Small Business Guide to Restaurant Inventory Software

By Kiely Kuligowski,
business.com writer
| Updated
Jul 23, 2020
Image Credit: Syda Productions / Shutterstock
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Wasted food takes a bite out of your profits. Restaurant inventory software can help.

The restaurant industry has some of the tightest margins of any professional industry. When every cent coming into a business counts, it's important to find software that can keep your costs and revenue projections realistic. While many software options are available, it can be difficult to wade through the details concerning what software is best for your business and why. By breaking down some marquee features, important aspects of services and cost-related information for restaurant inventory software, you can narrow it down to find the best software option for your business. 

Many restaurants lose up to 10% of their food before it even makes it onto diners' plates because of inventory errors. This can cost your restaurant thousands in lost revenue over the course of a year. A strong inventory management software application can help you track exactly what comes in and goes out of your restaurant, down to the last garlic clove. Another benefit of this type of software is that you can see exactly where you're overspending or losing money. 

Every restaurant has different needs, so the best place to start is to make a list of the features your business requires from an inventory software. Once you have a list of the must-have features, you can narrow it down from there.

 

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How to choose restaurant inventory software

As with choosing any software, the most important aspect of finding the right restaurant inventory software is defining your restaurant's needs. Restaurants are very diverse, and some software systems that thrive in one type of restaurant may come up short in yours. 

When searching for the right inventory software, ask other restaurant and business owners what they use. When you talk to a software company, ask for tangible, real-world examples of the software at work. The key here is to pair your business with a type of software that can do everything you need it to do. It should make things easier, not more complicated. 

Another good place to start is to analyze your current systems. When drawing up your list of must-have features, think about your current method of inventory management. What exactly is lacking with the current system, and what would you like to add? Do you need detailed reports of what items you have in stock? Do you need it to integrate with other systems? Do you store your items in multiple locations? 

Next, determine if your restaurant has other needs. Most inventory management tools are included in restaurant management systems (RMS), which also have features like point-of-sale (POS), employee management and CRM systems. Do you need these features or only inventory management software? If you need multiple services, an all-encompassing RMS may be more cost-effective than stand-alone inventory software.

Why is restaurant inventory management software important?

Inventory management software helps your restaurant run as efficiently as possible. A good inventory software program will perform these important functions: 

  • It allows you to plan your menu by telling you precisely which and how much food you have on hand.
  • It alerts you to surpluses or shortages of any item.
  • It tracks your food usage to help you identify sales trends.
  • It calculates your cost of goods sold (COGS), or how much you spend on your inventory, which gives you an accurate look at profit margins, represents your restaurant's financial health and helps you track tax deductions.
  • It determines food costs and controls waste by telling you what needs to be used first on a given day.

Pricing for restaurant inventory management software

Most inventory management software options have a core package that increases in price as you add more hardware or capabilities. A starting software package costs $70 to $130 per user (or terminal) per month, and you should expect to pay more for additional features. 

Software vendors offer different packages with different combinations of features, which is why it's important to already know exactly what features you need beforehand. If you know what you need, you can accurately compare different programs and pricing plans for their suitability.

Ease of use

It is important to choose software that is easy to use and has good customer support in the event that something goes wrong. Most systems are easy to learn and understand, but you should test the software that you're considering before you buy it. Many vendors offer a free demo. If they don't, ask for one. If they refuse or don't offer one, that should serve as a red flag to you.

Accessibility

Most software is created for Android or iPad platforms. Determine which type of device you will use, and check with the software company to ensure the software can run on those devices. Also check whether the software is mobile or tablet only, or if it can also be accessed on a desktop or laptop.

Integrations

If you choose inventory management software (as opposed to a general restaurant management system), make sure the software can easily integrate with other systems. This will make running the day-to-day tasks of your restaurant easier, because your systems will be able to seamlessly coexist (thereby providing more meaningful data) rather than offering conflicting reports or requiring you to enter the same information in multiple programs.

Restaurant inventory management features

Most systems have a core plan with basic features, such as automatic inventory, recipe costing, vendor management and one-click ordering, granting access to more advanced features as the price goes up. Here's a breakdown of some prominent features: 

  • Menu costing: One of the most important aspects of running a restaurant is calculating realistic menu costs. You should choose a software system that allows you to do this in real time and at scale. By defining each ingredient's cost, markup and final sale price, you can run a more organized and realistically budgeted business. Make sure you choose software that emphasizes this aspect of your business and provides all the tools you need.  
  • Order management: Another important aspect of creating a menu and running a restaurant is connecting with your suppliers and purveyors. You want software that can connect easily to the overall costs of the goods coming into your restaurant. This should also offer the option to be done at scale, letting you view food costs for a weekly, monthly and even yearly basis.

  • Integrations: The sign of any great software is its ability to integrate with other programs. Restaurant success is often about collaboration between several different types of people and programs. Your restaurant inventory software should play into this dynamic, not set the tone of it. Find software that integrates easily with POS systems and other software you use for your business. 

  • Real-time updates: What good is using software for food costing if it doesn't update in real time? One of the main advantages of using software to track and calculate costs that could otherwise be done manually is that it should update in real time, so this is an essential feature for your restaurant's software suite.

  • POS capabilities: Many restaurant inventory software programs double as a point-of-sale system. Depending on what your company is already using, it may be best to fully integrate your inventory software with POS software. This will allow you to keep all of your information in one place. Keep in mind that this will only make sense for certain types of restaurants.  

There are a host of other features to be aware of, many of which you should talk to sales representatives about. For example, how detailed do you need your inventory reports to be? Do you want automatic reordering? What (and how much) do you want the software to do versus what you and your staff are willing to do? Some vendors may customize the software to meet your unique needs. Talk to the vendor to see what your options are.

Customer support and troubleshooting

Finally, research what types of customer service and support are available for your desired software program. It is vital to have reliable and helpful responses to your requests, since good technical support can turn a crisis into a small inconvenience. 

Check whether the vendor has 24/7 chat and a phone number, or if you have to submit an online form or ticket for any issues. Ask vendors what their average response time is for typical customer issues and how they respond to issues. Be sure to read reviews for the company on a variety of platforms before making your decision. 

If you do your research and understand your restaurant's needs before buying, a restaurant inventory software application can increase your profits, decrease waste and help your business run more efficiently. By starting the buying process confident of what your needs are, you'll benefit in the long run. 

Restaurant inventory software should simplify your operations, not complicate them. If you want to cut down on food waste, highlight inventory tracking and use a cloud-based system to store data, this software could be ideal for your business. It's best to do some research, understand your business's needs, and then work closely with a company's sales representative to find the best match for your business. 

Matt D'Angelo contributed to the writing in this article.

Kiely is a staff writer based in New York City. She worked as a marketing copywriter after graduating with her bachelor’s in English from Miami University (OH) and now writes on small business, social media, and marketing. You can reach her on Twitter or by email.
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