5 Restaurant Inventory Fails to Avoid at All Costs

By Joy Ugi, Director of Marketing, Orderly

On a scale of 1 - 10, how much do you hate taking inventory?

Let’s face it, if you’re like most people you’d rank it as a 0. You hate it with a passion. 

That being said, it’s a well-known fact taking inventory can make a huge difference in the state of your restaurant. 

After all, inventory gives you a Cost of Goods Sold. And that is a must-have piece of an equation that gives you an immediate sense of the success of your business… 

COGS + Total Labor Cost = Prime Cost

So, you know inventory is important. But... you hate doing it.

This love-hate relationship with restaurant inventory sucks. And it leaves much to be desired in the quality of the inventory-taking process… it can lead to blunders, in fact.

That’s why we’re exposing the top 5 inventory fails, why they happen, and how to prevent them from happening in the first place. Because inventory is just too essential to the success of your business not to get it right.

#1 Doing It All Yourself

It’s all on you. You’re the owner, operator or manager… so the major tasks like inventory have to fall on your shoulders, right? 


Trying to handle inventory all on your own is a recipe for disaster. In fact, without the support of your team, there’s a good chance it will fail.

Teach your staff the value of taking inventory… how it helps the restaurant and how it helps each person specifically. Explain the details of how inventory saves the business money, keeping customers coming through the door… not to mention paychecks coming in. 

Make sure everyone understands and believes in the value of inventory.

Next, assign and train a few trustworthy team members to help you with inventory -- managers or senior staff members. We recommend teaching two people on your staff to take counts and do price lookup together. While one person can easily make an accidental mistake, it will probably be caught and corrected when another person is looking over their shoulder.

Sharing the responsibility for inventory with your team will create a shared sense of ownership… so you don’t have to bear the inventory burden alone.

#2 Throwing Away Cash

It’s true, when you order too much food and it goes bad, you’re throwing money away. Even when you keep too many non-perishables on hand, you’re holding cash hostage.

This inventory fail? Wasting hard-earned cash by keeping too much on hand.

This is where a weekly inventory is essential. You can see what you’ve been ordering way too much of and order less of it in the future. And to save money immediately, you can run a special on items that will go bad faster than you can use them.

You should also clean out your stockrooms of any non-perishable or dead inventory that’s been sitting around for a while.

Ordering too much of one item or letting it spoil because of overstocking means you’re letting money go to waste… money you could be spending on better quality food, paying your staff more, or reinvesting in the business.

#3 Hitting the “Pass” Button

Not taking inventory regularly is a major fail… and not doing it at all is an even bigger no-no. 

Not only have food costs skyrocketed 25% in the past five years, but they’re fluctuating on a daily basis. That means not taking a weekly inventory to understand your food costs and prevent waste and over-ordering means you’re spending money you don’t have.

Scheduling a weekly restaurant inventory -- in addition to a monthly one -- is the best way to combat rising food costs and waste. 

Consistency is important for inventory... without it, you can’t get an accurate picture of your COGS from week to week. Inventory has to be scheduled once a week -- on the same day every week -- before your orders are dropped off. Following a set schedule as closely as possible will give you the most visibility into your numbers.

The best part is with process comes habit and with habit comes speed. So with a consistent process in place, you’ll eventually have a quick and painless inventory process.

#4 Missing the Point

After you finish taking inventory, what are you doing with the information? If your answer’s not much then that’s a fail.

Many managers don’t do anything with their inventory figures beyond making a note to order more of one thing and less of another.

If that sounds like you, you’re missing the point of inventory. 

The reason you count and look up prices is to get a Cost of Goods Sold and pinpoint usage, days on hand, and other important numbers for running your business.

Remember, you’re doing inventory so you can calculate Prime Cost and understand the health of your business. But you’re also doing it to identify where there’s too much waste or possible theft… and stop it.

Instead of just hanging the clipboard on the wall and waiting until the next inventory cycle to pull it down, look at your numbers and put them to work for you.

#5 Open, Click, Type… Repeat

Inventory typically means hours spent with a spreadsheet. Typing in count numbers one by one. Looking up and adding prices. Entering formulas to get reports.

And that would be fine if data entry was the reason you got into the hospitality business. But it isn’t. You’d rather be managing your kitchen or taking care of your guests.

Spreadsheets are an inventory fail. It’s time to ditch them.

Software and apps for restaurants are changing the inventory game. It does all the hard work for you -- from taking counts online, to looking up the last price, to automatically giving you COGS and usage reports. It’s all there.

There are plenty of choices when it comes to inventory apps & software. This technology will give you a speedy, online way to complete counting and valuation based on invoice data… without the spreadsheets.

Inventory For the Win

There’s bad news and good news when it comes to running your restaurant. 

The bad news is a good part of your operational costs are tied up in the items you buy. 

So leaving food costs go unchecked can crush profits and cripple your business. Food prices are constantly fluctuating, competition is fierce, and you live every day fearing whether you’re going to be able to afford opening your doors and paying your staff.

The good news is taking inventory eliminates all of that. 

This one process minimizes food waste, determines what food and supplies you order, and is one of the biggest ways you can cut costs. Managing inventory is a way to maximize every dollar you spend -- and save -- in an industry where costs go up and down every day. 

Restaurants who take inventory seriously -- who avoid these five fails -- and invest in technology to make it an imperative part of their businesses will win. They’ll keep tabs on food spend, beat the competition, and understand where every penny of their profits are going.

About the author:
Joy Ugi is the Director of Marketing at Orderly, the #1 restaurant app for inventory. She writes about operational efficiency, food purchasing trends, and restaurant technology for the Orderly blog. Follow Orderly on Facebook, Twitter and LinkedIn!