How to Track Food Costs and Inventory Through Your Bookkeeping System

If you run a restaurant and don't track food costs closely, you’re taking a dangerous gamble. In a high-pressure industry where margins are razor thin, poor inventory control and vague cost tracking can quickly lead to financial disaster.

The good news? With the right systems in place, you can get clear, actionable data on your food costs—data that helps you make smart, strategic decisions every day. Below, we break down how food cost tracking, restaurant inventory accounting, and COGS bookkeeping for restaurants should work together to keep your business on solid ground.

Why Food Cost Tracking Matters

Food cost tracking is the foundation of your restaurant’s profitability. Without it, you’re flying blind.

Ideally, food costs should be tracked by menu item. This allows you to see exactly how much it costs to prepare each dish and compare that to its selling price. When tracked properly, food cost data gives you the power to make informed decisions:

• Adjust portion sizes or prices when costs start to climb

• Remove slow-moving items that lead to spoilage

• Identify menu items that are suitable for specials without eating into profits

  
  

In most restaurants, a healthy food cost percentage falls between 28 and 35 percent. If yours is creeping beyond that, it’s time to review your purchasing, portioning, and pricing strategies.

The Tools You Need

Accurate food cost tracking requires more than just a calculator. You’ll need:

• A point of sale (POS) system that tracks what menu items are sold

• An inventory tracking system that records what items are used

• A bookkeeping system that brings everything together and provides reliable reporting

  
  

QuickBooks, when integrated with your POS and inventory systems, can deliver powerful insight into your actual cost of goods sold (COGS). This is the core of COGS bookkeeping for restaurants, and it’s the key to managing your food costs with precision.

Daily Inventory Checks for Core Ingredients

One of the most effective ways to track inventory—and spot potential theft or waste—is by implementing end-of-shift counts for key ingredients. For example:

• Count units of meat in a burger or BBQ restaurant

• Track loaves of bread in a sandwich shop

  
  

These counts help verify whether all meals are being rung up properly in the POS system. A mismatch between inventory use and recorded sales could signal a problem—like theft or unrecorded meals.

How to do it right:

• Use a standardized paper form

• Record counts at the end of each shift

• Have a manager sign and date the form

• Keep all records on file

  
  

These daily checks provide consistency, transparency, and protection.

Track Spoilage and Shrinkage

Every shift should also include space on the inventory form to record spoilage—items thrown away due to expiration, damage, or improper storage.

In addition to shift-based tracking, conduct periodic inventory counts of non-core items like:

• Pickles, peppers, tea bags, condiments

• Soda syrup or other beverage supplies

• Food service disposables like napkins, forks, and cups

  
  

Unexpected inventory shrinkage should be flagged and investigated immediately. Regular inventory reviews help identify patterns, such as overuse, improper portioning, or staff misuse.

Better Inventory, Better Strategy

Inventory data isn’t just for keeping the shelves stocked—it’s for strategic decision-making. When inventory and food cost data are integrated into your bookkeeping system, you gain powerful visibility into:

• What’s working on your menu

• What’s costing you too much

• Where losses are occurring

• What needs to be re-evaluated for profitability

  
  

Final Thoughts

The restaurant industry is cutthroat. Profitability depends on tight food cost controls, consistent inventory tracking, and a bookkeeping system that ties it all together. If you’re not paying attention to these numbers, it’s only a matter of time before it catches up with you.

At ProfitWise, we help restaurants implement efficient systems for restaurant inventory accounting, integrate with tools like QuickBooks, and provide monthly financial insights to help you stay on course.

Ready to get control of your food costs?

Contact us today to learn how we help restaurants of all sizes protect their margins, reduce losses, and build smarter, more profitable operations.

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