It’s easy, and unfortunately, common for restaurants to lose money through poor inventory management practices. Beginners are particularly exposed to this cash drain, since they often do not have their financial control systems secured. But even the most well-managed, established restaurants have ongoing challenges in this area.

Consider the challenges of dealing with food. First, your inventory is not like a plate of french fries at a bar counter. Most of it is highly perishable. Your ingredients have a limited shelf life, much of it less than a week, some as short as just a day or two. Fail to use a product within this short time results in throwing it into the trash along with some of your hard-earned profit.

Furthermore, you have a lot of people who handle your food inventory — from the time your products are ordered, received, stored, prepared and ultimately served to your customers. Even a small eatery may have 10-15 people involved in the food production process. The more people involved in taking “raw” inventory and converting it to the delivered product, the more difficult it is to control loss, waste and misuse of inventory.

As the saying goes, “Too many cooks, spoils the food”; waste and theft become hidden problems, gradually eating your gross margins.

On the subject of theft, even a small eatery has dozens if not hundreds of raw and partially prepared food products in storage. You’re stocking lots of desirable products to which many people have access.

Depending on size, nature, volume and recipes in your business, there’s a good chance that you’ll have between 200 and 500 different raw food products in your storage rooms that are of value to everyone. The more products you have, the more challenging it is to control their use. The more of anything you have, the less likely one or two items will be immediately missed.

A true inventory management system will have an interface to record your physical inventory, tally it and find discrepancies with your computer inventory. It allows you to view the inventory, track usage and identify overages/shortages. It helps you to earn more by deriving smarter ways to control and reduce inventory cost.