February 13

Tap Into The Optimal Power Of Inventory Management


Optimized Inventory Management Is Vital in Your Restaurant. MarginEdge Shares Best Practices for Implementing Inventory Management Processes 

Inventory management is familiar to most restaurants, but all too often, it becomes a mundane task that falls by the wayside. 

Inventory is essential to a thriving business. It provides valuable insights into ingredient usage and calculates food costs while mitigating waste and shrinkage. This saves you time and money, so you can grow profits strategically. 

To inspire you to make inventory more manageable and consistent, our friends at MarginEdge, a leader in restaurant management software, gave some tips on the best inventory management practices. 

What is Inventory Management, and Is it Necessary In Your Restaurant? 

In simple words, inventory management is the process of ordering, storing, and selling goods and services, but it can do much more than that.  

“Implementing inventory management is the only way to have a truly accurate understanding of your food costs, meaning the ratio of your cost of ingredients (food inventory) and their revenue when sold as menu items,” Rachel Markus, Content Marketing Manager at MarginEdge, tells us. 

In essence, inventory management is at the core of all restaurant businesses. 

It’s the tool that makes pricing your menu for profitability possible while allowing you to monitor trends and make adjustments over time so your business can stay competitive and lucrative.

Also, proper inventory management in a restaurant ensures you order precisely what you need to prevent depleting or wasting ingredients. 

“It can help you order more accurately by preventing over/under-ordering, which can lead to expirations/waste or last-minute pick-ups from the corner store, which are often more expensive than what your vendors charge for the same items,” Markus explained. “It can also prevent disappointment from guests due to running out of products.” 
So, all in all, reviewing and implementing processes to optimize inventory in your restaurant is a vital component of staying profitable. 

If you don’t feel like you’re tapping into the full potential of inventory management, it’s worth investing time and money to implement processes that make it valuable for your business.

Tips For Improved Inventory Management 

Taking inventory isn’t anything new for most of you reading this. 

Still, considering it’s such an integral part of running your business, it’s always wise to review the processes you have in place and look for opportunities to improve. 

To help you out, Markus and the team at MarginEdge gave us a short list of best practices everyone looking to improve their inventory management should consider.

  1. Evaluate Resources and Adjust For Consistency
    “More frequent inventory counts will give you a more accurate view of food costs, but they might be effort/time-prohibitive depending on your restaurant,” Markus shared. “The best process an operator can create is one that’s sustainable. Understand your resources (labor) before committing your team to taking more counts.”

    Before you make an inventory plan, you want to be realistic about how much time and effort you can commit. If you have an extensive menu that requires a lot of ingredients, doing monthly counts might be more sustainable for your operations than doing a daily or weekly count. 

    It’s okay to start with less frequent inventory counts and then adjust to increased frequency if you have the resources to support the change. Additionally, Markus said that taking more minor counts for specific areas (walk-ins, pantry, bar, etc.) can still be insightful if doing a single large inventory doesn’t work for your team. 

    “Consistency is the most important practice to implement, simply because you want to be able to compare apples to apples,” Markus explained. “So if your restaurant does monthly counts, it’s best to stick to that same cadence unless you’re ready to commit to a new one.”
  2. Train Designated Staff on Your Preferred Inventory Management Process
    If the best inventory management processes are consistent and sustainable for your business—then you want to optimize your resources, aka labor.

    “Too many cooks in the inventory count sheet isn’t always a good thing, so make sure you have designated staff trained to take inventory consistently,” Markus shared.  

    Training designated staff in inventory management is essential to minimizing human error and inconsistencies. If something does come up, it’s easier to figure out what went wrong and potentially what aspect of your process needs to be changed or revisited. 

    Don’t be afraid to train beyond the count and get your team in the analytics stage, where they can begin to forecast demand, inventory shrinkage, or turnover rate to make informed and consistent decisions when placing orders or managing vendor relationships. 
  3. Focus on Your Top 5 Highest-Spend Products
    “If you don’t have the time/resources to do a full inventory every week, we recommend at least counting your top five highest-spend products, which are usually going to be proteins (beef, chicken, seafood, etc.),” Markus shared. 

    So, you want to identify your top five priciest products and make a weekly commitment to count those products before placing an order. 

    “The benefit of doing this before you put in an order is that you pretty much eliminate the possibility of over or under ordering those items, preventing your food cost from increasing since both mistakes can add up,” an article published by MarginEdge states.

    Saving money where and how you can is essential to decreasing food waste and ensuring your money stays in your pockets, not on your shelves. 
  4. Consider User Experience When Building Count Sheets
    The goal is to make inventory less of a headache and more manageable, so hopefully, you can do it frequently without tapping out your resources. 

    Putting some thought into your count sheets and how they’re organized so your team can breeze through the process with minimal mistakes—is vital. 

    “Make count sheets match the order of what’s on your shelves, not just alphabetically,” Markus said. “Also, separate count sheets by storage area (pantry, walk-in, etc.) or by category (bar, kitchen, paper goods, etc.).” 

    Adapting your count sheet for what makes sense in your space will allow your team to utilize their energy and time more efficiently. 

When In Doubt, Tech it Out

If evaluating, organizing, and managing a new inventory management process so you can do it more often seems daunting and like planning it out would take eons itself—don’t fret—there’s a tech solution for that. 

Restaurant management software (RMS), like MarginEdge, is an end-to-end management system with tools to help restaurant businesses manage invoice processing, recipe, inventory management, ordering, budgeting, commissary kitchens multi-unit management, and free and unlimited bill pay. 

Their platform automates the tracking of products and pricing by pulling the most recent data from your invoices. It also integrates with your POS system to acquire sales data—giving you a holistic view of costs automatically pushed into your account system. 

This level of inventory management can be done manually. Still, it requires hours of labor, and the person in charge of inventory understands the process and has a knowledge of software like Excel. 

Additionally, when using an RMS, all the data you need around inventory, food costs, and sales is kept in the cloud and accessible anytime with a wifi connection, providing a layer of redundancy so nothing is lost due to employee turnover. 

If you’re looking for an easy solution to organize your inventory management and increase the efficiency and frequency of counts—check out MarginEdge today

As a team built by former (and current!) restaurant operators, their mission is to bring the same energy, attention to detail, and passion that operators bring to their guests.

About the author


Ashley McNally likes to cook, loves to bake, and is always dreaming of her next meal. With over 13 years of experience working in various roles within a restaurant — McNally has made a home in hospitality.