits and losses while consistently serving menu items with fresh ingredients.

If you’re running a takeaway or you’re offering an online ordering service, you might want to start focusing on your inventory management. With all of the additional orders you’re getting, you need to have a better grasp on how you can manage your stocks and your profit.

This article aims to talk about all you, a restaurant owner, need to know about restaurant inventory management and why it is important to your restaurant and takeaway business.

What Is Inventory Management

More than just monitoring your stocks and supplies, proper restaurant management is accurately monitoring and managing the use of each supply and ingredients, in the proper quantity in any dish, with proper menu pricing.

Types Of Restaurant F&B Inventory Management

Par Inventory Sheets

Some restaurant managers prefer working the traditional way, Par inventory sheets are spreadsheets that help restaurant owners and managers to identify in which event additional inventory would be required. It also determines what and how much should be ordered based on what’s on their supply.

Inventory Management Software

This type of inventory management provides more accurate inventory information. It is a handy technology that records and saves every file needed for your restaurant inventory management. Some offer features for bookkeeping.

Here are the essential tasks a restaurant inventory management software is expected to perform:

Inventory control

Manage and control the maintenance of the right amount of inventory for each merchandise. Helps you prevent over-or-under-stocking, especially during seasonal and peak periods.

F and B Inventory Management

It also allows you to identify and categorize your merchandise and entire inventory by type, serial number, and location. You’re also able to manage stock returns efficiently through this feature.

Inventory barcode scanning

Provides a more accurate and faster process of collecting, storing, and organizing your merchandise online inventory data. It’s an automated process that identifies and labels products instantly.

Inventory notifications

Additional operational and management control is the main goal of this feature. It notifies and alerts you and your team about your inventory levels and shipment delays. You may receive it through an email or SMS. This is integrated into inventory management software because it allows owners to prepare better sales forecasts, product planning, vendor management, and logistics reports.

Multiple outlet management

You can now manage multiple inventories through a single platform. One of the most essential features of an inventory management system is the ability it gives to restaurant owners and managers to monitor and track inventory of their different locations over a single system.


Maximize your whole day by not sitting in front of your laptop all day and monitoring your inventory. Have hassle-free inventory management even if you’re out of the office by having a food and beverage inventory management system that can be accessed through the phone.

Ingredient and recipe management

Group and categorize your merchandise by specific use and recipe. It also keeps you updated about the quantities of ingredients needed for your recipes, and manages your reorder process as needed.

Purchase records

Gives you a better view of your purchase and order records. Gives you a finer analysis of what’s popular with your customers.

Here are some of the features you might want to add to your inventory management system.

  • Vendor and Tax Management
  • Audit and Waste Tracking
  • Trend analysis

Factors To Consider In Selecting An Inventory Management Software

  • Ingredient-tracking Level
  • Order and Supplier Management
  • Integration
  • Usability
  • Price
  • Customer support

The process of taking your restaurant inventory may vary on which type of inventory management you’ll get. And while par inventory sheets did their job, it won’t hurt to utilize a technology that could help you produce a more accurate result.

Important Terms You Need To Know

There are few terms that you need to familiarize yourself with if you want to work on your inventory management.

F and B Inventory Management

Sitting inventory – This is the amount of your in-house merchandise and commodities. It can be referred to as dollars or physical amounts. Consistent tracking and using one unit of measure is the key to manage your sitting inventory.

Depletion – Depletion is the amount of merchandise or its dollar-worth, that’s used in a specific period. You can track your depletion on a daily, weekly, or monthly sales basis.

Usage – This is what you get when you divide your sitting inventory by your chosen depletion time. It tells you how long you can utilize the merchandise that you have in-house.

Formula: Sitting inventory / Average depletion = Usage

Variance – It is the amount corresponding to the difference between your merchandise cost and its usage cost. It is the value that’s unaccounted for. For instance, if the inventory records that you’re down $300 worth of salmon, but your POS system shows that you only made $250 worth of salmon sale that day, then you have a cost of variance that amounted to $50.

Common Inventory Management Mistakes to Avoid

Time for you to do an inventory health check-up on your restaurant and see if your restaurant staff are practicing any of these common mistakes that negatively impact your restaurant.

  • Instinctual inventory management. Always rely on facts and data if you’re making purchases or any important business decision. Instinct may help you at some point in your life, but don’t rely on it if it’s purely.
  • Faulty endorsement of internal orders. It is important to keep all your records accurate. If there are transactions made by your employees with the other employees, make sure to account for it on your inventory system. 
  • Poor staff training. It is best to involve your whole restaurant team with this type of training. It doesn’t matter if they will not deal with inventory because it’s not on their job description, but having an extra eye to check if proper practices are being observed will be helpful in the long run.
  • Inadequate organization. Inventory management is not the most exciting task, but it will be a tough one for your team if you don’t implement strict rules for the organization of your stockroom, freezers, and fridges. Storage malpractices lead to the production of food waste and food costs.
  • Inefficient planning. No matter how fast you can produce reports with accurate data, your restaurant is not going anywhere if you don’t start planning. If you’re having a hard time creating a workable plan, you can involve your staff and consult them about their insights regarding inventory management. It should be collaborative work between you and your staff. They need a guide on how to carry out their tasks effectively.

Benefits Of Restaurant Inventory Management

Enjoy the listed advantages of having proper inventory management:

  • Determine the health of the restaurant’s operation. You can catch and avoid small errors before they come back as bigger concerns. If you observe effective inventory management practices you can identify the errors, such as double-ordering and overstocking which often leads to loss of profit, and take action before it badly affects your overall revenue.
  • Balances cost of ingredients against incoming profit. Managing your inventory provides you a better insight into your food costs and profit. If you start implementing effective inventory management, you can maximize every purchase you do.
  • Organizes contact information of suppliers and purchasing records. Being a restaurant owner, you’re more focused on bigger tasks than organizing and admin tasks. While it is understandable on your part, you should not underestimate the power of organized data. Organized records and contact information helps you to track and monitor the process of inventory on your establishment. It also helps you with urgent situations, such as if you need an emergency to restock, you can reach your suppliers easily.
  • Monitors the inventory to prevent and catch inside theft. Better tracking and management of your inventory allows you to prevent additional and unnecessary food costs caused by inside theft. While there are many ways your staff can hurt your profitability, inside theft is liable for 75% of inventory shortages.

And there are many ways your restaurant employees are contributing with inside theft, it’s not just taking the ingredients or the food at home, but snacking outside their crew meal, giving unauthorized free meals to others, and taking merchandise directly from the stockroom are all part of inside theft.

F and B Inventory Management

Protect the 4% of your revenue by preventing inside theft concerns through inventory management fitting your restaurant’s concept.

  • Helps identify menu item profit margins for improved menu management. With the help of the sales and forecast reports your inventory management software can produce, you’re now capable of conducting a deeper analysis of your menu. This is advantageous for you because you can now identify the menu items that are hurting your profit more than boosting your revenue.

Then, you can now innovate your menu in ways that maximize every ingredient that you have in-house. Or better, since you now have the data of the profitability of every menu item, you can eliminate or give less priority to menu items that are not working for your restaurant business.

  • Helps control the flow of the inventory and purchasing process. There’s less risk of over-and-under-stocking. You’re helping your team, especially the ones that handle the inventory, to have full control over your inventory and purchasing process.
  • Provides alerts and notifications to keep your staff aware of the inventory level. Restaurants are a busy field. Trying to operate it can eat up your time, energy, and resources, but it demands you to multitask and be flexible enough to manage different departments at the same time. Be at ease by crossing management of inventory off your list, because if you incorporate an inventory management system, you’ll be able to receive notifications and reminders about your inventory levels.

This keeps your restaurant staff updated about the status of your inventory, and they can take action right away if there are inventory concerns that arise.

  • Better food cost management. Since you’re now updated with accurate inventory reports, and management of stock levels and purchases are easier, you can also start managing your food cost and waste. Proper inventory management provides the first step towards the fight against food waste and food cost.

Save your restaurant twenty-eight to thirty-two percent of revenue by observing proper inventory management practices. 

  • Produce accurate useful reports. There are different types of reports that are essential for every department in a restaurant, if you’ll focus on Inventory Management, there are three main reports that you need to include to have seamless management of your inventory.
  1. Profitability reports – Analyze your profit margins for each item you offer, and better understand your cash flow. Make sure to compare your outcoming cash flow against your cash inflows.
  1. Stock reports – This report includes your current stock levels, helps you track inside food theft, and allows you to see if your restaurant staff are following your imposed food portions.
  1. Sales reports – This report helps you to identify your most popular menu items, and what part of your menu is not appealing to your customers. From there, you can make sure that you have the optimal quality of products needed for your most popular menu items.

Effective Practices For Better F&B Inventory Management

One of the main reasons why there’s a great need for proper restaurant inventory management is to minimize, and if possible, prevent food waste. Food waste is always an issue for restaurants and takeaway. Each year, food waste represents a cost of £682 million in the Restaurant Industry alone.

As a restaurant owner, it is your job to take action on this issue. Keep your food waste in check by following these effective and best practices for restaurant inventory management.


The First In, First Out or FIFO method is one of the most simple yet effective ways to manage your restaurant inventory. This approach lets you use the ingredient that arrives first, so that food spoilage would be prevented, this applies to both dry and raw supplies. Try to put a label on your supplies to keep track of their shelf life and expiry dates.


It won’t matter if you’ve formulated a streamlined and perfect process for inventory management if your staff doesn’t know how to apply it. Make sure that your staff is well-informed on how you expect the process of inventory management would be. Keep in mind that they are the ones who will handle most of the labor around your restaurant.

Inside theft is also one of the culprits of poor inventory management. Make sure that you limit the access of your inventory to your staff whose roles require access. Provide different credentials for better tracking of activities.


A little help to improve the workflow is always a huge thing for restaurant operations. One of the basic features of F&B inventory systems is a basic inventory management system. But if you want to have a more focused tool, you can also integrate into your restaurant EPOS system or your restaurant delivery and takeaway software a restaurant inventory management software and see how it works wonders for your operations.


Either you or you pick a staff who will do regular auditing of your inventory. Though you already have restaurant inventory management software, it is still a good practice to regularly check your stockroom and see if you’ve missed something. Keep in mind that the information and details on your software will rely on your input.


Whether you’re using the par inventory sheets or you have inventory management software, it is important to always study and analyze the data it produces. This is how you can properly stock up your inventory and prevent overstocking or understocking ingredients. You’ll be more informed and make better business and purchasing decisions.

F and B Inventory Management


If there’s one thing you should learn in running a restaurant is that not everything goes according to your way, that’s why having a backup plan to pick you up is a necessity. This goes for your restaurant inventory management as well, you should never rely on a single inventory. A single mishap on your inventory management may disrupt the whole operations of the restaurant.


Restaurant operation is composed of different tasks that are interconnected with each other, if one task fails, there’s a great chance of disrupting the whole operation. This is how important restaurant inventory management is, though it may be the most boring task in restaurant management, it serves as the backbone of the kitchen operations.

Looking for a reliable EPOS system to integrate your inventory management software? Let us help you, talk to us.