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Hospitality Inventory Management

7 Ways a Hospitality Inventory Management System Can Help Increase Your Cash Flow

Of all the expenses your restaurant carries, food accounts for between 28 and 30 percent of your costs. For hotels, it’s about 30 to 35 percent. With the razor-thin margins on which most restaurants and hotels operate, proper hospitality inventory management is essential. 

With the right inventory management system, restaurants can keep food costs in check, reduce waste, increase profits on menu items, and order ingredients accurately.

We’ll explore what hospitality inventory management is, seven ways it can help your business, and how to find the most efficient management system.

What Is Hospitality Inventory Management?

Inventory management keeps a record of all assets for your business. It will help you plan future orders, prevent waste, curb theft, and maximize profits.

Inventory is taken on a daily basis and counts every food item and ingredient in your kitchen. It records sitting inventory and depletion and even accounts for misfires, spills, and comps.

If done right, inventory management will give you a full picture of your usage and variance. It’s important to implement a solid inventory management system to avoid food waste, food shortages, and improper forecasting. In this article, we’ll show you how.


How Can Hospitality Inventory Management Help Your Hotel or Restaurant?

A consistently accurate and up-to-date stocktake is essential for your bottom line. Here’s why.

1. Monitor Food Cost

There are four ways a good inventory management system will help you manage food costs. With MarketMan’s price change report, you can review the prices of ingredients over time and adjust ingredients as costs fluctuate.

MarketMan Price Change Report

When placing orders, you can compare the cost of ingredients from different suppliers to ensure you’re always getting the best price.

You can also monitor the percentage of cost overall for each ingredient. If the percentage gets too high, an inventory management system will alert you.


Finally, you can keep an eye on the CoGS. Recipe cards will ensure every menu item is created with a consistent amount of ingredients and help you see which menu items are more expensive to produce and why.


2. Order Accurately

Keeping an up-to-date record of your stocktake lets you keep track of how quickly you use each item and identify reorder points by location. A hospitality inventory management system helps you create an ordering schedule for items you use every day, and alerts you when you’re unexpectedly running low on ingredients.

On the flip side, you can see when something isn’t moving off the shelves and adjust your ordering schedule accordingly. 

Pro Tip: Use slow-moving ingredients for staff meals or create specials to get items off the shelves before they spoil.

3. Adjust Portions and Menu Prices

Keep track of which menu ingredients have become pricier. If the price of an essential ingredient rises, reduce portion sizes for menu items that include that ingredient or raise menu prices. With MarketMan’s menu profitability report, you can view your best-selling and highest-margin profit items with a clear understanding of the performance of your menu.


Pro Tip: Whether or not you choose to adjust portion sizes, make sure to train your back-of-house staff in proper portion sizing to ensure consistent ingredient use.

4. Identify Supply Chain Issues

A bump in price or a gap in inventory could also be an indication of a problem in your supply chain. A good inventory management system will help you compare prices across suppliers, so you’re always within budget. 

A well-kept inventory record will also help you track missing or delayed items from orders. If that’s happening often, you can consider switching suppliers.

5. Eliminate Less Popular Dishes

Ingredients left idling in your pantry, fridge or freezer may be a red flag that something on your menu just isn’t clicking. It may be time to eliminate those dishes and refresh your menu.

At the same time, ingredients that are flying off the shelves can indicate popular menu items. Cross-check quickly-used ingredients against your POS system to see if their high use is due to their popularity, then ramp up your orders and consider raising prices.

6. Identify and Eliminate Theft

If you conduct a regular inventory count, you know the rate of use for every ingredient in your kitchen. If fresh vegetables or expensive olive oil start running out at a faster rate, you can investigate by looking at your sales through your POS system and waste report in your inventory management system.


If everything is selling at the regular rate, you may have a theft problem.

Pro Tip: The problem may not be theft. It may be too many comped meals or simple accidents. Train staff on recording comps, spills, misfires, and staff meals so that they can be accounted for in inventory. 

7. Reduce Waste

Did you know that between 4 and 10 percent of food purchased by restaurants becomes pre-consumer waste? The biggest culprits in food wastage are:

  • Misfires
  • Over-ordering
  • Spoilage
  • Overproduction
  • Poor Portion Control

By keeping an accurate inventory, you can reduce the amount of waste coming out of your kitchen.

Pro Tip: Take inventory at the beginning or end of every day to identify food that’s about to spoil and reduce waste. Keep items organized and labeled to make inventory easier to manage. Use the first-in-first-out rule, particularly with perishable goods, to make sure the oldest ingredients are used first.

How to Manage Inventory

How do you manage inventory in a way that doesn’t disrupt your busy kitchen? There are two roads you can take with hospitality inventory management. 

You could create a spreadsheet that records the following information:

  • Items
  • Unit of Measure (pounds, ounces, number, etc.)
  • Unit Price
  • Inventory Amount
  • Total Cost

You can then share that spreadsheet with your inventory team, have them fill it out every day, research the current unit price for all items, and figure out the total cost on your own. In the meantime, you’ll hope that no one accidentally deletes a row (or the entire spreadsheet) or fills in an incorrect entry that messes up your Excel formulas.

Or, you could adopt a digital tool such as MarketMan that automates inventory management for your BoH staff and allows food inventory management through mobile devices. 

With MarketMan, you can:

  • Update inventory and cost automatically from invoices
  • Create recipe cards to ensure consistent portion sizes and use of ingredients across staff, as well as across multiple locations
  • Get automatic cost calculations per plate
  • Keep track of food cost percentages and get alerts if your percentages become too high
  • Organize items by storage area or focus inventories on high-use items
  • Record waste events, such as misfires and spills

Any business in the food and hospitality industry, from restaurants to hotels and resorts, can implement MarketMan seamlessly to improve their hospitality inventory management.

BearX, a day-cation resort chain based in Texas, uses MarketMan to keep track of its inventory across various revenue streams. Since BearX’s business model includes part-time staff, it was particularly helpful in keeping an accurate count across different shifts.

With MarketMan, BearX reduced the amount of time spent on asset management across different resorts and asset tracking methods, as well. Inventory, invoice, and receipt scanning made that possible.


A hospitality inventory tool such as MarketMan that integrates with your POS will help you grow that razor-thin margin by helping you keep track of one of your most valuable assets: your inventory. Schedule a demo today.

Gerard E.
Gerard E.

MarketMan allows me to get food costs, pricing trends, even tax credits at the tip of my fingers and what’s best is that it integrates with my Point of Sale and Accounting software so I don’t even have to worry about those steps.

Gede S.
Gede S.
Assistant Restaurant & Bar Manager

I have been using this software for more than 3 years. I like how I can accurately calculate profit and loss on a daily basis. It was easy synchronizing with our POS system to create recipes and every menu item!

Melissa M.
Melissa M.
Purchasing Manager

I am most happy that the price of an ingredient carries through all functions from ordering, receiving invoices and payment, recipe costing, and inventory. The accuracy of this data has been a huge time-saver for the restaurant group, and we have a better idea of how profitable we are day-to day.”

Seamless Integrations

MarketMan integrates with all major food distributors, POS systems and accounting software to help you build a unique ecosystem tailored to your specific needs.

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