Developing an Inventory Management System for Your Restaurant

If you’re a restaurant owner managing your restaurant’s inventory by hand, you know how time-consuming and painless it is. In 2020, there has to be a solution to manage your inventory more effectively and easily.

We’re here to talk about custom restaurant inventory management software, what features to include, and when it’s better to go with off-the-shelf restaurant management apps. But first let’s answer the question: Why are spreadsheets bad for inventory management?

Why using spreadsheets for cafe inventory management isn’t the best solution

Being cumbersome isn’t the only reason to stop using spreadsheets. In addition to this, spreadsheets:

  • Require a great deal of time and effort to plan and design
  • Are vulnerable to human errors
  • Are difficult to analyze
  • Don’t generate reports
  • Don’t provide you with updates in real time
  • Don’t ensure Cost of Goods Sold (COGS)
  • Don’t give you historical inventory data

Restaurant inventory software, on the other hand, optimizes and automates your inventory management process.

What is a restaurant inventory system?

A restaurant inventory management system gives restaurants accurate and up-to-date data about their food inventory and helps them purchase orders and manage stock levels.

Source: by reut kabilo

Nowadays, restaurant management software isn’t a luxury, it’s a must. Such software improves inventory tracking and ordering and helps restaurant businesses:

  • Update inventory automatically
  • Know their stock levels in real time
  • Prevent food losses and minimize waste
  • Get control of food costs
  • Manage vendors
  • Minimize human error
  • Reduce the number of employees required to track inventory
  • Streamline their processes

Key features to include in your inventory management software

The functionality you include in your inventory software can vary depending on your particular goals. Below, we draw up a list of features that can be helpful.

Inventory upload and update

This is the major feature of restaurant inventory software.You should be able to upload menu items and ingredients and update their quantities by entering data like product name, quantity received, vendor, and Universal Product Code (UPC).

Consider integrating your PoS System to update stock levels automatically. By doing so, the system will instantly update inventory each time a customer orders food and drinks.


Low-stock inventory alerts

Let your system notify you when a menu item is about to run our. You can also set alerts when your vendors prices rise or when a menu item becomes less profitable. This notification can be a dashboard notification, push notification, or an email.


Vendor relationship management

Enable your restaurant software to create purchase orders, add suppliers, and send orders to your vendors electronically. By doing so, you’ll prevent costly errors and reduce the time spent on placing orders.


Analytics and reports provide you with an accurate and thorough picture of your finances, performance, and daily activities. By analyzing this information, you can increase your restaurant’s efficiency as well as profitability. There are a few reports you may want include: stock levels, profitability, and sales performance.

Source: by Gowtham Selvaraj

Stock reports let you stay updated about what you have on hand. Tracking individual ingredients can help you monitor their stock levels and even identify food theft and see if your kitchen staff follow the correct proportions.

Profitability reports can help you see your cash flow by comparing cash outflows (such as cost of food and beverages, payroll, insurance, rent, and utilities) with cash inflows. Also, you’re able to know your profit margins for items.

With sales reports, you can see what menu items aren’t selling so you can remove them. Additionally, you can quickly find out the least ordered and most ordered items to make sure you have the necessary items on hand.


Apart from your PoS system integrations, you’ll need to consider integrations with other systems you use. This can be your employee time tracking and accounting tools. By doing so, you’ll save time and optimize your inventory operations.

Build vs. buy: Advantages and disadvantages of buying ready-made restaurant management software and building a custom solution

There are lots of restaurant PoS systems that feature inventory management, so you might be wondering if it’s worth building an inventory management app from scratch. Below, we examine the advantages and drawbacks of both approaches so you can understand which option that best suits your needs.


Ready-made systems

We’ll compare three popular restaurant PoS systems that come with inventory management functionality (TouchBistro, Toast, and Lavu) based on their inventory management tools, functionality, and pricing.


Building a custom inventory management solution

To be clear on whether custom development is the best solution for you, we’ll explore benefits and limitations of this approach.

  • You can build software that perfectly suits your needs and requirements. This is especially important for businesses that have specific needs. A custom system can perfectly align with your restaurant operations and processes.
  • A custom system has great potential for further improvements and salability so your software grows along with your restaurant. You can start small by developing an MVP including a minimum set of features. Later, you can add more features.
  • You can decide on every element of your software. The design, content, and set of features is limited only by your imagination. You’re free to choose what you like.
  • You’ll pay just for development, you won’t pay monthly fees and depend on a third-party provider.
  • You can use the best practices for protecting your data, so your critical business information is protected.
  • To use your inventory system, you won’t need to purchase specific hardware.
  • Much time spent on development. Custom development takes more time compared to using a ready-made solution so it might not be the perfect option for businesses that require quick solutions.
  • High costs. A custom system can cost a pretty penny. Plus, you also have to pay additional expenses for maintaining, upgrading, and hosting.

Want to start your inventory management software development?

If you have any questions on how to create an inventory system or if you’re looking for an inventory management software development company, message us. We’d be happy to help!

Also, we suggest that you check out the articles below to learn more about how you can use technology to improve customer service:



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