How to Use the FIFO Periodic Inventory Method to Improve Restaurant Management

Published on:
January 1, 2024
Read Time:

Dive into the world of efficient restaurant management with the FIFO periodic inventory method at its heart.

Imagine serving every dish with the freshest of ingredients, all while optimizing costs and minimizing waste. That's the power and promise of the FIFO periodic inventory method.

Now, let's elevate that vision. Introducing Xenia, your ultimate partner in mastering this inventory method.

Picture a platform designed specifically for bustling restaurants. Xenia streamlines, automates, and refines every inventory task. Human errors? They're a thing of the past. Time-consuming inventory checks? Reduced to mere moments.

Sign up to get expert articles, guides, tips, and inspiration straight to your inbox.
You're in! Look out for our emails in your inbox.
Oh no! Something went wrong while submitting the form.
Our Top Picks
The Workforce Operations Platform for Frontline Teams
Rated 4.9/5 stars on Capterra
Free Version:
Supported Platforms:
Available for up to 5 users
Starter for $99/month for the first 20 users (with free trial period)
Available on iOS, Android and Web
Free Version:
Available for up to 5 users
Premium for $99/month for the first 20 users (with free trial period)
Supported Platforms:
Available on iOS, Android and Web
Download Xenia app on

With Xenia, you're not just managing inventory; you're leading it. Embrace the FIFO periodic inventory method and watch as it transforms your restaurant's operations, costs, and quality.

This post is your roadmap to that transformation. So, ready to reshape your restaurant's future with the FIFO periodic inventory method and Xenia?

Let's get started.

Unpacking the FIFO Periodic Inventory Method

First In, First Out - or FIFO as it's commonly known - is an inventory valuation method extensively used in the restaurant industry. The method operates under a straightforward principle: the first items added to your inventory (i.e., the oldest) are the first ones to be used. 

This method is ideal for restaurants dealing with perishable goods, helping ensure that ingredients are used while they're still fresh and reducing food waste. Inventory management using the FIFO method is not a one-time activity. It's a continuous process that requires regular check-ins, which we refer to as the "periodic inventory method". 

Unlike perpetual inventory methods that involve constant tracking, the periodic inventory method involves updating inventory levels at specific intervals, such as weekly or monthly. This approach is simpler and less time-consuming, which can be a significant advantage for busy restaurant managers.

The Role of FIFO Periodic Inventory Method in Restaurant Management

With tight margins and high competition, even small errors in inventory can lead to substantial losses.

Through this method, restaurant owners can optimize their operations, enhance profitability, and provide a consistent and quality dining experience for their customers.Here's why adopting the FIFO periodic inventory method matters.

Improved Food Safety

The FIFO (First-In, First-Out) method ensures that ingredients are used in the order they are received, reducing the risk of serving expired or spoiled items.

Enhanced Menu Planning

By utilizing the FIFO method, restaurant managers can better plan their menus based on the availability and freshness of ingredients. Doing so enables efficient utilization of inventory and avoids situations where certain ingredients remain unused while others run out.

Minimized Inventory Holding Costs

The FIFO method helps in reducing inventory holding costs by preventing the accumulation of excess inventory.

Streamlined Purchasing Decisions

FIFO enables restaurant managers to make informed purchasing decisions by providing a clear understanding of the inventory levels and usage patterns.

Accurate Costing and Pricing

Adopting this method enables accurate costing and pricing of menu items. By valuing inventory based on the most recent purchases, restaurants can calculate the cost of goods sold more accurately, leading to better pricing decisions and improved profitability.

Compliance with Regulations

FIFO is a widely accepted inventory management method and is often required by health departments and regulatory agencies. Through proper implementation of FIFO methodology, restaurants can demonstrate compliance with food safety regulations, which can contribute to a positive reputation and customer trust.

How to Implement the FIFO Periodic Inventory Method in Restaurants

Having grasped the transformative power of the FIFO periodic inventory method in restaurant management, it's essential to integrate this technique into your operations. Let's break down this process into six manageable steps:

Catalog Your Inventory

Begin your transition by meticulously documenting every inventory item. Be sure to record essential details such as the purchase date, cost, and expiry date. This groundwork ensures that no item remains untracked.

Incorporate FIFO Tracking

Adopt a system that can efficiently manage your inventory in line with the FIFO principle. The right system will inherently prioritize items based on their acquisition date, ensuring that older stock is used first.

Establish Routine Inventory Checks

Consistent oversight is the key to flawless inventory management. Decide on a routine, whether weekly, bi-weekly, or monthly, for conducting inventory checks. When incorporated into your system, regular reminders can be set up to ensure timely assessments.

Monitor and Adapt

Continuous monitoring of your inventory is essential. Regularly peruse your reports to identify emerging trends. Based on these insights, adjustments can be made, including revising order amounts, altering menu options, or reconfiguring storage areas for optimum use.

Employee Training and Onboarding

To maximize the benefits of the FIFO system, your team must be on board and well-trained. Arrange regular training sessions, using available resources and guides, to ensure every team member is adept at using the system.

Maintain a Feedback Loop for Continuous Improvement

Open channels of communication are critical. Seek feedback from your team regarding their experiences with the FIFO method. Their valuable insights can highlight areas that require fine-tuning, ensuring the method remains efficient and in sync with the restaurant's dynamic needs.

Challenges in Implementing the FIFO Periodic Inventory Method In Terms of Compliance & Other Aspects

In restaurant operations, inventory management is vital for ensuring profitability and customer satisfaction. While the FIFO method is celebrated for optimizing costs and preserving freshness, its consistent application poses significant challenges.

Addressing these hurdles is crucial as restaurants navigate the ever-evolving demands of the culinary world. 

Restaurants must navigate and address six significant challenges inherent to the method:

High Volume of Inventory

Restaurants deal with an extensive variety of ingredients ranging from spices to perishables. This high volume of inventory items, each with its unique shelf life and storage requirements, poses a formidable challenge. Managers need to maintain a keen eye to ensure that each item, amidst this vast array, is utilized before it becomes unsuitable for consumption.

Manual Tracking

Manually noting down and tracking the purchase and expiration dates of perishables is a herculean task. Relying on human memory or physical logs is not only tedious but fraught with potential errors. A slight oversight can lead to using expired ingredients or unnecessary wastage, both of which have ramifications on food safety and cost-efficiency.

Fast-paced Environment

With orders flowing in and dishes flowing out, it is not always conducive to meticulous inventory checks. Amidst this rapid pace, there's a significant risk of missing out on periodic checks or mismanaging stock rotation. Such oversights can result in inconsistencies in inventory management, ultimately affecting the quality of food served.

Dependency on Reliable Suppliers

A restaurant's commitment to the FIFO method is only as good as its suppliers' reliability. Timely and consistent deliveries are paramount to maintain a steady flow of ingredients. If suppliers falter in their schedules or provide stock with shorter shelf lives, it can create ripples in the restaurant's inventory flow, affecting the entire food preparation process.

Space Management

The FIFO method necessitates a strategic arrangement of stock, ensuring that older items remain accessible for use before the newer ones. This can be a logistical challenge, particularly in establishments where storage space is at a premium. Overcoming this requires innovative solutions and frequent rearrangements to ensure that inventory aligns with the FIFO principle consistently.

Lack of Training and Awareness

For his method to be truly effective, every team member must be on board. Absent comprehensive training and awareness, inconsistencies in its application can emerge, potentially harming both the dish quality and the establishment's financial health.

Mastering FIFO Periodic Inventory Method with Xenia

Xenia Restaurant Operations Management Software

Navigating the nuances of the FIFO periodic inventory method can be intricate, with its immense potential being truly unlocked only through meticulous execution. In bustling restaurant landscapes where manual oversight is not only challenging but also error-prone, Xenia emerges as a beacon of efficiency and precision. Here's how Xenia refines and elevates the inventory management process:

Automated Tracking

No longer are the days of cumbersome manual logs. Xenia streamlines the inventory process with its automated tracking system. By cutting down on human intervention, it not only minimizes errors but also expedites the entire inventory management procedure, enabling establishments to focus more on delivering impeccable service.

Real-Time Updates

Information at your fingertips is the need of the hour. Xenia ensures that your inventory data is continually refreshed and available, offering a real-time glimpse into stock status. Armed with this immediate data, restaurants can make informed decisions promptly, enhancing operational agility and financial outcomes.

Inventory Analysis

Data-driven decisions are at the heart of optimal operations. Xenia, with its robust analytical capabilities, sheds light on evolving inventory patterns. These insights become instrumental in making strategic procurement choices, striking a balance between inventory sufficiency and minimal wastage, ensuring both customer satisfaction and cost efficiency.

Streamlined Workflows

Consistency is key in any operational facet. Xenia appreciates this tenet and offers features to curate tailor-made workflows for inventory processes.

Why remain trapped in yesterday’s methods? Dive into the future, harness the full potential of your inventory, and witness the transformative magic Xenia brings.

Begin your free Xenia trial today and taste the future!

Unify Operations, Safety and Maintenance
Unite your team with an all-in-one platform handling inspections, maintenance and daily operations
Get Started for Free
Streamline Food Health and Safety with Xenia Today
Get Started for Free
Rated 4.9/5 stars on Capterra

Latest Articles

Frequently Asked Questions

Got a question? Find our FAQs here. If your question hasn't been answered here, contact us.

Illustration for empty FAQ section.
No FAQs Found

Looks like there's no data available in our FAQ section at the moment.