Dec 2017

Avoid these Inventory Management Mistakes in your Restaurant

  • By Ribbon
  • Shows Related

One of the most critical areas that impact a restaurant’s profitability, is its inventory management system, which is often underrated. A healthy inventory management system not only ensures smooth operations but also helps improve the business’ costs. While most restaurateurs have access to inventory management softwares to help them out, many budding and veteran restaurateurs don’t use them effectively, or at all.

In this article, we aim to shed light on some of the basics to be aware of regarding inventory management, including some of the common mistakes made and their solutions.

Recipe Mismanagement: Recipes contain not just the methods, but also the exact measure of ingredients to be used. However several times, recipes are not followed to the tee, leading to misuse/ overuse of ingredients. Often recipes are completely changed but go unrecorded, again leading to incorrect use of ingredients by kitchen staff. This ultimately puts pressure on food cost for the business which can easily be avoided, by doing spot checks, maintaining proper records and updating them in a timely manner, especially on the inventory software, wherever applicable.

Untrained Staff: If you are using an automated software to record inventory, it leaves very little room for manual intervention and human error. However, your staff would still need to regularly check the backend database and ensure it is updated with accurate information in case of supplier changes, price changes, brand changes and so forth. For this, your staff needs to be trained well and should have a good understanding of the inventory management process and tools.

Lack of Tracking: Tracking and reporting inventory regularly is one of the most critical steps that restaurants fail to adhere to, despite setting up the inventory management tools. Every purchase order, delivery note and invoice received should be accounted for on a daily basis. Regular stock takes (bi-weekly or monthly) should be verified by the manager or head chef, and variances, if any, should be investigated immediately and minimized. We recommend setting staff KPI (key performance indicator) targets and incentives linked to minimizing wastage and variances on a monthly basis, to keep the staff cautious when handling food.

Order Placement: While there is no direct formula to predict exact usage of ingredients, one of the key responsibilities of a restaurant manager/ head chef is to estimate quantities of items required on hand, based on daily consumption trends. Par levels for all items should be set and followed strictly, bearing in mind business volumes and supplier lead times. Overstocking would result in wastage, while understocking could affect the items available on the menu – neither scenario is ideal for your business.

No Automation: Manual registers and excel sheets may be the norm in most eateries. But if you want an accurate estimate of the inventory, we recommend investing in a good inventory management software – one that will not only ease your team’s workload, but can provide live updates on stock levels, wastage, variances and almost accurate food cost calculations.

In the grand scheme of managing a restaurant’s day-to-day operations, it is easy to lose sight of implementing a structured inventory management system. However, a simple yet small step, like setting up detailed standards and procedures for managing inventory or installing an inventory tracking software can go a long way in improving your restaurant’s operations, and ultimately the bottom line.

If you would like to get further insights into implementing an efficient inventory management system within your restaurant’s operations, you can reach out to us at Ribbon Consulting. We will ensure that the right processes are set in place, as a part of our specialized restaurant consulting solutions. You can write to us at or give us a call on (971) 4360 5758, and we’ll be happy to help!

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