5 Inventory Management Tips for Hospo Businesses

Michael Elligett

Inventory management is a crucial part of a business, especially in the hospitality industry. It’s a process that involves tracking the ingredients or stocked goods coming in and out of your restaurant or café. 

This allows you to have a detailed insight on how much stock you have, how much you still need to purchase, when is the next scheduled delivery and many more. 

5 Inventory Management Tips for Hospo Businesses

By practising effective inventory management, you can avoid the stress of overstocking or understocking ingredients and miscalculating stocks. This will help business owners like you minimise spending by implementing a system to reduce errors and streamline the process.

To help you have an efficient and optimised inventory management, here are some things to consider: 

  • Use the ABC analysis

  • The ABC analysis is an inventory categorisation technique that will help you manage your inventory efficiently. If you’re just starting to learn how to handle your inventory effectively, this system is a great way to start. 

    This technique works by splitting the items in your inventory into three categories:

    • A-items: Most valuable and best-selling ingredients or products that contribute the most to overall profit. If these items are not often stocked and replenished, it could result in poor customer service and loss of sales. To identify which things fall into this category, look at your data, research on what’s popular and what customers are always ordering.
    • B-items: Products that are also valuable, but not as popular as the first category items. These are medium-priority items that usually call for monthly reorders. 
    • C-items: Items in this category are low-priority stock. Unlike A-items and B-items, they do not move from shelves as often. Consider ordering smaller amounts of products under this category to save on costs. 

    Organising stocks using the ABC analysis will help streamline your inventory and closely monitor items of high importance. When you know the number of ingredients your business needs over a period of time, you can buy in bulk and save on per-unit cost. It will help you decrease inventory costs and make a higher profit.

  • Follow the First-in, First-Out (FIFO) method

  • Once you’ve identified your A-, B- and C-items, you can use the FIFO method to arrange your inventory. The FIFO method is an inventory system that assumes that the first items placed in inventory are the first to be sold. 

    Implementing a method like FIFO alongside ABC analysis will help you rotate stock by putting the fresh items behind the older ones when restocking shelves. This system keeps older food items from being pushed back where it can be overlooked. It can also help you track how quickly your food stock is used. 

    This is very useful, especially when you’re trying to reduce your café waste. It’s easier to identify which items are about to expire so you can use or sell them before the expiration date. 

  • Audit your inventory regularly

  • Doing a regular inventory audit is crucial to your business. Inventory audit is the process of evaluating the stock maintained in your books and comparing it against your physical stock to ensure they match. It will help you see which items are leaving your kitchen as sales, what products are coming in and what is leftover on your shelf and refrigerator. 

    Having detailed insight into these things will help you make more informed inventory orders. A regular inventory audit will help you avoid overstocking or understocking that may result in poor cash flow. This could also support you in identifying any potential inefficiencies happening in your inventory and verify the quality and condition of your stocks. 

  • Invest in inventory management software

  • Managing your inventory manually is doable. However, as your business grows, you need to invest in inventory management software to streamline the process which ultimately helps you save time and money. 

    Inventory management software automates your business processes and avoids the risk of human error. Having a good system will make all your tasks easier and efficient. It will give you accurate and up-to-date data about your food inventory, and help you purchase orders and manage stock levels. There is a lot of software available, but make sure you’re getting the one that suits your specific needs. 

    Here are some things you need to look for in an inventory management software:

    • Ease of use - Choose a software solution that is user-friendly and easy to navigate.
    • Reports and analytics - Inventory management solutions must help you collect data and turn it into organised reports. Most software has pre-defined reports that provide the key metrics you need.
    • Centralised information - If you have other branches or you’re planning to scale up your business, you need one centralised tool that will help you manage all your shops’ inventory. 
    • Reliable customer support - You don’t want to be left out struggling to use a system for the first time. When choosing software, look for reviews about their customer service. They should be able to assist you as quickly as possible if you need help.

  • Find a reliable essential supplier 

  • Choosing a reliable supplier is vital to your inventory management. You need to find someone who can meet your café’s everyday needs. In order to run your business smoothly, you need to make sure your supplier is providing all the high-quality items or products you need and delivers on time. 

    If you’re having a problem with your current supplier, make sure to take action immediately. Talk to them and raise your concerns. If it doesn’t work out, be ready to look for other partners that can give you high-quality products and services. For instance, if a faster turnaround is one of your main priorities, look for a supplier that can meet your delivery requirements. 

    Always remember that it’s important to invest time in building good relationships with your suppliers. Treat them more than just someone who supplies goods, look at them as partners.


    Are you looking for a reliable supplier for your café business? We deliver Australia wide with free freight for orders over $100. Contact The Café Supplier here

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