Restaurant Inventory

While previous articles have focused on operational functions of a POS system, it’s equally important to utilize your POS tools to manage cost, expenditures and purchases.

Enter the inventory module of your system. As per usual, we will be using POSitouch as our basis of comparison, but all POS systems should offer some form of the inventory module.

Inventory Setup

The setup of inventory is by far the most labor-intensive portion of the inventory process. While many inventory options may be automated, there is no replacement for the initial entry of data into your system. To begin, first identify the items that are most important to you from a cost perspective. In time, you may manage inventory down to individual sugar packets, should you so desire, but we recommend that you begin with the high value items. Your meat and produce purchases are traditionally the most costly, and are often the items most prone to theft. If you serve steaks or chicken entrees, it’s not hard to imagine an employee seeing a free steak in the cooler where you, the restaurateur, see loss of revenue. Within the POSitouch inventory module, you must first create the inventory item and then enter the resulting inventory item number into the inventory worksheet. This worksheet will also serve as the standard by which you’ll count inventory, se we recommend that you organize the inventory worksheet in the same order that you would do your count. Walk the storeroom and coolers and freezers in the order you normally would, making note of which items you count in which order.

Once your inventory worksheet is compiled, you will then enter the name of your vendors, from the provider of your most basic ingredients to your beer and liquor vendors. Within POSitouch, this is done via the Vendor Worksheet. Once this has been completed, you will associate the inventory items initially created to the vendors you have entered. Now, we have our inventory items, our vendors, and the association made between the two. The last step in inventory setup is tying together the inventory item with your menu item. When setting up the inventory item, you will define the manner in which you purchase the item, for example, by the case, and how you count and use it, for example, by the ounce. On the menu item setup screen, you will see a button marked Recipe. When you select this button, you will be given the opportunity to enter the inventory item number and quantity, thus creating the link between the menu item and the inventory items that should be removed from inventory when the item is purchased. Once done, every time that item is sold, the predetermined inventory amounts will be subtracted from your existing inventory totals and counted against the purchases. As you are probably aware, the cost paid for items compared against the money earned from the sale of these items is referred to as your food cost. This food cost percentage will tell you very quickly if you are charging too little for an item, or if the cost of purchase has been raised to the point that you must also raise the cost of the menu items.

Restaurant Reporting


Now that our setup is done, and, as mentioned previously, that is no mean feat, it’s time to use some of that hard work to our advantage! Using the inventory reporting, we can quickly determine how much we are spending and how much we are gaining in revenue based on our purchase prices. We can also see whether or not the items we are purchasing are making it to customers. Let’s use an example. If I am purchasing five cases of strip steaks per week, with twenty steaks per case, I should have one hundred steaks. If I sell seventy, I am left with thirty. When I walk through the cooler and do my inventory count, I find that I have only twenty-five left in stock. The reporting will then show me a variance of five steaks lost. As the owner, I must now determine where these steaks have gone. I will consult my kitchen management and individual employees if I must, to determine if the steaks were thrown away, or, worse, pilfered by the staff. It has been our experience that, simply by doing these detailed inventory counts, we are making the staff and management aware that we are tracking the movement of our inventory very closely. The knowledge that “Big Brother” is watching may be enough to deter some theft.

Discounts and Deletes

There are also settings within the programming for discounts and deletes that take into account inventory subtraction. By using these appropriate discounts and deletes, we can remove an item from inventory without it ever making it to a customer. For example, if one of our steaks is overcooked, we assign the appropriate deletion or discount to reflect that the item was, in fact, prepared. Within the inventory module itself, we also have the option of entering items that were thrown away, if, for example, a case of produce is signed for, but turns out to be unusable. We may enter these amounts as waste, removing them from our inventory count.

As you may imagine, inventory can consume a great deal of time for the owner or kitchen manager responsible, especially if you inventory every item in your restaurant. The benefits in savings are substantial, however, as is the peace of mind in knowing how your inventory is moving through your restaurant. Be prepared for some heavy lifting in the setup stage, but the ensuing weeks only require basic maintenance. Also, be sure to inquire with your vendors and POS dealers regarding what steps in the process may be automated. For example, POSitouch will import purchase orders from Amerifoods at the click of button, but not every POS system supports every vendor.

Inventory management is one of the most time-consuming and rewarding aspects of restaurant management. Use your staff and POS dealers to make the implementation as easy as possible, and, once done, watch how your grasp of your money flow tightens and leads to even greater savings!

Additional Resources:

Fast food and your POS system
Table service and your POS system