If you've managed inventory or worked in accounting, you're probably familiar with the term "first in, first out" or FIFO. As an accounting method, "FIFO" assumes that the first unit brought into inventory is the first sold. As an inventory management technique, FIFO dictates that the first lettuce that came in is the first lettuce to go out. The first chicken filets that came in are the first chicken filets to be cooked.

Unless you're fascinated with managerial accounting, an explanation of the financial reasons for using the FIFO accounting method versus LIFO (or "last in, first out") tends to put people to sleep. Conversely, if you ignore FIFO inventory management in your restaurant, it could keep you up at night.

How so? As ServSafe instructor Cathy Watson says, "Eventually, everything will go bad." You don't want to toss money in the trash because a container has gotten consistently shoved to the back of the shelf until the contents were unusable. "If you give cooks free reign, they'll stuff things in there and not pay attention. In a hurry to load up their stations, they'll stuff the new in on top of the old. Food shoved in the back will never be used and it will be waste," Watson says.

Kevin Moll, president of Denver-based Restaurant Consultants Inc., says, "A major factor in controlling food cost is eliminating waste as much as possible. Throwing product away because it is too old -- thus spoiled -- shows that the product was not properly rotated in the cooler, or it was over-ordered." Watson agrees. "If you keep your stock low, you can bring your food cost down. You should always be just on the verge of running out."

Not the Same as Inventory Rotation

Don't confuse inventory management with inventory rotation. Your inventory management system will tell you that you have 10 half-gallons of whole milk. By employing FIFO, you know in what order those half-gallons should be served.

At home, it may be easy to remember which of two cartons of milk you should use first for your cereal. But in a restaurant, you have several shifts of people working, which can cause confusion. Watson worked at a casino where there were four restaurants and a central kitchen. Many food items were prepped in the central kitchen and completed in each restaurant. In a situation like that, it's obvious all food items have to be properly labeled. But even in a small restaurant, food should be labeled to make FIFO work.

The health departments of some jurisdictions mandate that all stored food be labeled. If that's the case in your area, you have no choice but to do it.

. . . At home, it may be easy to remember which of two cartons of milk you should use first for your cereal. But in a restaurant, you have several shifts of people working, which can cause confusion.

But what if laws in your state, county, or municipality don't require labeling? "Even if labels are not required, they are an operational advantage," restaurant consultant Chris Tripoli says. "I strongly suggest using labels for the purpose of product management, inventory rotation, as well as simplicity of station setup." Watson adds this tip: "Even if labels aren't required, having your perishables labeled will show the health inspectors you're at least trying to have a system."

Watson worked at a restaurant where the shelves were labeled instead of the containers. That system worked well until a hard-working cleaning crew came in. "The crew removed everything on the shelves to clean them and then just put it all back," Watson says. That's why she suggests that if you're going to label your shelves, label the containers, too.

Commercially Prepared Labels are the Way to Go

A handful of companies manufacture labels precisely for this purpose, and the experts agree that you should use these labels. Why? Masking tape may be a cheap alternative to store-bought labels, and it may successfully record the correct information, but when removed masking tape leaves behind a sticky residue, which traps bacteria and creates an unsanitary condition that may jeopardize food safety.

It's the same thing with using marker pens. Sure, you can write directly on the plastic wrap with a marker pen. Watson says she's even seen marker-pen-on-plastic labeling shown in ServSafe videos, but she's against the practice. "I'm concerned the ink may bleed through to the food. What's the cost of the label as compared to the cost of the food that's in that container?" she says.

Still another problem with using noncommercial labels is that they are often hard to remove. If you wash a container in the sink or dishwasher with a label, that label may come off in bits, which eventually clog your drain, or not come off at all. You'll be left with a container with an outdated, meaningless label still on it. The trend for food labeling systems is dissolvable material that breaks down in water and removes cleanly, without clogging drains or otherwise making a mess. Masking tape, sticky notes, and other methods of marking pans are not created with the harsh and often wet environments of the kitchen, cooler, or freezer in mind.

FIFO makes sense. Commercial labels make sense. So what's next? How do you begin a food dating program or improve your current one? A standardized system incorporating color-coded, day-of-the-week labels is a simple way to put in place a food rotation program. Printed labels are easy-to-read, often multilingual, and available in a variety of configurations and adhesives for every operational need. One popular item is a 1-inch dot with the day of the week on top and a blank on the bottom for the date.

Accountability can increase the likelihood that back-of-the-house staff will adhere to food safety and inventory control measures. Many restaurants require the signature of the person who opened the package or who prepped the food. Initializing prepped food is particularly effective during a training period so that the manager can see if the food is being prepared to the restaurant's standards.

Some labels are bilingual (Spanish and English) and some are trilingual (Spanish, English and French), but if the kitchen crew only speaks Farsi or Korean, don't despair. At least one company can make you custom labels in any language. Depending on how their rotation system works, restaurants have different needs. Some want their logo on their labels. One customer wanted food dated down to the hour. A labeling company created a label with a clock face to circle the time the item was prepped and the time the item would be thrown away.

And then, there is the obvious. What is the food? Don't dismiss the notion of labeling the type of food in a container. Anybody can tell the difference between applesauce and shrimp salad just by looking at it. What about chicken salad and tuna salad? When Watson teaches her ServSafe courses, she always includes an exercise in which the attendees are presented with six bags of white powders and asked to identify them. She even gives them 12 possibilities to choose from, ranging from flour to scouring powder, from salt to baking powder. "In the eight years I've been teaching, not one person has ever gotten all six right," she says.

Watson experienced a case of "mistaken identity" herself. Earlier in her career, when she worked for a chain restaurant, the chef made her a special chicken sandwich. He grabbed what he thought was flour from an unmarked box in the storeroom to coat the chicken and mixed the "flour" with Cajun spice. Funny thing was, this "flour" didn't seem to brown in the pan.

Earth Food

Watson ate the sandwich anyway, but later found out that what the chef thought was flour was actually diatomaceous earth, a filter media used with the oil in the restaurant's fryers. "We were oblivious to every red flag that went up," Watson says. Luckily, diatomaceous earth is nontoxic.

Once you've determined what information is mandated (if any) on food labels and what information you want for your purposes, the kitchen supervisor must train the staff with the use of the labels. Even experienced kitchen workers need to know your particular system when they are hired. "Give them a consistent pattern to follow." For example, do you write March 5 or March 05 or 3/5 or 03/05? Some employees may write March 5 as 5/3.

Further, Watson also believes that all training should be followed by a test of practical knowledge. She says you can test your staff with questions such as, "How long can we keep our potato salad that was made yesterday?" or "What information goes on each of our labels?"

Ongoing training is also important. You may want to work with a supplier who offers ongoing training materials and curriculum to educate staff on food rotation techniques and safety. One company has an online training program in which your staff can engage in self-paced learning on topics such as preventing cross-contamination, proper hand-washing techniques, and thermometers. Each course is designed to take less than 15 minutes, which allows students to start and stop as needed by their busy schedules. A "final exam" helps the students analyze how well they've done and whether they can progress to the next level.

Tripoli makes this analogy: "Food labeling systems are as important to a kitchen -- large and small -- as the little yellow sticky notes are to an office. For the back of the house, these labels are our sticky notes." And restaurant consultant Kevin Moll sums it up: "When you take away all the fluff, it's all about making money by avoiding waste -- and [ensuring] a quality product for your guest."

Case in Point

THE RESTAURANT: Crabby Bill's Seafood.

LOCATIONS: Indian Rocks Beach, Clearwater Beach, St. Petersburg, St. Petersburg Beach, Tampa (all in Florida).

THE CONCEPT: "The freshest seafood at family-friendly prices."

SIGNATURE DISHES: Steamer Bucket, Fried Grouper Sandwich, King Crab, Cajun Fried Shrimp, Crab Trap (banana, pineapple, orange and coconut rums with a splash of orange juice, pineapple juice and cranberry juice).

Crabby Bill's inventory and rotation system is based on all food items being labeled. Restaurant representative Matt Loder explains their procedures:

We are primarily in the seafood business so our products are very perishable. We have a standard kill date when products must be discarded as determined by our senior management. One of the worst practices a restaurateur can have is to let this be determined by the staff. A manager or chef who thinks their job is in jeopardy for losing product might not discard old items and in the long run lose customers as a result of serving poor quality goods.

I have seen this happen with very competent chefs and managers trying to freeze bad products or wash away the odor; it's frightening.

As products are prepped, they are dated. We count everything every day, noting the dates of each item. For example, we may have a total of 15 catfish portions but we note: 5 Friday; 3 Thursday; 2 Wednesday; 5 Monday. By doing it this way, we can determine the remaining shelf life on every portion and see daily if anything is being pulled out of use first rotation.

In this example, if more than five portions of catfish were prepped on Friday, three on Thursday and two on Tuesday, we're out of rotation and not using the oldest product first.

To ensure employees take rotation seriously, we make managers sign the count sheets and prep work lists every day to make sure they take responsibility for the content. We check these against waste sheets and look to see if everything was done correctly to eliminate the necessity of things becoming old.

We use waste sheets listing the items discarded, requiring a manager's signature and the retail value of the portions. We don't use this as an opportunity to reprimand the staff but rather to encourage them to record the losses and use it strictly as a tool to better our processes, otherwise we won't have anything listed but things will still be discarded.

A con with any rotation and dating system are products produced during the night's business and not tracked like things being prepped during the course of regular process. As an example, the kitchen runs short of catfish and some needs to be prepped during the rush after the regular prep crew has left the restaurant.

The staff makes some orders of catfish but fail to mark these down as being made. We come in the next day and don't have this information and see five portions there and make no more because we think we didn't sell any. You see the problem. We'll run short again night after night and realize the error only after a cross-check is made between the items sold and those prepped.

Source: Restaurant Owner