Stock Management in Catering: Valuation Criteria

Stock management is a crucial part of any business working with fresh produce, especially in catering. Knowing and applying the right inventory management methods can optimise turnover, reduce losses and maximise profits. Let's look at the most popular ones: FIFO, FEFO, LIFO, NIFO and WAP.

FIFO (First In, First Out)

• The first product into stock is the first to be used;
• Ideal for fresh ingredients and products with a short shelf life;
• It reduces waste and losses through expiry.

FEFO (First Expired, First Out)

• The product with the nearest expiry date is the first to be used;
• Essential for perishable ingredients with a short shelf life;
• It minimises the risk of using out-of-date ingredients and keeps dishes fresh.

LIFO (Last In, First Out)

• The last product into stock is the first to be used;
• Less common in restaurants, but it can be used in specific scenarios;
• It can be useful in settings where ingredient prices tend to rise quickly.

Example: bars that need to turn over stocks of particular drinks quickly.

NIFO (Next In, First Out)

• The next product to come into stock is the first to be used;
• For high-value, low-turnover products;
• It allows stocks to be revalued and can be advantageous in niche markets.

Example: fine-dining restaurants with premium ingredients and cellar wines, where ageing can add value.

WAP (Weighted Average Price) – cost management by weighted average

• It calculates the average cost of the products in stock in order to set the selling price;
• Used to keep the valuation of stock low in restaurants;
• It simplifies cost control and makes inventory management easier.

Formula: (Q = Quantity; P = Price)

Each method has its own particularities, and it is important to choose the one that best suits your type of business and products. Implementing these methods correctly can optimise operations and maximise profits in the sector.

Do you run a catering business?

Share your experience or your questions with us in the comments!