The Silent Profit Killer
Inventory is where most restaurants lose money without realizing it. Between over-ordering, theft, waste, and poor tracking, the average restaurant loses 5–10% of food purchases to inventory mismanagement.
For a restaurant spending $30,000/month on food, that's $1,500–$3,000 walking out the door every month.
The Fundamentals
Par Levels
A par level is the minimum amount of each item you need on hand to get through until the next delivery. Setting accurate par levels is the foundation of inventory management.
Formula: Par = (Average daily use × Days between deliveries) + Safety stock
Safety stock is typically 10–20% above the calculated need. More for high-variance items, less for stable ones.
FIFO (First In, First Out)
Every item that comes in goes behind what's already there. Label everything with:
- Item name
- Date received or prepped
- Use-by date
This isn't just about freshness — it's about cost. Using older inventory first means less waste, which means lower food cost.
The Inventory Count Process
When to Count
- Weekly: Key items (proteins, dairy, expensive produce)
- Monthly: Full inventory (every item in the building)
- Spot checks: Random items, random days — catches theft and errors
How to Count
- Same person, same day, same time — consistency eliminates variables
- Count before deliveries — gives you accurate depletion data
- Count by storage location (walk-in, dry storage, bar) not by category
- Two-person system: one counts, one records — reduces errors
- Don't round — if you have 3.5 cases, write 3.5 cases
The Inventory Formula
Cost of Goods Sold (COGS) = Beginning Inventory + Purchases − Ending Inventory
Food Cost Percentage = COGS ÷ Food Revenue × 100
Target: 28–35% depending on your concept.
Common Problems and Fixes
Variance Between Theoretical and Actual
If your POS says you sold $10,000 in food but your inventory says you used $12,000, that $2,000 gap is variance. Common causes:
- Portioning inconsistency
- Unrecorded waste
- Employee meals not tracked
- Theft
Over-Ordering
- Review par levels monthly against actual usage
- Check what's being thrown away (your waste log tells you)
- Reduce order frequency for slow-moving items
Under-Ordering
- 86'd items during service = lost revenue and frustrated guests
- Better to slightly over-order perishables than to run out
- Build buffer for weekends and events
Technology Helps, But Isn't Magic
Inventory software can automate ordering, track cost trends, and flag anomalies. But the fundamentals still require human discipline:
- Someone has to physically count
- Someone has to enforce FIFO
- Someone has to review the numbers and act on them
The restaurants with the best food costs aren't the ones with the best software. They're the ones with the most consistent inventory discipline.
Sideworks helps you track food costs, manage vendor relationships, and maintain the operational consistency that keeps inventory accurate.
