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10 ideas on how to reduce your restaurant inventory cost

  • Published on : 10/11/2017

Globally, restaurants are reeling under the losses caused by the outbreak of COVID-19. As per, about 17% of America’s restaurants have already closed permanently in 2020. The best strategy to overcome this tough phase would be to cut down your restaurant inventory cost.

What is Inventory cost?

The term inventory cost refers to the amount of your working capital that is being held up in stored goods. It can be the fresh stock of raw materials, frozen foods, cutlery and employee uniforms. In short, inventory includes all those items purchased for use at your restaurant. However, if the inventory is lying idle or unutilized, it will cost you dearly. 

Why inventory is important?

If the sale at your restaurant for a week is way lower than the money invested in inventory, then you are in trouble. It’s high time to realise that you can utilise that money in marketing or other avenues that increase sales. By assessing the inventory costs, you can free up your inventory and achieve major cost savings.  

Let’s delve deep into the 10 ideas that help you cut down inventory costs.

Organise your inventory space

Stock the new products behind the existing ones and make sure that the items are stored safely. Place the heavier products on the lower shelves. Develop a storage map that makes it easy for employees to find out the various items. One of the major benefits of organising inventory space is that it becomes easy to take the count of stock.

Protect expensive items

As per the study by National Restaurant Association, 75% of restaurant inventory shrinkage in the Unites States happens due to employee theft. Hence lock away the expensive items such as alcohol. Installing closed circuit cameras can also help curb inventory theft to a great extent.

Stay away from excessive stocking

Purchasing in bulk may help you gain initial savings. However, always keep in mind that the dead stock is eating away your savings. Especially in case of seasonal items, limit your purchases as you require those materials only for a specific time period. For eg, the sale of frozen drinks declines during winter. Hence avoid overstocking of items that will consume a major portion of your shelf space. 

Cash in on technology

Replace legacy tools such as spreadsheets with modern day inventory management systems. With cloud based, digital inventory management platforms such as inresto SCM, live tracking of inventory is now possible from anywhere, anytime. The other benefits include alerts on minimum threshold quantities, minimising wastage and pilferage, and optimum use of kitchen resources.

Free flow of communication

Irrespective of the number of people involved in inventory management, ensure that there is proper communication. Never make assumptions such as a team member has identified shortage of an ingredient or everyone knows how to push an overstocked item.

Deliver adequate training

It’s always better to keep the count of people handling inventory to the minimum. Invest in detailed training as even a minor mistake can cost you a huge amount. If a person with prior experience in inventory management joins your restaurant, train them on how the system is managed at your restaurant. 

Plan in advance

With valuable insights provided by platforms such as inresto, you can determine the exact amount of inventory required at various seasons. It frees you from the hassles of under-stocking and overstocking.

Limit wastage

Make it a point to utilise the food items before the expiry date. If there is a surplus, co-ordinate with front of the house and kitchen staff to push those items.

Be creative

Make use of the unutilized food items effectively. If there is an extra stock of alcohol, serve cocktail to some of your loyal guests.

Have a word with suppliers

Maintain a cordial relationship with your suppliers and have discussions with them. They are the right people to offer suggestions regarding your ordering process. Work closely with them to make adjustments to your inventory.

Parting Words

In the post pandemic world, cost cutting has become inevitable for restaurants. The above 10 ideas will definitely prove to be helpful in cutting down your inventory costs. 


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