In this guide, we’ll walk you through counting inventory in a restaurant, covering different types of inventory, from perishable and non-perishable items to liquor. By the end of this guide, you will also learn some techniques to improve your restaurant’s efficiency, reduce costs, and enhance profitability. Let’s get started.
Why Count Your Inventory?
Regular inventory checks allow you to easily manage your perishable items to reduce spoilage and waste. You also ensure that the right amount of stock is always available to meet customer demands. This ultimately optimizes your cash flow and reduces storage costs in the long term. Effective proper inventory management through restaurant inventory management and utilizing inventory management systems are key to achieving these goals.
Benefits of Regular Inventory Counts
Bespoke inventory management can give your restaurant business these four major benefits.
1. Improved Cost of Goods Sold (COGS) calculations
When you do regular inventory counts, you stay armed with accurate data on stock levels to match purchases with actual usage. This helps you accurately calculate the Cost of Goods Sold (COGS). To make it even more hassle-free, you can use restaurant inventory management software. It can track real-time inventory changes and integrate with your accounting system for seamless COGS calculations. Implementing restaurant inventory management tips and effective food inventory management strategies helps in tracking inventory and managing inventory efficiently, ultimately reducing food waste and optimizing inventory usage.
2. Reduced Food and Beverage Waste
With frequent inventory checks, you can easily keep a tap on perishable items and use them before they get spoiled – reduced waste in the long term. You can use the FIFO technique to identify older stocks first to use them promptly or run special promotions to move inventory quickly.
3. More Informed Purchasing Decisions
Running through your inventory data every now and then gives you visibility of overstocked or understocked items, allowing you to adjust orders accordingly. This knowledge prevents you from overbuying items and ensures you always have the necessary items on hand.
4. Increased Profitability
When you keep an accurate inventory count, you can reduce waste, optimize purchases, and calculate COGS precisely – all of which contribute to lower operational costs. Ultimately, this process leads to better cost savings and increased profitability.
How Often Should You Count?
The frequency of restaurant inventory counts is subjective. It depends on many factors, including restaurant size, menu complexity, and inventory turnover rate. Using inventory software can help restaurant owners efficiently track inventory and determine inventory turnover. Keeping accurate beginning inventory records and using inventory count sheets can aid in managing how much inventory you need. Regular restaurant inventory counts can also help you better understand your inventory turnover and adjust accordingly.
Let’s look at a quick guide to help you understand the ideal frequency.
Factors Influencing Inventory Count Frequency
Restaurant Size
A weekly or biweekly count will do if you run a small restaurant with less inventory. For large restaurants with more inventory items and higher turnover rates, frequent counts (even daily) are imperative.
Menu Complexity
Restaurants with simple menus with limited items that require few ingredients are good to go with biweekly or monthly inventory counts. On the other hand, if your restaurant offers a diverse menu that requires stocking a wide range of ingredients, you should count inventory more frequently to avoid spoilage and waste.
Inventory Turnover
Items that exhaust quickly (e.g., canned bears) should be counted more often to check accurate stock levels and vice versa.
Perishable Items
To prevent spoilage, you need to count items like fresh produce, dairy, and meat more frequently. You can run checks less often for items with longer shelf life, such as canned goods and spices.
Operational Volume
You might require more frequent counts during busy times, such as holidays or peak seasons, to ensure you do not run out of essential items to disappoint your customers.
Here are the general recommendations for inventory count frequency for different categories of items:
High-volume ingredients (e.g., fresh produce, dairy, and meat): count weekly
Perishable goods: count weekly
Non-perishable goods: count monthly
Liquor inventory: count monthly or quarterly
Counting Procedures
1. For Perishables Items
The business suffers when you have unsold perishable inventory, such as fruits, vegetables, milk, etc., with a nearby expiry date. That’s where the need for effective periodic counting restaurant inventory becomes important. Utilizing tools like an inventory consumption spreadsheet and a food waste sheet can help you manage inventory more effectively. By controlling inventory and understanding the dollar value of your menu items, you can better meet customer demand and reduce food waste. Implementing a robust inventory system allows you to control inventory and minimize losses.
In this regard, here is how you should count perishable items.
Step 1: Organize your storage
First, arrange your perishable items so that the ones close to expiry are at the front and the newest ones are at the back. This way, you can easily access the oldest items first.
Step 2: Clearly label items
Clearly label all items with their arrival or expiration dates. Use markers or stickers to help you identify them with ease.
Step 3: Count the Oldest First:
Start your count with the items in stock for the longest time and record their quantities. Then go for the newest ones. Count them by their proper unit measure. For example, if you have 120 lemons floating around in the deep fridge, and 240 lemons equal one case, combine them and count them as half case. Record them on your sheet or counting software.
Step 4: Rotate Stock:
After counting, place the newest items behind the older ones. This keeps the FIFO system intact.
2. For Non-perishables Items
Unlike perishable items, non-perishable items are easy to quantify and measure. Here is how you should approach it.
Step 1: Organize your storage area for calculation
Organize your storage area (like pantry shelves) to quickly identify items for the counting procedure. Take the help of responsible staff members to reduce the processing time.
Step 2: Start the count
Begin from one end of the storage area and take inventory of each type of canned goods, such as tomato sauce, beans, tuna, etc. In a sheet, mention the name of the item and the quantity available. Group similar items together (e.g., all canned items) to streamline the counting process. Discard the damaged or dented cans. Enter them into a separate list, as they may need to be discarded.
Step 3: Record accurately
Use tally marks or numerical values for better inventory management when recording. For instance, tomato sauce and beans can be recorded as the number of cans available instead of the quantity. You can also use color-coded stickers or labels for different categories. For instance, you can use red for beans and blue for sauces.
Step 4: Double-check and update the inventory list
Have a second person verify the sheet to minimize counting errors. After verification, transfer the counts to your inventory sheet. You can consider adding the purchase price of each item on the inventory sheet to calculate the total value of your present stock with the same effort.
3. For liquor items
As liquor items are usually available in bottles of known max quantity, the counting procedure is straightforward as follows.
Step 1: Begin from one end
Begin counting from one end of the bar area and count each type of liquor bottle (e.g., vodka, whiskey, and rum) you come across. Enter the liquor type and quantity into the list as you go.
Step 2: Use the weighing method
Weight each bottle to determine the remaining quantity inside and record the quantity in ounces or millimetres on the inventory sheet. You can also estimate bottle fill levels visually. For instance, you can note a third-full-appearing bottle as 0.3 of the total quantity. But this process is slower and less accurate.
Step 3: Double-check for damaged or expired bottles
Double-check the inventory via a second person to remove any damaged or expired bottles from the counting process and note them separately for disposal or replacement.
Additional tips to consider for inventory management
It is advisable to count at the same time on the same day, every day, week, or month.
If you want to maintain consistency and accuracy in your restaurant’s inventory management process, choose to count before opening or after closing the business for the day.
Regardless of the method you choose, follow the same pattern each time you count to avoid counting errors.
Different Counting Techniques for Better Efficiency
Look at seven inventory counting techniques for maintaining accuracy and real-time data.
Cycle count method:
This represents a regular, scheduled count of a subset of inventory. For instance, counting a different section of your pantry each week/month is a simple example of how cycle counts work. As they are simple and easy to follow, you can use them to maintain accurate inventory records throughout the year. Big restaurants use cycle counts during slow periods to avoid interruption in daily operations.
Double-count method:
In this method, you engage two resources to count the same inventory independently and compare results to remove any redundancy or errors. For instance, you can assign two staff members to count the number of wine bottles in the cellar and compare results for data accuracy.
ABC counting
In the ABC counting method, you can categorize items into three groups: A (high-value), B (moderate-value), and C (low-value), with different counting frequencies. For instance, you may count expensive meats (A) weekly, canned goods (B) bi-weekly, and condiments (C) monthly. Here, the focus remains on counting the highest-impact items on the business and spending less time on low-value items.
Spot checking
As the name suggests, it involves randomly checking the inventory at different times to catch errors and discrepancies that might have been missed in your regular counts. Responsible managers often conduct spot checks for different items each time to ensure thorough oversight.
Recording Your Inventory
Data is important. Accurate data collection helps you with bespoke inventory management. Here’s what information you should record for each item.
a) item Name
Description: The specific name of the inventory item.
Example: “Tomatoes,” “Chicken Breast,” “Red Wine.”
b) Quantity
Description: The amount of the item currently in stock.
Example: “10 lbs,” “20 pieces,” “15 bottles.”
c) Unit Price
Description: The cost per unit of the item.
Example: “$2.50 per lb,” “$1.20 per piece,” “$15 per bottle.”
d) Total Value
Description: The total cost of the item is based on the quantity and unit price.
Example: If you have 10 lbs of tomatoes at $2.50 per lb, the total value is $25.
e) Date of Expiry (if applicable)
Description: The date when the item will expire.
Example: “08/15/2024.”
f) Supplier
Description: The vendor or supplier of the item.
Example: “Local Farm,” “National Supplier.”
g) Category
Description: The category to which the item belongs.
Example: “Produce,” “Meat,” “Beverage.”
h) Location
Description: The storage location of the item within the restaurant.
Example: “Walk-in Fridge,” “Pantry Shelf 2.”
|
Item name |
Quantity |
Unit price |
Total value |
Expiry date |
Supplier |
Category |
Location |
|
Tomatoes |
10 lbs |
$2.50/lb |
$25.00 |
08/15/24 |
Local farm |
Produce |
Walk-in fridge |
|
Red Wine |
15 bottles |
$15.00/ bottle |
$225.00 |
12/01/24 |
Wine distributor |
Beverage |
Wine cellar |
Why Should You Use Inventory Management Software for Data Entry and Record-Keeping
When you invest too much time in manual data entry and record-keeping, you subject your calculations to humane errors, inconsistencies, and inefficiencies. Eventually, you may find difficulty tracking stock levels, experience errors in COGS calculations, waste product hours on time-consuming inventory counts, and feel touble maintaining accurate records. This is where an ideal inventory management software becomes imperative to streamline processes and provide accurate, real-time data.
Why Inventory Management Software Is Essential for Business Success?
Automate data entry with barcode scanning to reduce human errors and fetch you reliable data for decision-making
Does real-time tracking and provides you with alerts for overstock and understock levels or expiration dates
Simplifies the inventory counting process with cycle counting and mobile app integration to give you accurate counts with less disruption to daily operations
Makes use of POS systems and automated calculation tools to give you improved COGS figures
Gives you historical data analysis and demand forecasting to help you make informed purchasing decisions based on accurate inventory data
