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What is the Importance of Inventory Management in Restaurants?

Importance of Inventory Management in Restaurants
Restaurant Inventory - August 23, 2022 Written By: Krista Dinsmore

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Restaurant inventory management is the process of monitoring your food and beverage stock to gain better control and visibility over your inventory. 

By knowing how your inventory is being used and how you make changes that impact profit margins and reduce waste, you’ll be able to make decisions that lead to a more profitable restaurant. 

Inventory management has several benefits that makes it critical for the success of any restaurant. Here are the top five reasons for the importance of inventory management in restaurants.

  1. Cost savings 

While business owners know that inventory is one of the most significant assets they have, they often do not know that it is losing them money. Good inventory management will help uncover where your inventory is reducing your profits, whether it’s due to food waste, poor pricing practices or something else entirely. 

Once you know where the losses are coming from, you can then find ways to prevent it from happening. This will help reduce costs and improve your profit margins.

  1. Better ordering 

Improved visibility over your inventory means that you can make better ordering decisions. Instead of ordering stock “just to be sure you don’t run out,” you can use historical data to determine just how much inventory you need, including safety stock. 

This better ordering will improve cash flow, reduce tied up capital and minimize waste. All while ensuring you can provide the dishes your customer’s love without having to 86 an item. 

  1. Improved pricing 

We mentioned earlier that good inventory management can help identify a bad pricing strategy. You see, many restaurant owners don’t adjust their menu pricing to reflect the increased cost of inventory. In addition, some owners don’t know what their recipe cost is, increasing the risk of undercharging in the first place.

To ensure you are maximizing profits, you want to use a data-driven approach. By determining the per plate cost of your dishes you can set an improved profit margin. It will also help you identify low-profit dishes so that you can remove items or update prices. 

  1. Reduced shrinkage 

Shrinkage caused by internal theft, spoilage, spills and human errors is a big issue for restaurants, especially when they have poor inventory management. That’s because without inventory oversight, it’s harder to see when there’s a problem. 

By keeping proper track of your food and beverage inventory and regularly checking data, you can pinpoint the source of lost stock, minimize waste and create accountability that reduces theft. 

  1. Better customer satisfaction 

When customers dine at your restaurant, they expect to be able to order anything off the menu. The moment you tell them you can’t, due to product shortage, it can have a huge impact on their overall experience and customer satisfaction. Especially when they’re told their second or even third choice has been 86’d as well. 

Maintaining a proper inventory will help ensure you have what you need when you need it. If your vendor can’t get it to you, you have time to source it elsewhere. As a result, you’ll be able to ensure your customers are delighted and satisfied. 

These are just some of the reasons proper inventory management is important for restaurants. For help taking control of your restaurant inventory, contact us today

Contact your Local Inventory Consultant Today

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A Complete Buyer's Guide to Food & Beverage Inventory Management Systems

With around 25 to 35 percent of a restaurant’s operating budget dedicated to purchasing food (that’s not even taking into account beverage inventory costs for the bar), proper inventory management can significantly improve expected revenue.

To maximize profits you need to improve visibility and control over your restaurant or bar’s inventory. 

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