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Small Business Guide to Restaurant Inventory Software

Sean Peek
Sean Peek
business.com Contributing Writer
Updated Feb 03, 2022

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 counts, it’s important to find software that can keep your costs down and your revenue projections realistic. While many software options are available, it can be challenging to wade through the details concerning which software is best for your business and why. Breaking down some marquee features, important aspects of services and cost-related information for restaurant inventory software can help you 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 robust 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 list the features your business requires from inventory software. Once you have a list of must-have features, you can narrow it down from there.

Editor’s note: Looking for the right POS system for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

What is restaurant inventory software?

Restaurant inventory software is a program that helps restaurants make purchasing and menu-pricing decisions. The software is cloud-based and analyzes food supply levels, menu sales and demand. 

It’s possible to work on inventory tracking without software, but the process is time-consuming and challenging. At restaurants, most food and drinks sold use ingredients with varying shelf lives. Without good inventory management, ingredients can be used up too soon or not used soon enough, affecting the availability of menu items and creating the possibility of lost sales.

Inventory software can also help restaurants cut costs and improve profit margins. By linking inventory software to other business programs and supplier ordering systems, restaurants can get real-time inventory updates and make supply orders based on limited quantity, order history or forecasted sales.   

How does inventory software for restaurants work?

To help restaurants manage their supplies, inventory software takes counts and tracks ingredient usage against data about menu items and their recipes. Depending on the specific software chosen and other available programs for integration, this information is either updated automatically through orders with suppliers and restaurant sales data or input through regular physical employee counts of supplies. Many programs utilize mobile device cameras as barcode scanners for physical counting, and the software checks for errors in counts based on expected numbers. Some programs allow both types of recording.

As supplies coming in and going out are updated, inventory software can provide reports on food costs, high-performing and underperforming menu items, and how much to prepare during specific situations to minimize food waste. The software can also use data to suggest ways to optimize ingredient usage in everyday recipes. 

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 critical functions:

  • It allows you to plan your menu by telling you precisely which food and how much of it 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, 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.

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. You can run a more organized and realistically budgeted business by defining each ingredient’s cost, markup and final sale price. Make sure you choose software that emphasizes this aspect of your business and provides all the tools you need.  

  • Order management: Another vital 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 on 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 point-of-sale (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 POS 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 make sense for certain types of restaurants only.  

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.

Bottom LineBottom line: Restaurant inventory software takes guesswork out of supply orders and helps restaurants focus on menus with higher-profit lines.

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 include POS systems, employee management tools and customer relationship management 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.

FYIFYI: Inventory management software is just one type of restaurant technology that can help your bottom line. POS systems, customer loyalty, delivery apps and QR codes are all pieces of technology you should consider for your restaurant.

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 basic software package can cost $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 which 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’s important to choose software that is easy to use and has good customer support if something goes wrong. Most systems are easy to learn and understand, but you should test the software you’re considering before buying 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 (instead of 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 software to consider

The best restaurant inventory management software syncs with POS data or integrates with a POS system. The following inventory software is part of top-rated POS systems:

  • Clover is an affordable option for restaurants. As a POS system, it’s easy to use and offers a variety of compatible hardware and add-ons that make it work for almost any kind of food sales. Its inventory app has real-time inventory tracking with ingredient-level detail and can automate kitchen ordering. Learn more in our review of Clover.

  • Toast is a restaurant-focused POS system with tiers that allow restaurants to offer different kinds of online ordering and delivery. Toast inventory management software provides clear information about food value and cost, and has tools to prevent waste. It even lets restaurants experiment with menus, providing predictions about profits. Learn more in our review of Toast

  • TouchBistro is an excellent option for most restaurant types, both quick and full service, looking for a POS system and inventory software that works on iPads. TouchBistro’s inventory management app automatically updates menus based on supply shipments and uses sales data to make menu recommendations to increase profitability.  Learn more in our review of TouchBistro.

  • Upserve by Lightspeed offers a robust POS system on a mobile app that is easy to use and provides in-depth analytics. Upserve Inventory allows inventory tracking ounce by ounce and has alerts for waste or theft. Using integrated sales data, Upserve automatically replenishes inventory with easy, one-click ordering. Learn more in our review of Upserve.   

Customer support and troubleshooting

Finally, research the level of customer service and support that is available for your desired software program. It is vital to have reliable and helpful responses to your requests, since good technical support can prevent a minor inconvenience from becoming a crisis. 

Check whether the vendor has 24/7 chat and a phone number, or if you have to submit an online form or ticket if you have 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 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 and Kiely Kuligowski contributed to the writing and research in this article.

Image Credit:

Syda Productions / Shutterstock

Sean Peek
Sean Peek
business.com Contributing Writer
Sean Peek has written more than 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.