Why restaurant stock is harder to track than shop stock
A shop sells the same packet it bought. A restaurant buys paneer, onions, cream and oil, and sells paneer butter masala. To know whether your stock is being used properly, you need a bridge between what you sell and what you buy, and that bridge is the recipe. Without it, the only figure you ever see is how much money went on purchases this month, which tells you nothing about portions, waste or pilferage.
This guide is for restaurant owners, managers and storekeepers who want raw material inventory that answers one question: how much should we have used, and how much did we actually use? It covers setting up items and units, mapping recipes, recording purchases and wastage, taking a daily closing count, and checking the difference. Using those numbers in a weekly owner review is covered separately in our guide to restaurant reports owners should review weekly.
Set up items and units before anything else
Most inventory problems in restaurants start with units. Paneer arrives in kilograms but is used in grams. Oil comes in a tin but is measured in millilitres. Eggs come by the tray and are used one at a time. If the purchase unit and the usage unit are not linked by a fixed conversion, every later figure will be wrong.
| Raw material | Purchase unit | Usage unit | Conversion | How often to count |
|---|---|---|---|---|
| Paneer | kg | g | 1 kg = 1,000 g | Daily |
| Refined oil | 15 L tin | ml | 1 tin = 15,000 ml | Daily |
| Eggs | Tray of 30 | Piece | 1 tray = 30 pieces | Daily |
| Basmati rice | 25 kg bag | g | 1 bag = 25,000 g | Weekly |
| Takeaway containers | Pack of 50 | Piece | 1 pack = 50 pieces | Weekly |
Give each item one name and stick to it, so "Paneer", "paneer fresh" and "PANEER 1kg" do not become three separate items. Group items into categories such as dairy, meat, vegetables, dry store, beverages and packaging. Packaging is often forgotten, yet containers, bags and cutlery can be a noticeable cost for outlets with a lot of takeaway and delivery.
Mapping recipes to consumption
A recipe in inventory terms is simply a list of raw materials and quantities used for one portion of a menu item. When the item is billed, the software deducts those quantities from stock. If you sell half and full portions, each variant needs its own recipe.
For example, and these quantities are illustrative only, a full plate of paneer butter masala might be mapped as 150 g paneer, 20 g butter, 200 ml makhani gravy and 10 ml cream. Your own kitchen's figures will differ, so weigh several real portions during service rather than copying a cookbook.
Prepared items and batch recipes
Most kitchens cook bases in batches: makhani gravy, onion-tomato masala, dough, marinated chicken. Treat these as prepared items with their own batch recipe and yield. When the kitchen makes a batch of gravy, the raw materials are deducted and the gravy is added to stock; when a dish is sold, gravy is deducted. This keeps the recipe for each dish short and accurate.
Where to start
Do not try to map all 150 menu items in week one. Start with your top twenty sellers and the dishes that use expensive ingredients such as mutton, chicken, paneer, cheese and butter. That covers most of your food cost with a fraction of the effort.
Recording purchases on the day they arrive
Stock figures are only as current as your purchase entries. If the vegetable supplier's bill sits in a drawer for three days, closing stock will look short and the variance check will raise false alarms.
- Check the delivery against the supplier's bill: weight, count and quality, before signing.
- Enter the purchase against the supplier with quantity and rate on the same day.
- Note any short supply or rejected items on the bill and in the entry, so the supplier's account stays correct.
- Store new stock behind old stock so older stock is used first.
- For packaged items with a date, such as cream, sauces and dairy, record the expiry date if you track expiry.
Rates matter as much as quantities. If the price of an ingredient rises and the purchase entry is not updated, your costing will understate what each dish now costs you. For food safety, storage and labelling requirements that apply to your licence, refer to the Food Safety and Standards Authority of India (FSSAI).
Wastage: record it, classify it and do not hide it
Every kitchen wastes something. The problem is not wastage itself but wastage that is never written down, because unrecorded waste looks exactly like theft in your stock figures. Make it easy and blame-free for staff to record waste, and insist that it is recorded every shift.
- Preparation loss: trimming, peeling and bones, which you can usually build into the recipe as a yield.
- Spoilage: items that went bad or passed their date in storage.
- Kitchen errors: a burnt dish, a dropped plate, a wrong order cooked.
- Returned or cancelled after cooking: dishes sent back or cancelled once prepared, linked to the cancellation entry in the POS.
- Staff meals and complimentary items: recorded as their own type, not as waste.
A wastage entry should carry the item, quantity, reason and the name of the person entering it, with the manager reviewing the list at day end. How cancellations after a KOT should be approved in the first place is covered in our guide to the restaurant POS and KOT flow.
Daily closing stock for the items that matter
A daily count of everything is unrealistic and staff will stop doing it within a week. A daily count of the right ten to twenty items is realistic and catches most problems.
- Count daily: meat, fish, paneer, cheese, butter, cream, cooking oil, and any bar or packaged beverage stock.
- Count weekly: rice, flour, pulses, frozen items and packaging.
- Count monthly: spices, dry goods and cleaning supplies, as part of a full stock-take.
Count at the same time each night, after the kitchen closes, and preferably have the person counting enter what they find without seeing the system figure first. This "blind count" stops people adjusting the count to match the screen. Low stock alerts can then tell the manager what to order the next morning; if you want a method for setting the reorder point itself, our reorder level guide explains the calculation for a pharmacy, and the same logic works for a dry store.
Checking variance: expected use against actual use
Variance is the difference between what you should have used according to sales and recipes, and what you actually used according to your counts. It is the single most useful number inventory gives you.
Actual use = opening stock + purchases − closing stock. Expected use = (quantity sold × recipe quantity) + recorded wastage. Variance = actual use − expected use.
Illustrative example with made-up round numbers: paneer opening stock 4 kg, purchased 10 kg, closing count 3 kg, so actual use is 11 kg. Sales were 60 full portions at 150 g each (9 kg) and recorded wastage was 0.5 kg, so expected use is 9.5 kg. The unexplained variance is 1.5 kg.
A variance does not automatically mean theft. Work through the likely causes in order, starting with the simplest.
| Possible cause | How to check |
|---|---|
| Purchase entered twice or not at all | Match supplier bills to purchase entries for the period |
| Recipe quantity wrong | Weigh a few portions during service and compare |
| Portions served larger than recipe | Watch plating at peak time; check if one cook differs from another |
| Unrecorded wastage or staff meals | Ask the kitchen; compare with days when entries were made |
| Items served but not billed | Compare KOTs with bills for the same day |
| Counting error | Recount the item next morning before service |
Decide your own acceptable band for each key item based on a few weeks of your data, and investigate anything outside it. The aim is to find patterns, such as a gap that appears only on one shift, not to argue over every gram.
How MATROP's restaurant software supports inventory, and when a register is enough
The inventory and purchase module in our restaurant software records stock in and out, vendor purchases, low stock alerts and wastage. Recipe-based consumption and expiry tracking are optional features you can switch on when you are ready. Because billing and inventory sit in the same system, sold items can reduce raw material stock through the recipe once recipe-based consumption is switched on. The manager role covers purchase and approvals, so you can limit who is allowed to change stock. For groups that run a central store supplying several outlets, the approach in our article on multi-branch stock control applies in a similar way.
Software is not always the first step. If you run a small outlet where the owner buys, cooks and counts, a simple register for your five most expensive ingredients, with purchases, wastage and a nightly count, will teach you most of what inventory software would. Software becomes worth it when several people buy, cook and issue stock, when the menu is long, or when you want recipe-based deductions without manual arithmetic. Recipe mapping also needs someone to maintain it whenever the menu or portions change; if nobody will own that job, start with purchase, wastage and closing counts only.
Questions people ask
Should we count every ingredient in the store every night?
No. Count your high-value and fast-moving items daily, such as meat, paneer, cheese, butter, oil and bar stock, and leave dry goods and spices for a weekly or monthly full count.
How should staff meals be recorded in restaurant stock?
Record them as a separate consumption type, not as wastage and not as sales. That way you can see what staff meals actually cost, and your variance check is not distorted.
Our chefs do not follow exact quantities. Can recipe mapping still work?
Yes, as long as the recipe reflects what the kitchen actually uses on average. Weigh a few real portions during service, set the recipe from those, and use the variance check to see whether practice drifts over time.
Do we need recipe-based consumption to start using inventory software?
No. You can begin with purchase entries, wastage entries and closing counts only, then add recipes for your top-selling dishes once the counting habit is in place. In MATROP's restaurant software, recipe-based consumption is an optional feature.
