BEST Food Truck Inventory Management Software: How to Do Food Truck Inventory

Food Truck Inventory Management Software: How to Do Food Truck Inventory

Ongoing inflation and economic uncertainty are requiring all restaurants to dial in their inventory management and ingredient purchasing — especially for food truck inventory management. 

The limited storage space, commissary kitchens, and revolving locations make food truck inventory management quite the challenge.

The U.S. food truck industry has grown grown 7.9% per year on average between 2017 and 2022. To capitalize on this growth while navigating the inevitable peaks and valleys, operators need more than just a unique and delicious concept (though that’s a good start.)

Profitability, growth, and sustained business success are all dependent on inventory management. That’s why we’ve gathered tips, tricks, and best practices to help turn inventory management into a well-oiled machine. Read on to learn more about food truck inventory practices.

What is Food Truck Inventory Management?

Food truck inventory management is the process of ordering, receiving, storing, and tracking all the ingredients and supplies that enter and leave your truck and commissary kitchen. 

The goal is to ensure your food truck inventory matches customer demand so you don’t have too little or too much product.

For food trucks, the biggest challenge is storage, and many operators turn to commissary or commercial kitchens to prep ingredients and stash non-perishables. This means you’ll have at least two locations to keep track of.

Maybe you operate a fleet of food trucks scattered across town with different customer bases, further complicating supply and demand.

A simple food truck inventory list will not cut it. You’ll need to develop a food truck inventory management system that speaks to your unique business needs. But don’t worry, it’s not as daunting as it sounds.

To get started, read our guide to Restaurant Food Inventory 101 and then familiarize yourself with these keywords:

• Cost of goods sold (COGS) is the cost of all the ingredients a food truck uses in a given time frame, such as food costs, cleaning supplies, and even fuel for your truck. To calculate your COGS, use this simple formula: Beginning inventory + Purchased inventory – Ending inventory. A general rule of thumb is that COGS should be around 25% of your total sales.

• Par level refers to the minimum amount of supplies you should keep on hand to ensure you always meet your customers' needs.

• Understanding the cost of each “plate” (or portion) you serve is critical, and the first step is to track the unit of measurement that the ingredients were purchased in (ounces, pounds, gallons, cases, etc.). Plate costing is the difference between cost and price and is calculated using the formula: profit margin % = ([Price – Cost]/Price)*100.

• Unit conversion involves converting ingredients between different units of weight and volume. For instance, if you buy cheese by the pound but serve 2-ounce slices in a grilled cheese sandwich, you’ll need to calculate the costs by ounce. Recipe costing requires extreme standardization and should be redone every time you change a recipe. You don’t want to be in a position where you’re flying blind, unknowingly charging too little to break even.

• Yield refers to the amount of usable product after processing. Say customers love the homemade green salsa slathered on your tacos, which requires several crates of limes and tomatillos. But after all that squeezing and shucking, 40 pounds of produce quickly turns into 30 pounds, which is your yield.

• Waste that occurs during beverage and food prep will also need to be factored into recipe costs.

• Actual vs. theoretical formula (AvT) is the difference between the actual cost of goods sold and the theoretical (or expected) cost of goods sold based on projections from historical data. This is also known as variance.

• Depletion measures how long you have a product until it is entirely gone.

• Count sheets is the spreadsheet you use to keep track of your physical inventory. It is built upon your food truck inventory list with columns for description, price, quantity, and in larger businesses, the location of the items.

• Shelf-to-sheet inventory tracking is looking at what’s on your shelf and matching it to your inventory sheet.

• Shrinkage means you have less inventory on your shelves than what you’ve recorded in your books. This red flag often signals theft, shoplifting, or fraud.

Why Food Truck Inventory Management Matters

Accurately forecasting demand has gotten harder in recent years. Volatile food and gas prices have inspired (forced) many trucks to tighten inventories and avoid waste.

However, avoiding waste is all about balance. Operators don’t want to overcorrect when eliminating all slack in the supply chain. Food trucks still need to have enough food to handle unexpected rushes.

Strong inventory management is the key to finding that perfect balance for your business. With a robust system like Toast’s xtraCHEF, you’ll know exactly what is in stock at any given moment, pinpoint customer favorites in different locations, and successfully navigate the ebbs and flows of demand. 

Manual Food Truck Inventory Management vs. Software Automations

Many food trucks still count inventory by hand, ticking off every last bunch of herbs or box of plastic spoons on a food truck inventory list. While this is a tried-and-true method, it can quickly eat up precious time and, let’s face it, bore you to sleep. 

If you have multiple trucks at different locations with changing specials, taking physical inventory becomes a Sisyphean task, seemingly impossible to complete.   

The good news is that recent innovations in food truck inventory management systems will streamline the process, no matter how complicated. 

Automating the process means you will never be in the dark about your food truck inventory. It’s not just about tracking the flow of ingredients, though that’s important. You can also automate invoicing, easily measure your inventory turnover rate, and get notifications when certain items are running low.

A POS system, for instance, will centralize sales, inventory, payment, and customer and marketing data all in one dashboard. With the right food truck inventory management system, you can save time, reduce errors, and avoid major headaches.

That said, a dual approach is often the most effective: a blend of hands-on methods with newer automated software. For instance, you may be happy to check cartons of eggs against a list before the breakfast rush but too tired to tackle invoices at the end of the day. Our free guide to invoice automation shows just how important it is to digitize this crucial part of your business.

Whether your approach is automated or pen and paper (or a blend of the two), an excellent place to start is our Restaurant Cost Control Guide, where we share best practices, helpful tips, and industry insight into the tricky business of keeping costs down.

We’ll also walk you through setting up an inventory management system using a series of par inventory Excel spreadsheets. And even food truck veterans will benefit from brushing up on basic restaurant accounting practices with our free guide.

Best Practices for Food Truck Inventory

Food trucks are sought after for their unique creations and exciting approach to street food. Even more than restaurants, they reflect changing tastes and need to pivot quickly to keep customers interested. Inventory can sometimes seem like a moving target. To help, we’ve identified best practices of food truck inventory management, from storing supplies to maintaining food truck inventory lists:

• Organize your space. Storage is particularly challenging for food trucks as there can be quite a bit of chaos and confusion in such a small space. Sometimes, out-of-the-box thinking is required. “Running out does not indicate, ‘Oh, we did great.’ I see that as money we could have made” says Torey Hartwell, owner of Sweet Smackin’ Treats in Atlanta. “I try to never run out, no matter how busy or how large the crowd is.” Hartwell sometimes sets up a tent behind the trailer with coolers and containers filled with extra food, cups, containers, and other backup supplies. “I look at this as extra money to be made. When other trucks run out, we get their customers too.”

• Take inventory often. When you factor in perishable items and customers' changing tastes, it’s essential to count your food truck inventory regularly to ensure it matches what you think you have. Depending on your weekly schedule, this could be once a week or many times throughout the day. “Lists, lists, lists,” says Hartwell. “I am a person who writes down everything immediately to keep from mistakenly forgetting something important.” After every outing, she recaps the details with her husband to determine “if there is anything we felt could have flowed better. We try to come up with a game plan to correct that issue.”

• Maintain a consistent inventory schedule. Taking inventory at the same time each day will help you better understand the demands for specific products. You’ll understand what ingredients are used and when so that you can adjust accordingly on future orders. Hartwell always takes inventory the day after an event. She restocks non-perishables and orders any missing items immediately so she doesn’t forget.

• Train your staff. The most important part of any food truck inventory management system is the people. While larger restaurants may assign inventory duties to one seasoned employee or a team, smaller operations like food trucks benefit from getting all employees on board. It’s always helpful to have a fresh pair of eyes to spot small details or overlooked items.

Invest in Restaurant Inventory Management Software

After long days flipping burgers in a 16 x 7-foot space, the last thing on your mind may be software purchases. If you’re just starting out, you could always track costs manually using a food truck inventory list. But as your business grows and becomes more complex, a solid food truck inventory management system, such as xtraCHEF will be invaluable. It will help you make better business decisions and put your truck ahead of the curve.

The single most crucial step you can take is to digitize invoices; it is the foundation on which all profitable food truck inventory processes are built. Digital invoices can dramatically cut costs simply by eliminating human error. There’s nothing worse than waking up in the middle of the night to realize you added an extra “zero” to an invoice or missed a payment on a bill — heaven forbid it’s from an important supplier. You’ll want a food truck inventory management system that integrates the invoice automation process, so that duplicate payments, late payments, or missed bills will never keep you up at night.

To get the most out of your software investment, it’s also essential to define your product catalog so that it can be integrated into your inventory system. A digital record allows you to monitor sales at all locations and easily track specific metrics, from identifying the most popular plates to determining when particular menu items are sold. For instance, lunch-goers outside of a business park will have different cravings than late-night partiers looking for food after last call. You’ll know how much of each item you’ll need to meet demand, helping you better manage your product mix. 

Additionally, inventory software will help you master the elusive concept of par leveling, the goal of every company everywhere. You don’t want the inventory to be too much or too little but “just right.” The data you capture will help you to forecast demand for your menu items to keep everyone happy.

Not surprisingly, inventory management software is powering some of the most cutting-edge solutions in the food industry today. Whether you have one truck or many, want a simple system, or all the bells and whistles, the right software can profoundly affect your profits.

FAQs

How often do restaurants do inventory?

This depends on how often you have deliveries in your restaurant. Most restaurants do inventory check-ins 1 - 2 times per week, but it makes sense to take count of your inventory every time you’re restocking, to make sure that everything is fresh and within its expiration dates.  

How is food cost calculated?

Food cost percentage is calculated by taking the cost of goods sold and dividing that by the revenue or sales generated from that finished dish. Learn more about calculating food cost percentages here. 

How much food inventory should a restaurant carry?

You only need to have enough inventory to cover your sales, plus a little bit extra in case of an emergency. For most restaurants, this usually means about 5 - 7 days worth of inventory, if you’re getting 1 - 2 deliveries per week. 

What is a good inventory to sales ratio?

A good inventory to sales ratio is between 4 and 8, which means selling your entire food inventory between four and eight times each month. 

What is the average inventory turnover ratio for restaurant food?

The inventory turnover ratio indicates the number of times the store sold out its inventory in a given time period. A low inventory turnover ratio indicates either low sales or too much inventory in stock, while a high inventory turnover ratio indicates either strong sales or a poor inventory purchasing plan. The restaurant industry average is about five.