How to develop a restaurant inventory management system

22 Aug 2021

Do you still use spreadsheets to manage your restaurant inventory? If so, you know exactly how challenging and time-consuming it is. In 2021, there has to be a better way to track food.

In this article, we talk about how to build restaurant inventory management software from scratch and when it’s better to use an off-the-shelf solution. But first, let’s go back to spreadsheets for a minute to outline what problems you can get rid of by creating a brand-new food inventory management system.

Reasons why inventory management software for restaurants is better than spreadsheets

In addition to being cumbersome, there are a number of other good reasons to stop using spreadsheets:

Vulnerable to human errors
Require plenty of time to plan and design
Don’t give you Cost of Goods Sold (COGS)
Don’t generate reports
Are difficult to analyze
Don’t provide you with historical inventory data
Don’t ensure real-time updates

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Unlike old-school spreadsheets, inventory software for restaurants tracks your restaurant’s inventory automatically and helps you manage your inventory effectively.

What is a restaurant inventory management system?

A restaurant inventory management app provides restaurants with an up-to-date and accurate picture of their food inventory and helps them manage stock levels and purchase orders.

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Source: dribbble.com by reut kabilo

These days, an inventory management system for restaurants is a must, not a luxury. This kind of software makes restaurant inventory tracking easier and helps restaurants:

Know their food inventory in real time
Automate inventory management
Decrease the number of employees required to manage inventory
Get control of food costs
Minimize food waste and prevent losses
Automate the supply chain
Streamline operations
Reduce human error in inventory management

What features does your restaurant inventory software need?

The features you include in your restaurant management system can vary depending on what you want to accomplish. Below, we outline functionality that can be helpful.

Inventory management: Upload and update

This is the main feature of restaurant food inventory management software. You need to be able to upload ingredients and menu items and update their quantities. You should be able to enter data such as product name, supplier, quantity received, and Universal Product Code (UPC).

To update inventory automatically, integrate your management system with your PoS system so that each time a customer purchases food and drinks, the system instantly updates your stock levels.

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Source: calazan.com

Real-time alerts

Enable your restaurant software to alert you when a menu item is about to run out. Also, you can set notifications when any menu item becomes less profitable or when your suppliers’ prices rise. This notification can be an email, push notification, or dashboard notification.

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Source: calazan.com

Vendor management

Your management system should enable you to add vendors, create purchase orders, and send those orders to your suppliers electronically. This will reduce the time spent on placing orders and reduce costly errors.

Reports

Reports give you a thorough and accurate understanding of your restaurant’s performance, finances, and daily activities. By analyzing this data, you can increase your restaurant’s profitability and efficiency. There are several reports you may want to consider: stock levels, sales performance, and profitability (ratios).

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Source: dribbble.com by Gowtham Selvaraj

Stock reports can help you stay updated about what you have on hand. By monitoring individual ingredients, you’ll be able to track their stock levels and even see whether your kitchen staff follow the correct portions and identify food theft.

Sales reports let you quickly determine the most ordered and least ordered menu items so you can make sure you have the necessary ingredients on hand. Also, sales reports can show you what items aren’t selling so you can remove them.

With profitability reports, you can understand your restaurant’s cash flow by comparing cash outflows (payroll, cost of food and beverages, utilities, rent, and insurance) with cash inflows. You can also know your profit margins for items.

Integrations

In addition to integrating with your restaurant PoS system, your management system should communicate and synchronize seamlessly with other systems you use – for example, your accounting and employee time tracking software. This will help you optimize your inventory management and save time.

Build or buy inventory management software?

With so many off-the-shelf PoS systems that come with inventory management functionality, you might be questioning whether it’s worth developing a custom inventory management solution. To help you decide which option is best suited to your restaurant’s needs, we’ve examined the benefits and limitations of both approaches.

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Source: blog.learnosity.com

Ready-made solutions

What is the best restaurant PoS and inventory software? Well, it’s difficult to single out one player who deserves to be named the best as there are a variety of off-the-shelf solutions that provide a lot of powerful functionality including cafe inventory management. Therefore, we chose three popular restaurant PoS systems that feature inventory management ― Toast, TouchBistro, and Lavu ― and compared them based on their pricing, inventory management tools, functionality, disadvantages, and integrations.

Building a custom inventory management system

There isn’t a clear answer to whether custom development is the best approach for you. It depends on your needs and goals.

Good reasons to develop an inventory management system from scratch:

You’re free to decide on every element of your system. You can choose what functionality and content to include and what design you like. You pay only for the functionality that you need.
You can develop a system that’s a perfect match for your requirements. This is especially relevant for restaurants that have unique needs. By going custom, you’ll be able to develop a system that perfectly aligns with your business processes and restaurant operations.
Custom software has great potential for scalability and further improvements, allowing you to grow your system along with your business. You can first build a minimum viable product, including the most important features. Later on, you can scale by adding more functionality.
Your sensitive data is protected. With development from scratch, you can use the best practices for protecting your data.
You won’t depend on a third-party provider and pay monthly fees. You’ll pay only for development.
You won’t need to buy specific hardware to use your restaurant inventory system.

Reasons why you shouldn’t go custom:

High costs. Custom software often costs a lot to develop and might not be the best choice for small restaurants. As there are lots of ready-made solutions available, small businesses may find it beneficial to go with a ready-made system that covers a wide range of needs.
Much time spent on development. Usually, custom development takes lots of time and isn’t always the best option for businesses that are short on time and need quick solutions.

Looking for an inventory management software development company?

If you’ve decided to say goodbye to spreadsheets and hire developers to build your own restaurant management software — or if you have any questions on how to create an inventory system — we’d be happy to help. Message our sales team for a free consultation.