How to do restaurant inventory

Without inventory there's no way to know your actual food cost, how much you're losing or how much to order. Counting isn't the most fun part of the business, but with a good system it takes less time and has fewer mistakes. Here's how often to count, how to do it and how to use FIFO to throw out less food.

What inventory is for

• Knowing your real cost: cost of goods sold is calculated with inventory (beginning + purchases − ending). We explain it in the prime cost guide.
• Spotting leaks: if your actual cost is much higher than your recipes say, something is getting lost.
• Ordering the right amount: not running out of an ingredient at peak hour, and not overbuying and throwing it away.

How often to count

• Full count: monthly, on the last day of the month, to close out the month's numbers.
• Expensive items: weekly. Your 10 to 20 most expensive items (meat, seafood, cheese, alcohol) are usually most of your spend. Counting them weekly warns you in time if something is disappearing.
• Highest-risk items: daily, if you need it. For example, a very expensive protein or something that goes missing often.

Always count at the same time: before opening or after closing, when nothing is coming in or going out.

Before you count

• Organize storage and keep like items together.
• Make a count sheet in the same order as your shelves, left to right and top to bottom. That way you don't skip anything or walk in circles.
• Set the unit for each item and always use the same one: pounds, cases, bags or each.
• Don't receive deliveries while counting.
• Count in pairs: one counts, one writes. It's faster and there are fewer mistakes.

How to count

1. Always follow the same route: walk-in, freezer, dry storage and the line last.
2. Count sealed items in whole units.
3. Count open items in decimals: half a bag is 0.5; if it's expensive, weigh it.
4. Include prepped items that carry real value: sauces, marinades and cooked meats, at the cost of their ingredients.
5. Check at the end that no line is blank and quantities make sense compared with last month.

How to value your inventory

Multiply what you counted by the cost of each unit. Use the last price you paid so the value is current.

Value = Quantity counted × Unit cost

What to do with the count

1. Calculate cost of goods sold and actual food cost.

Cost of goods sold = Beginning inventory + Purchases − Ending inventory

Compare it with what your recipes say. If there's a big gap, check portions, waste and purchasing; we explain how in how to lower food cost.

2. Set par levels. Par is how much of each item you want on hand right after your order arrives.

Par = What you use between orders + Safety stock

Order = Par − What you have

If you use 40 lb of pork shoulder a week and want a 10 lb cushion, your par is 50 lb. If you count 18 lb, you order 32 lb.

3. Look for what isn't moving. An item that's been sitting for months is money tied up and, if it expires, money thrown away.

The FIFO method

FIFO means "first in, first out". What arrived first gets used first, so nothing gets pushed to the back until it spoils.

• Label everything when you receive it with the received date and expiration date.
• Put new stock behind or below and older stock in front.
• If expiration dates don't follow arrival order, use what expires first, even if it arrived later.
• Check dates every morning and plan the day around what expires soon: a special, a sauce or a staff meal.

In Kitchfly you record the expiration date with each purchase (or it's set automatically from how many days each ingredient lasts), and the "Expiring" section spreads your stock across your purchases using FIFO to show you every morning what expires today, tomorrow and this week.

Common mistakes

• Eyeballing expensive items: weigh them.
• Switching units between counts (cases one month, pounds the next).
• Counting with old prices: the value doesn't match reality.
• Counting on different days each month: the numbers can't be compared.
• Counting and not using the numbers: a count only helps if you compare it with your sales and recipes.

Frequently asked questions