Inventory management is at the heart of running a successful restaurant business. You need to ensure you have the right type and quantity of ingredients to meet the needs of the customers. With food ingredients costing a dime and requiring frequent replenishment, a restaurant inventory management system is necessary. It ensures that your chefs and cooks keep track of the available ingredients and can tell how much more inventory is needed. You will also be able to tell when you should order your next batch and when the available ingredients will expire. 

A properly implemented restaurant inventory management system automates the process of tracking and managing inventory in a restaurant. With recent technological advancements, restaurants no longer rely on manual stock taking with a pen and paper. Inventory taking is easily conducted automatically by the system, ensuring accuracy in every step. The system helps in tracking food waste, the expiry date of the ingredients, and estimating when to order more inventory. 

Inventory Management Process

Components of a Restaurant Inventory Management System

A restaurant inventory management system provides an accurate and up-to-date picture of food inventory. This helps in managing inventory levels and making purchase orders based on the performance of the restaurant. While a comprehensive system may automate this process, the following standalone components are essential:

Components of a Restaurant Inventory Management System

1. Inventory Tracking System

An inventory tracking system allows you to track the amount of products your restaurant currently has, any shortages, and what needs replenishment. You do not have to do the count physically as the whole process is fully automated. Inventory tracking systems are comprised of a set of software and hardware based tools for automating the inventory tracking process. It tracks quantifiable goods based on the barcode technology. Every item has a unique barcode that is scanned to the system and recorded. Once scanned, the information is encoded and tracked by a central computer system. This way, the staff can locate the items at any time and know when they have been used up. 

Inventory tracking system allows you to tell which ingredients need to be stocked in greater quantities and which ones are in excess already. You can then use this information to order for inventory or improve your restaurant efficiency. Other benefits of an inventory management system include:

  • Generating real-time inventory and financial reports of your restaurant
  • Automatic creation of purchase orders to your vendors
  • Integration of the inventory to the restaurant’s menu to ensure only food available can be orders
  • Regular updates on the state of stock or when stock fall below a specific level
  • Easy transfer of items locations for multi-location restaurants 

Keeping track of these inventory factors keeps your restaurants fully operational. You do not have to worry about running short of a certain ingredient without knowing. A restaurant inventory tracking system helps you easily count your inventory with a barcode scanner.

Inventory tracking system helps you scan your inventory with less searching. This means that you can streamline your deliveries and save time takes to count your stock. You simply create suppliers, purchase orders, and catalog items using barcodes. This also helps you receive stock without having to manually search for items through a purchase order. All you have to do is scan, enter the needed quantity, and move to the next item. 

2. Vendor Management System

A vendor management system is used to build relationships with suppliers and other service providers. Normally, a restaurant works with several different vendors. Each of the vendors have their own contract terms, points of contacts, and pay rates. While a vendor manager may handle these issues, a vendor management system provides an automated solution. 

A vendor management system is an online web-based solution used to manage vendors in one location. The system acts as a single place to manage all activities related to the vendors. This ensures that efficiency is achieved and long-term growth achieved in a cost-effective manner. Implement a vendor management system in a restaurant attracts several benefits:

  • Better contract management: The system evaluates the different types of contacts when dealing with multiple vendors. It provides a centralized platform when all documentation and other important information is stored. 
  • Better selection: Vendor management systems allow restaurants to manage many vendors in one place, giving more options. It helps in evaluating all different vendors to choose the ones with better terms of business.
  • Better vendor relationships: A system makes it easy to manage multiple vendors at the same time. This ensures successful completion of projects in time, enhancing business relationships with vendors. 
  • Better value: When implemented properly in a business, vendor management system can improve savings and earnings over a period of time.

3. Inventory Management System

Inventory management is more than just tracking. It includes determining the nature of the stocked items, including spoilt ingredients. An inventory management system can be defined as a combination of hardware and software technology used to oversee the maintenance and monitoring of stocked products. 

Inventory management features include a system for identifying items and their associated information, such as asset tags, labels, or barcodes. Hardware tools like smartphones or barcode scanners are used to read barcode labels. They are then connected to the restaurant inventory management software that provides a central management database. This is the point of reference for all inventory that allows for data analysis, inventory report generation, future demand forecasts, and more. Other aspects of inventory management system include policies and processes for documentation, labelling, and reporting. This may be guided by techniques like First-In First Out (FIFO), ABC Analysis, Just in Time, Stock Review, and others. 

Inventory management helps in determining the exact state of inventory at any given point. It fully automates the process of inventory management to allow restaurant owners and managers to focus on other important aspects of their business. Inventory management eliminates the needs for regular inventory checks or stock taking. This also means minimum human-related errors as both the tracking and ordering of inventory are automatic. The benefits of this component include:

  • Shows real-time inventory visibility at every level of a multi-location restaurant. 
  • Tracks real-time restaurant and profitability.
  • Reduces food costs, dead stock, storage costs, and labor costs by keeping inventory levels optimum at all time.
  • Improves vendor, supplier, and partner relationships through enhanced transparency and better organization. 
  • Provides high accuracy levels of inventory management to prevent cases of understocking and overstocking.
  • Insights into the food products that sell the most and the ones with the lowest demand.
  • Full integration into restaurant point of sale (POS) and accounting systems.

An inventory management system is designed to indicate the amount of stock available at any given time. You can upload menu items and ingredients as you wish, and update their quantities. The data can be viewed based on the product name, quantity received, supplier, or Universal Product Code (UPC). When integrated into a restaurant POS, the whole inventory management process is automated. It provides instant updates of the stock levels every time a customer purchases food and drinks (a bar POS can track inventory as bartenders sell mixed drinks, beer, and wine).

4. Food Costing Calculator

An important aspect of restaurant inventory management is food costing. Food costs have a direct impact on the restaurant profitability, and keeping them at the minimum should be a priority. A food costing calculator or a recipe costing software streamlines the process of calculating food costs for faster and more accurate results. It allows you to calculate food costs per menu item. You can also add important details like notes, pictures, and allergy information about each dish. Using a food costing calculator helps you calculate food costs, track your inventory, and generate detailed analytics of the products sold. 

Good recipe cost software takes care of all the recipe costing needs of a restaurant. It comes with a simple user interface where you can calculate restaurant food costs, catering costs, bakery food costs, recipe prices, ingredient costs, and food costs. it also allows you to add packaging and labor costs in your recipes for more accurate calculations. This saves restaurants thousands of hours that would have been spent calculating the cost of food to improve profitability. 

Part of the food costing is standardization and management of recipes. A standard recipe specifies the quantity of each ingredient to be used. This helps in quickly estimating the number of days it will take before reordering stock. When integrated into the POS system, this functionality assesses how raw materials are used with respect to sales. You can use this data to lower pilferage in your business. For multiple location establishments, the food costing helps in making sure that recipes are the same across the locations. 

Since restaurants operate on slim margins, the food costing allows you to know the cost of your recipes. You can easily calculate the cost of recipes and their margins by tracking each ingredient on the plate. You can also incorporate any price fluctuations to determine how they affect your bottom line. This is also a great way to engineer your menu in a way that encourages sales to boost your revenues. 


Restaurant inventory is comprised of all the raw materials and items needed to prepare dishes. Since the successful running of a restaurant involves having adequate inventory, restaurant inventory management system is vital. It helps you track every ingredient and how well you meet the needs of the customers. When integrated into your restaurant POS system, the whole process is automated to allow you to organize and control every aspect of stock. You can maintain a smooth flow of stock from your vendors and in the restaurant.