Restaurant Inventory Categories: A Guide To Organizing Chaos
Struggling to organize your inventory? Discover inventory categorization techniques to optimize your restaurant’s operations and profitability.
By You may be thinking, Are restaurant inventory categories really that important?
After all, running a restaurant comes with a million and one tasks to juggle, from managing staff to creating menus to keeping customers happy. In the midst of it all, restaurant inventory management can often take a back seat.
But here’s the thing.
Without proper inventory organization and categorization, your restaurant could be losing money. And no restaurant owner wants that.
Here are some of the specific reasons why restaurant inventory categories are important.
Cost control
Are your costs ballooning and your profit margins eroding? It could be because you’re not staying on top of your inventory.
Categorizing inventory helps in tracking and monitoring expenses accurately. By organizing items into discrete categories (e.g., meat, vegetables, beverages, liquor, dry goods), restaurant owners and managers can identify which areas of their inventory are costing the most and make informed decisions to control costs.
On the other hand, without proper categorization, it becomes difficult to pinpoint where the expenses are coming from, making it challenging to control costs. Your cost of goods sold (COGS) increases, along with your prime costs, and your bottom line takes a hit.
Menu optimization
A well-categorized inventory helps restaurant operators gain a better understanding of which menu items contribute most to their overall food costs. These insights, combined with the process of menu engineering, allow restaurant management to optimize the menus to promote the highest profit items.
Efficient ordering
Separating inventory into discrete categories helps streamline the supply chain ordering process. Restaurants can set par levels for each category, ensuring that they order the right quantity of ingredients and supplies to meet demand without over-ordering or running out.
Identifying waste sources
Certain types of inventory, primarily perishable items, are prone to food waste and spoilage. By categorizing these items, restaurant owners and managers can easily identify which categories have the highest amounts of waste. Armed with this knowledge, restaurant owners can then make informed decisions regarding how to reduce waste and save money.
Optimizing stock levels
Different inventory categories have different turnover rates, with perishable items typically needing to be restocked more than non-perishable. Categorizing sitting inventory items allows operators to optimize stock levels and ensure that items are used before they expire. This, in turn, makes inventory control more efficient.
Supplier negotiations
It’s important to negotiate competitive pricing with suppliers to control restaurant prime costs. By categorizing inventory items, restaurant operators can analyze which categories have the highest spend and work with their suppliers to negotiate better prices. This can lead to significant cost savings for restaurants.
Monitoring trends
Inventory categorization also allows restaurant operators to monitor trends in ingredient usage and popularity. By analyzing which categories are consistently popular or seeing an increase in demand, operators can make strategic menu changes and promotions to capitalize on these trends.
The bottom line is that something as seemingly mundane as restaurant inventory categories has a major impact on your restaurant. By focusing on it, you reduce costs, reduce waste, increase profits, and ultimately boost the customer experience.
Master the art of inventory management with our definitive guide.
Types of inventory categories
There are several ways that inventory can be categorized.
Perishable vs non-perishable inventory
As the name suggests, perishable inventory is any item that has a limited shelf life and must be used or sold before it expires. This includes items such as fresh fruits, vegetables, meats, dairy products, and other ingredients with short expiration dates. Perishable inventory can quickly become waste if not managed properly.
Non-perishable goods do not expire quickly. This includes items like canned goods, dry goods, and frozen foods. Managing these items involves monitoring expiration dates and storage conditions.
Raw materials vs. finished goods
Raw materials are all the ingredients that make up various dishes. You need to monitor both the quantity and quality of the raw ingredients you use to ensure that you only serve up the highest quality dishes.
Finished goods are pre-prepared items or dishes that are ready to sell. This includes things like desserts, sauces, or dressings.
High-value vs. low-value items
High-value items, such as premium cuts of meat or expensive seafood, should be closely monitored to avoid waste and ensure they are properly utilized. High-value items must also be closely watched to ensure they are not stolen. Low-value items, such as basic condiments or inexpensive ingredients, may not require the same level of monitoring.
Critical vs. non-critical items
Critical items are those that you need to maintain your menu and satisfy customer demand. These items must be carefully monitored and restocked to ensure you do not run out.
Non-critical items are those that are not essential to your menu but may still be used in dishes or for customer requests. While they should still be monitored, they may not require the same level of attention as critical items.
Storage locations
Inventory can also be categorized by storage areas. For example, you may have some inventory in dry storage, some in a walk-in cooler, and some in a freezer. Each storage location may require different monitoring and organization methods to ensure items are easily accessible when needed.
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Best practices for managing restaurant inventory categories
Utilize restaurant inventory management software
The most effective way to manage restaurant inventory categories is through the use of a robust restaurant inventory management software, like MacromatiX.
MacromatiX allows you to:
- Easily manage inventory across multiple categories
- Effortlessly connect to and interact with suppliers using a unified platform.
- Consolidate supplier catalogs to access real-time pricing
- Utilize predictive ordering to reduce food waste and maintain proper inventory levels
- Develop workflows that keep managers on task with their purchasing tasks
- Streamline the purchasing process
- Engineer your menu for maximum profitability per dish
- Use demand forecasting to manage dish preparation and track waste
- Perform recipe costing in real-time
- Track inventory from order and delivery through production and accounts payable
Restaurant inventory management software also reduces the amount of time that must be spent on tedious tasks, allowing you to focus on more important things:
“A well-designed inventory management solution allows users to reduce time spent on repetitive and administrative tasks and focus their energies on more value-added tasks (e.g., engaging with customers, team members, etc.)”
— Andreas Mettler, Senior Director Solution Center, Fourth
Organize for efficiency and inventory counts
Your inventory should be organized for both efficiency and to make the stock-taking process easy and accurate.
For maximum efficiency, utilize a First-In-First-Out (FIFO) system. Items that spoil quickly should be placed at the front of shelves and coolers, while items with longer shelf lives should be placed towards the back. This ensures that older inventory is used first, reducing waste and maintaining freshness.
Additionally, regularly used items should be placed in a central location for easy access, while items that are used less frequently can be stored further away. This saves time and energy during busy service periods.
For accurate inventory counts, use clear labeling systems and ensure that all items are labeled with their name, expiration date (if applicable), and quantity. Also, make sure that you don’t mix your inventory categories. Keep food, non-food items, and beverage inventory separate to avoid confusion and make it easy for staff to find what they’re looking for.
Perform regular auditing and reporting
It’s best practice to regularly audit and report on your various inventory categories. Determine how each category is performing, how fast various items are moving, and how much waste is being generated. This will help you make informed decisions on purchasing, menu engineering, and overall inventory management.
Additionally, conducting regular audits can help identify any discrepancies or potential theft. By comparing your actual inventory levels to what is recorded in your system, you can quickly spot any discrepancies and take corrective action.
This is where restaurant inventory management software can also be tremendously useful. Thanks to things like RFID tagging and real-time tracking, these systems can provide accurate and up-to-date inventory data for all categories. This not only saves time on manual audits but also minimizes the risk of human error.
Increase your restaurant’s profit, optimize cash flow, reduce costly waste, and drive consistency across production and operations.
Regularly train staff
It’s essential to train your staff on proper inventory categorization and handling procedures for each of the categories. As much as possible, work to foster a culture of responsibility and accountability regarding inventory management. This includes keeping track of inventory levels, properly labeling items, and reporting any discrepancies or issues.
Regular communication is important. Talk with your staff about the importance of proper inventory management and how it impacts the overall success of the restaurant. Encourage them to provide suggestions on ways to improve processes and ensure they feel confident in their roles when it comes to handling and tracking inventory.
Establish PAR levels
PAR, or “periodic automatic replenishment,” refers to the minimum amount of inventory needed to meet customer demand and maintain operations.
For example, you may establish a PAR level of 50 bottles of ketchup in your condiments category. Once your inventory dips below this level, it triggers a reorder to ensure you always have enough on hand.
Establishing PAR levels for each category can help prevent overstocking or understocking items, both of which can lead to wasted money and potential shortages. These levels should be regularly reviewed and adjusted as needed.
Negotiate better prices with suppliers
By closely monitoring your different restaurant inventory categories, you’ll gain a clear understanding of how fast various inventory items are moving. Armed with this information, you can negotiate better prices with suppliers based on the volume of items you consistently order. This not only helps reduce costs but also allows for more accurate budgeting and forecasting.
For example, if you notice that your produce category has a high turnover rate and you consistently order large quantities, you can use this information to negotiate better prices with your produce supplier. This can lead to significant cost savings over time.
Master your inventory categories
Mastering your restaurant inventory categories is an indispensable part of maintaining smooth operations and ensuring profitability. By understanding each category, establishing PAR levels, and utilizing this knowledge to negotiate better supplier prices, you can optimize your inventory processes, prevent waste, and save money.