Simple inventory for small kitchens: counts, FIFO and par

Simple inventory for a small kitchen means counting the ten or fifteen ingredients that weigh most in your cost on the same day each week, noting what you bought between counts, and comparing what you used with what your recipes say. That tells you how much you lose, what to buy and how much. Add two rules, use the oldest stock first (FIFO) and keep a par level for each item, and you have a system that works without any software.

What to count and what to skip

Do not count everything. Count:

• Expensive ingredients or the ones you use in volume: meat, cheese, butter, chocolate, nuts, oil, flour if you bake at scale.
• Anything that spoils fast: dairy, fruit, leafy greens, prepared fillings.
• Packaging and labels, because running out of jars for an order costs more than the jar.
• Finished product you hold for sale.

Leave out salt, spices and anything that costs cents per batch. Counting it takes time and changes nothing.

Use the same unit you buy and cost in: kilos, litres, units. If nuts come in 1 kg bags, count the sealed bags and weigh the open one.

How often and how to count

Once a week, same day, same time, is enough for most small kitchens. The best moment is before you shop, for example early Monday before the wholesaler or cash and carry. That way the count also builds your shopping list.

To count fast:

1. Keep a sheet listing items in the order they sit on the shelves.
2. Count left to right, top to bottom, without skipping.
3. Weigh anything open. A kitchen scale beats any guess.
4. Note anything spoiled and throw it out. That is waste, and it goes in your records.

On the same sheet, next to each item, write what you bought during the week. Take it from your receipts.

Actual usage versus theoretical usage

This is where inventory earns its keep. For each item:

actual usage = opening stock + purchases − closing stock

Then work out theoretical usage: what your recipes say you should have used for what you produced. If you made 300 pieces and the recipe takes 20 g each, theoretical usage is 6 kg.

The gap between the two has only a few explanations: portions bigger than the recipe, prep waste that was never in your costing, stock that spoiled, purchases recorded wrong, or use that is not a sale (what you eat, tastings). Each one is fixed differently, but none shows up unless you count. If the gap comes from portions, the guide on portion control helps close it.

FIFO: first in, first out

When new stock arrives, it goes to the back or the bottom; older stock stays at the front. That way you always use what has been waiting longest, and less goes out of date at the back of the fridge.

To make it work:

• Label every opened or prepared container with the item and the date.
• Arrange the shelves, fridge and freezer the same way.
• If you sell packaged goods, put a batch code and date on the product label; it lets you count and rotate finished stock by batch.

When a new ingredient comes in, keep its label or spec sheet. You will need it if you ever work out nutrition information for your products, and it helps you notice when a supplier switches brands.

Par levels: how much to keep

A par level is the amount of an item you want on hand right after shopping:

par level = usage between orders + buffer

The buffer covers a busier week than usual or a supplier who is out of stock that day. For things that spoil fast, keep the buffer small or zero. For dry goods it can be bigger, as long as it does not tie up too much cash.

With a par level, the shopping list writes itself: order = par level − what you counted, rounded to the pack size. To go from there to a full list based on what you plan to make, see planning purchases from your production plan.

Worked example: the nuts in your granola

You make granola, and mixed nuts are your most expensive ingredient. They come in 1 kg bags at $14.00, so $14.00 per kg. The recipe uses 60 g of nuts per 500 g jar.

This week's count:

Actual usage: 2.0 + 5.0 − 1.8 = 5.2 kg

Theoretical usage: 70 × 60 g = 4,200 g = 4.2 kg

Gap: 5.2 − 4.2 = 1.0 kg

Cost of the gap: 1.0 × $14.00 = $14.00 a week. Over four weeks, 14.00 × 4 = $56.00 a month.

Per jar you are using 5,200 g ÷ 70 = 74.3 g instead of 60 g. Nuts cost $14.00 ÷ 1,000 = $0.014 per gram, so the extra 14.3 g is 14.3 × 0.014 = $0.20 per jar that your costing does not see. A marked scoop or weighing the nuts per batch fixes it.

Par level: you use 5.2 kg between orders. With a 1.0 kg buffer, par is 5.2 + 1.0 = 6.2 kg. On Monday you count 1.8 kg, so you need 6.2 − 1.8 = 4.4 kg. In 1 kg bags that is five bags (6.8 kg on hand) or four (5.8 kg, a little under par). Nuts keep well sealed, so five is the safer order.

Once you fix the portion, redo the sum: at 4.2 kg a week, par drops to 4.2 + 1.0 = 5.2 kg, and your weekly order shrinks by about 1 kg, or $14.00.

Stock is money too

Everything on the shelf is money that has gone out and not yet come back. An extra sack "because it was cheap" can be a good buy or cash tied up for weeks, depending on how fast you use it. The guide on how inventory ties up cash shows how to work it out.

To see how inventory fits with the rest of your records (purchases, production and sales), read the guide to operations and records.

Do it with the calculator

Once you know the actual usage per unit, put it into the food cost calculator instead of the recipe quantity: you will see the cost per unit you are really paying.