Inventory Strategy Going Stale? How to Master FIFO

FIFO (First In, First Out) Keeps Inventory Fresh, Reduces Waste, and Saves Money

Picture this: You’ve been promoting your newest menu item, the Vegan Taco Bowl, all week, leading up to the big holiday weekend. Orders have been rolling in—for takeout, delivery, and in-house—and then the three-day weekend hits. Suddenly, orders are flying in faster than your staff can fill them—but you put on an apron and chip in, and you make it work.

Then it happens: the next batch of vegan beef crumbles comes out of the fridge. Your key ingredient is spoiled. Now not only are you scrambling to tell in-house guests the dish is off the menu, but all delivery orders have to halt. Customers waiting at home are frustrated, and first-timers might never come back.

One moment, your kitchen is humming. The next, your inventory mishap has disrupted service, wasted food, and threatened your bottom line.

Why Restaurant Inventory Management Matters

Running out of a key ingredient mid-shift is one of the most stressful situations for any restaurant owner. It can hurt your reputation, frustrate customers, and directly impact profits. At the same time, overordering can lead to unnecessary food waste, which also drains your bottom line.

The solution? Smart inventory management that tracks stock, monitors usage, and ensures ingredients are used before they spoil.

Enter FIFO

One of the simplest and most effective strategies to keep your kitchen stocked, reduce waste, and protect your profits is FIFO—First In, First Out. By using the oldest stock first, you ensure ingredients stay fresh, delivery orders keep flowing, and your kitchen avoids the chaos of spoiled inventory.

A smart FIFO system helps by:

• Ensuring fresh stock gets used first

• Reducing food waste

• Helping manage costs and menu pricing

The right amount of inventory depends on traffic, storage, deliveries, and PAR levels, short for Periodic Automatic Replacement. PAR levels are the minimum desired quantities of ingredients and supplies that should be on hand at all times to meet customer demand while avoiding waste from overstocking. Restaurants calculate PAR levels by considering average ingredient usage, delivery frequency, and a safety stock buffer for unexpected demand, ensuring enough product for service without spoilage or excessive cash tied up in inventory. 

Example: If you use an average of 50 pounds of ground turkey per week and have a weekly delivery, and you add a safety stock of 12.5 pounds (25% of 50), your PAR level would be 62.5 pounds of ground turkey. You would then order enough to bring your stock up to 62.5 pounds whenever your current inventory drops to that level. 

And it’s not just food—running out of containers, packaging, or other supplies can stall your entire delivery operation.

How FIFO Works in Your Kitchen

FIFO is simple in theory, but execution matters:

• Organize storage: Put new stock at the back, older stock in front.

• Train staff: Everyone should check expiration dates and rotate stock properly.

• Use POS and manual checks: POS data forecasts demand, while manual checks catch spoilage, spills, or shrinkage.

Example: Yesterday’s delivery of vegan beef crumbles should be used before today’s. Same goes for dairy, fish, and all perishables.

A Quick Word on LIFO

LIFO (Last In, First Out) is where the newest stock gets used first. It rarely makes sense for perishable items, but can work for long-dated goods like wines, sauces, or pantry staples. For most restaurants, FIFO is the go-to method to keep ingredients fresh, avoid waste, and ensure delivery orders keep flowing.

5 Tips to Maximize FIFO

1. Integrate POS SoftwareTrack sales, forecast demand, and automate orders. Comparing sales to inventory costs also ensures menu items are priced correctly.

2. Manual Inventory ChecksPOS systems can’t track spoilage, spills, or theft. Manual counts ensure FIFO is actually being followed.

3. Designate Staff for Stock RotationAssign staff members to rotate stock consistently. Train thoroughly and consider bonuses tied to waste reduction.

4. Track Food WasteRecord item, quantity, and reason for waste. Use this data to adjust orders, repurpose surplus, and improve staff accountability.

5. Repurpose Surplus IngredientsIf ingredients are nearing expiration, create specials, soups, salads, or dips. FIFO isn’t just about rotation—it’s about smart usage.

FIFO and Your Bottom Line

Proper inventory management directly impacts Cost of Goods Sold (COGS) and net profit. By using FIFO, you minimize spoilage, maximize the value of your inventory, and keep delivery orders running smoothly.

COGS Equation:

Beginning Inventory + Purchased Inventory – Ending Inventory

Net Profit Equation:

Gross Profit (Total Sales – COGS) – Labor Costs – Operating Costs

Reducing waste through FIFO lowers COGS, which increases net profits.

Making FIFO Easy

The right inventory software simplifies FIFO: automated ordering, POS integration, and real-time tracking all help your kitchen run efficiently. Combine this with manual checks and staff training, and your restaurant will reduce waste, keep ingredients fresh, and protect your bottom line—even during the busiest delivery rushes.

Take Away

Almost nothing can wreak havoc on your restaurant's vibe, reputation, or daily sales more than running out of an essential item in the middle of a busy shift. By mastering FIFO, you can reduce waste, keep delivery orders flowing, and keep your customers happy.

By Eileen Strauss