1. Why inventory control matters
Food cost is usually the second-largest expense in a restaurant after labour, and it's the one most directly controlled by how well you manage inventory. A kitchen that doesn't track stock precisely is, in effect, giving money away — through spoilage nobody notices, portions that drift larger over time, and purchase orders based on guesswork instead of actual usage.
The restaurants with the healthiest margins aren't necessarily the ones with the cheapest ingredients — they're the ones with the tightest gap between theoretical food cost (what the recipe says it should cost) and actual food cost (what was really spent).
2. Common mistakes restaurants make
- Counting stock only once a month. By the time a shortage shows up, weeks of loss have already happened.
- No standard recipe cards. If portion size lives in a chef's head, it drifts — usually upward, quietly increasing cost.
- Ordering by feel. Purchase quantities based on habit rather than actual sales data lead to both stockouts and spoilage in the same week.
- Not tracking wastage reasons. "We threw it away" isn't data. Spoilage, over-prep, and plate returns each need a different fix.
- Ignoring price changes. A recipe costed a year ago using old vegetable and protein prices is often quietly wrong today.
3. FIFO vs. FEFO for perishables
FIFO (First-In-First-Out) uses stock in the order it arrived. FEFO (First-Expired-First-Out) uses stock closest to its expiry date first — regardless of arrival order. For most kitchen ingredients, FEFO is the right approach, since two batches of the same item can have different expiry windows depending on the supplier or delivery date.
Label every batch with a received date and expiry date, store older-expiring stock in front, and if you're using software, let it flag near-expiry batches automatically rather than relying on staff to notice.
4. Recipe costing and stock deduction
Every dish on your menu should have a recipe card specifying exact ingredient quantities, down to the gram or millilitre. This does two things: it keeps food cost consistent regardless of who's cooking, and — if linked to your POS — it lets stock deduct automatically every time that dish is sold, instead of requiring a manual count.
Sub-recipes (like a house sauce or marinade used across multiple dishes) should be costed once and referenced everywhere they're used, so a single price change updates every dish that depends on it.
5. Tracking and reducing wastage
Log every instance of wastage with a reason: spoilage, over-prep, kitchen error, or plate return. Over a few weeks, patterns emerge — maybe a particular ingredient spoils before it's used because you're over-ordering it, or a specific dish gets sent back more than others.
Typical wastage benchmarks
6. Purchase orders and vendor management
Base purchase quantities on actual consumption trends, not gut feel — most kitchens have predictable weekly patterns once you actually look at the data. Keep a vendor directory with pricing history so you can spot when a supplier quietly raises rates, and photograph delivery invoices so quantities and prices can be verified against what was ordered.
Route purchase entries through an approval step for anything above a threshold you set — this alone catches a surprising number of pricing errors and duplicate orders before they hit your books.
7. KPIs to track every week
- Actual vs. theoretical food cost %
- Wastage % of purchases
- Stock turnover rate
- Near-expiry stock value
- Top 10 highest-cost ingredients
- Purchase price variance vs. last month
8. Monthly inventory audit checklist
☐ Full physical stock count reconciled against system records
☐ Review all wastage logs and reason codes for the month
☐ Compare theoretical vs. actual food cost, investigate any gap over 2–3%
☐ Re-cost top 20 ingredients against current supplier pricing
☐ Review near-expiry and slow-moving stock, plan usage or return
☐ Audit vendor pricing history for unnoticed rate increases
9. When to move from spreadsheets to software
A single-outlet café with a small menu can often run on a well-maintained spreadsheet. Once you're managing multiple branches, a menu with dozens of recipe-linked dishes, or a team where several people touch stock, the manual approach breaks down — the reconciliation time alone usually costs more than a proper inventory system. The tipping point for most restaurants is somewhere between one and two locations, or once your food cost gap becomes hard to explain by memory alone.