Inventory Management 101 + Free Downloadable Restaurant Inventory Sheet
Efficient and consistent inventory management tracking is critical to cutting unnecessary spending and improving your bottom line.
Considering one-third of a restaurant’s revenue is allocated to costs of goods sold (CoGS), improving inventory management and reducing food waste will naturally provide more revenue-generating opportunities.
Accuracy, consistency, and organization are crucial for inventory reporting; download the restaurant inventory sheet to improve your reporting system for free.
Over time, you’ll be able to compare your daily, weekly, monthly, and yearly inventory numbers for critical insights into your restaurant operations and reporting trends.
Effective inventory management can make or break your restaurant. It’s a crucial system that helps control costs, reduce waste, and avoid overspending—all of which are vital for any restaurant’s success.
Inventory management helps ensure the right amount of food and ingredients are stocked in your restaurant so there’s always enough for customers, but not too much to cause spoilage and loss. Considering one-third of a restaurant’s revenue is allocated to costs of goods sold (CoGS), effectively managing your inventory is key to keeping tables and a profit turning.
But, effective inventory management is like walking on a tightrope—you don’t want to under-buy and run out of your top sellers, and you don’t want to over-buy and lose revenue by throwing out spoiled food. Thankfully, there’s some simple math and helpful formulas to help you develop the right inventory system for your restaurant.
Tracking inventory can be done in a handful of ways, but using a restaurant inventory sheet is one of the more organized methods—and it’s completely free. A restaurant inventory sheet can be used as a template to help you consistently keep track of food and beverage ingredients so you can compare and manage your costs over time.
In this article, you’ll learn how to create a restaurant inventory sheet for your restaurant’s needs, receive a downloadable food inventory sheet, and get helpful tips to improve the efficiency of your restaurant’s inventory management.
Before taking inventory, it’s important to do a little housekeeping to set you and your team up for success. A huge part of efficient inventory management is organization. So, I recommend doing the following to make your inventory tracking process as clean and coordinated as possible:
- Clean and organize stock shelves
- Create a schedule for taking inventory
- Download Our Inventory Spreadsheet
Accuracy cannot be stressed enough when it comes to tracking inventory. That’s why abiding by these three tips and using a tracking sheet are so important. By developing a system with order and consistency, you and your team will be able to track critical data that can be used to improve your bottom line.
If inventory management is new to you, developing it as a standard practice in your restaurant is key to knocking it out of the park. Thankfully, tracking inventory is generally the same across all restaurants, so you don’t have to reinvent the wheel. The downloadable tracking sheet above includes a premade template for inventory and consumption reporting, and includes examples as a helpful reference. It also includes step-by-step instructions for calculating statistics to monitor your progress.
Reporting is your most reliable asset when determining your restaurant’s business performance. Establishing reporting standards, especially for your inventory management, can help you control your business spend, catch any unnecessary losses, and find opportunities where you can increase your profits.
By using the downloadable restaurant inventory sheet, you’ll be able to improve your inventory management reporting and overall restaurant operations. Read on to learn how to apply it to your restaurant and specific business needs.
Creating your restaurant inventory list
The easiest way to create your restaurant inventory list is by using the downloadable spreadsheet above. Once you’ve opened it, create a copy, rename it, and save it for your restaurant's use. For additional help, here are some tips to help you get the most out of the restaurant inventory sheet:
The ‘Inventory Sheet’ tab is there for you to use as a manual way to take inventory. You can track directly in the excel sheet or print it if you prefer paper and pen. For an example, go to the ‘Example Inventory Sheet’ tab.
The ‘Consumption Report’ tab is there to help you compare your inventory consumption between two time periods. It’s ideal for comparing month starts and ends, and can help gauge your month-to-month progress. For an example, go to the ‘Example Consumption Report’ tab.
Finally, the ‘Stats’ tab uses input from the ‘Consumption Report’ tab to give you important figures for managing your inventory. The outputs on this tab are:
- CoGS (Cost of Goods Sold)
- Average Inventory
- Inventory Turnover Rate
Using this downloadable restaurant inventory sheet is a surefire way to improve the efficiency of your inventory management. Consistently tracking your inventory with this system not only helps you compare month-to-month costs, but also provides insights into yearly trends. The more you know about your inventory, the more you’ll know about your restaurant.
How often should a restaurant do inventory?
So, how often should you be tracking your restaurant’s inventory? There isn’t a one-size-fits-all answer, but the general rule of thumb is once or twice per week.
The purpose of tracking inventory is to ensure your ingredients are always stocked and fresh. So, keep that in mind when creating your own schedule. If you manage a smoothie bar, for example, then having the freshest ingredients is imperative and may require daily inventory checks to sustain quality.
However, restaurants usually have a mix of fresh and dry ingredients, which means the shelf life of produce and products varies. To stay on top of it all, consider these tips when creating your restaurant inventory sheet:
- Different types of ingredients may have different frequencies, such as daily, weekly, or monthly. Be sure to prioritize and check your perishable goods more often.
- Take daily inventories of at least the top selling 15 items that generate the most revenue—if not all products. Keeping a daily beverage inventory is also recommended for both big and small restaurants.
- Take full inventory as often as you order items. If you regularly order items five times per week, consult with your inventory checklist before ordering to determine the amount you will need to buy. Referencing your inventory checklist can help you keep costs down by avoiding over ordering.
- Take at least weekly inventory of all food items to stay on top of your food and beverage costs.
- Take monthly inventory of everything, including your products, ingredients, alcohol, and cleaning products to calculate the CoGS for your income statements.
Additionally, you may want to add additional checks for specific items to detect shortages, surpluses, and theft.
Items to Check
Top 10-15 items sold
All Food Items
Crunching your inventory numbers
Improving your inventory management means you have to study up and learn a little math. There’s terminology, acronyms, and formulas to learn, including ratio, par level, recipes, estimated usage, theoretical vs. actual usage, variance, and waste, plus terms like CoGS, catch weight, sitting, and percentage.
If you’re feeling overwhelmed, there’s no reason to be! I’ve outlined everything you need to know encyclopedia style below to help you get up to speed with all things inventory management.
- Definition: PAR level is an industry term for effective inventory management, standing for Periodic Automatic Replacement. It’s a system for finding the minimum level of inventory you need to maintain sales for a given time period.
- In Practice: Every restaurant’s PAR level system is unique to their needs. A PAR level system shows the minimum quantity of any given inventory item required in stock to maintain restaurant sales. When a food or beverage item falls below your PAR level, you’ll know it’s time to place an order and restock. Developing the right PAR level system will promote a healthy inventory turnover that reduces costs and boosts your profits.
Theoretical vs Actual Food Usage
- Definition - Theoretical Usage: The theoretical food cost is what your restaurant food costs should be for a particular time period. Theoretical food costs are calculated with the assumption that no food is wasted or there’s no shrinkage of ingredients for the meals sold.
- Definition - Actual Usage: The actual food cost is the full cost of all food purchases for that same time period. The actual food cost includes costs for imperfect portions, accidental waste, incorrect ordering, or employee theft.
- In Practice: Calculating the actual and theoretical food usage gives you the data points to measure the efficiency of your food cost control. Once you have the usage points, you will measure the variance between the two to calculate your food loss cost.
Theoretical vs Actual Food Cost Variance
- Definition: Actual vs. Theoretical Food Cost Variance measures the efficiency of your food cost control.
- In Practice: Measuring the actual vs. theoretical food cost variance provides insight into the efficiency of your inventory management. If the actual food cost and theoretical food cost match, then you’re not wasting any food and your restaurant is essentially running perfectly. However, if there is a large difference between your actual and theoretical food costs, then that tells you there’s waste somewhere in your restaurant. You should be striving to reduce the variance between your actual and theoretical food cost as much as possible. Anything in between shows loss. The variance shows where you can be more efficient and where you can regain lost profits.
Cost of Good Sold (CoGS)
- Definition: CoGS shows the cost of everything on your menu. This data point is extremely important because it’s tied directly to your restaurant’s profit margins and overall revenue.
- In Practice: CoGS is referred to as one of the “Big Three” alongside labor and overhead, which are all major restaurant expenses that could greatly contribute to low profit margins. Approximately one-third of a restaurant’s revenue is allocated to cost of goods sold (CoGS). If food is thrown away, you’re throwing away your product and opportunity to make a profit.
Food Cost Percentage
- Definition: Food cost percentage is the ratio of the amount of money your restaurant spends on food inventory compared to the revenue those ingredients generate as food sales.
- In Practice: Food cost percentage is one of the most important metrics for determining a restaurant’s business health. Maintaining the food cost percentage directly correlates with a restaurant’s profits. It’s also used to improve spending and menu engineering.
Learning and understanding these fundamental data points for inventory management is crucial for lowering costs and improving profits. You’ll need to be familiar with these terms to fill out your own restaurant inventory sheet using the downloadable excel template.
Tips to improve your inventory management
Tracking inventory for restaurants is crucial, especially in a post-pandemic world. With labor shortages, supply chain issues, and a looming recession, improving your inventory management can keep your restaurant thriving in times of economic uncertainty.
Above all, tracking inventory is excellent business practice and should be implemented in your restaurant as a standard routine. To help your employees make a habit of inventory tracking, use the following tips to get everyone on board with inventory:
Organization: The key to efficiency is organization. Tidy up your shelves so every product has a designated home and employees can find the items they need quickly. For ultimate organization, make labels on your stock shelves. Follow up by training employees about the new organizational layout and regularly correct when mistakes are made.
Consistency: Delegate inventory to the same key employees. Pick employees you trust who have more responsibility in their roles like managers or your head chef. Train your employees to follow your schedule consistently and use your inventory spreadsheet.
Rotation: Always practice the FIFO method—First In, First Out. When doing inventory, this means moving the older ingredients to the front of the storage shelves to be used first. This is crucial for keeping ingredients fresh and should be standard practice among your employees.
Goals: Outline goals and milestones with ideal metrics for sales and food loss control and communicate them with your staff. Let your team know about your inventory management goals and set up incentives to motivate them to help hit your targets.
Whether your goal is to improve your profit margins, cut unnecessary costs, or detect any food loss, improving your inventory management can give you insights into each of these areas and more. The key to effective inventory management is organization and consistency, so download the restaurant inventory sheet and stick to a schedule that works for you, your restaurant, and your employees.
After you have implemented your inventory tracking schedule, you’ll immediately start to receive crucial data. Over time, you’ll be able to compare your daily, monthly, and yearly inventory reporting. Numbers don’t lie; implementing any type of reporting, especially inventory, will give you critical insights into your restaurant's operations and your overall business performance.
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