Restaurant space is full of words that one might not be familiar with, and the restaurant glossary is here to simplify it all for you. It will help you keep up with updated restaurant industry lingo.
What is FIFO?
First-in, first-out (FIFO) is an inventory valuation principle that is widely used in restaurants. This method makes the assumption that the products you buy first are also the products you use (and sell) first.
What are the benefits of FIFO?
- Reduced trash will make your company more environment-friendly and cost-effective.
- FIFO ensures greater food hygiene standards, resulting in safer food storage.
- Aids in adhering to HACCP (Hazard Analysis Critical Control Point) and, by extension, food safety law.
- Greater customer experience as the food is always of high quality.
What are the disadvantages of FIFO?
Running a busy kitchen may make it challenging to keep track of and classify items in the order they arrive, but a restaurant inventory management system can be beneficial. There might be a disparity between costs and revenue since older, frequently lower expenses are calculated using current revenues.
It has a propensity to exaggerate gross margin, which leads to deceptive financial statements, especially during periods of high inflation. Gains seem bigger than they are, and expenses seem cheaper than they are.