The FIFO principle in hospitality: how to store stock properly and prevent spoilage

Friday night, the walk-in cooler is full. At the very back of the shelf sits a crate of cream that was delivered last week, and in front of it this morning's fresh delivery. Naturally, the kitchen reaches for the front. On Tuesday someone finds the old crate: past its date, straight into the bin. This is exactly the pattern the FIFO principle prevents, and with surprisingly little effort.

In this article you will learn what first in, first out means, when to store by FEFO instead, how to apply the principle in the cold room, dry store and bar, and what clean storage is worth to you in euros. You also get an overview of the most common mistakes and a worked example from everyday hospitality.

1. What does the FIFO principle mean?

FIFO stands for first in, first out: whatever enters your store room first also leaves it first. In hospitality this means, in practice, that older stock sits at the front and is used first, while new deliveries are placed behind it. That way every item moves through your storage in the order in which it arrived.

The opposite is LIFO (last in, first out), where the most recently stored goods are taken first. As a storage principle, LIFO is unsuitable for food and drinks because older stock keeps sliding further back and eventually spoils.

An important distinction: the term FIFO is also used in accounting, where it describes a method for valuing inventory. In Germany, under Section 256 of the German Commercial Code (HGB), the valuation of similar inventory items may assume that the items acquired first, or those acquired last, were used first. That concerns the balance sheet, not the question of how you stock your cooler. Which valuation suits your annual accounts is best clarified with your tax advisor. This article is about FIFO as a storage principle.

2. Why the FIFO principle matters so much in hospitality

Few industries handle goods as perishable as hospitality kitchens and bars do. Dairy, meat, fish, fresh herbs, fruit for garnishes and freshly squeezed juices all have short shelf lives. If the order in storage is not respected, goods you have paid for end up in the bin. A figure from the German Federal Government shows how big the issue is: according to the Thünen Institute, the out-of-home catering sector produced around 1.4 million tonnes of food waste in 2015.

The FIFO principle works on several levels at once:

• Less spoilage: goods are used before they expire. Every crate that is not thrown away lowers your cost of goods.
• Consistent quality: guests do not get products that are still edible but already past their best in terms of taste.
• Hygiene and food safety: under Article 5 of Regulation (EC) No 852/2004, food businesses must put in place permanent procedures based on HACCP principles. Orderly, dated storage is an obvious building block of your HACCP-based food safety system.
• Less shrinkage: spoiled goods that nobody writes off show up as unexplained differences in the next stocktake. You can read more in our article on shrinkage and breakage in hospitality.

3. FIFO or FEFO: which principle when?

FIFO is based on the date of delivery. In most cases that works well, because the older delivery usually expires first too. There are exceptions, though: sometimes a new delivery arrives with an earlier date than the stock already on the shelf. That is where the FEFO principle helps: first expired, first out. Whatever expires first is used first, regardless of the delivery day.

In practice, the difference between the best-before date and the use-by date is crucial. According to Article 24 of the Food Information Regulation (EU) No 1169/2011, foods that are highly perishable from a microbiological point of view carry a use-by date instead of a best-before date. After the use-by date, a food is deemed unsafe. As an EU regulation, it applies equally in Germany and Austria. Switzerland has its own rules with the same distinction between best-before and use-by, as explained for example in the guide by the Lucerne food inspectorate (in German).

A simple rule of thumb for your business:

• FIFO for goods with a long shelf life and regular deliveries, such as spirits, wine, tinned goods, flour, sugar or consumables.
• FEFO for anything with a short or varying date, such as dairy, meat, fish, fresh juices and goods with a use-by date.
• Opening date for anything that spoils faster once opened: syrups, purées, sauces, opened tins. What counts here is not the delivery day but the day you opened the pack.

4. Applying the FIFO principle step by step

The principle is simple; implementation usually fails because of routines. These four steps turn FIFO into a habit for your whole team:

Step 1: Receive. Every delivery is checked on arrival: are quantity and items correct, has the cold chain been maintained, are the dates plausible? How to organise this properly is covered in our guide to goods receipt inspection in hospitality. Only then does the stock go into storage.

Step 2: Date. Goods without a clearly legible date get a label with the delivery date. Opened packs also get the opening date. A label printer or a waterproof marker is perfectly sufficient; what matters is that everyone uses the same system.

Step 3: Rotate. When putting stock away, the existing goods are pulled to the front and the new delivery is placed behind them. That takes a few seconds longer than simply putting it down at the front, but it saves the crate that would otherwise be forgotten at the back.

Step 4: Check. At every stocktake and during a short weekly walk-through you check the dates. Anything expiring soon is marked and used first, for example as a daily special or in staff meals. Anything that has expired anyway is written off so that it does not appear as unexplained shrinkage in the stocktake.

5. FIFO in the cold room, dry store and bar

Every storage area has its own pitfalls. These points have proven themselves:

• Cold room and fridges: do not fill shelves all the way to the back wall, so you can pull older stock forward. Always store the same items in the same place. This is where FEFO pays off most.
• Freezer: always label anything you freeze yourself with contents and freezing date. Unlabelled bags are a typical source of spoilage in the freezer.
• Dry store: heavy containers at the bottom, opened packs visible at the front. Shelves with fixed places per item make FIFO almost automatic.
• Bar and drinks store: spirits keep for a long time, but beer, juices, milk, syrups and garnishes do not. Stack crates and kegs by delivery day, and mark opened syrups and purées with the opening date.
• Multiple areas: hotels and larger venues often have a hotel bar, restaurant, banqueting and breakfast buffet. FIFO only works if every area follows the same rules and stock does not move between areas unchecked.

6. Common FIFO mistakes

Most problems are not caused by a lack of knowledge but by time pressure. You will see these mistakes in many businesses:

• New stock put at the front: after a long shift, the delivery is simply put wherever there is space. Decide who puts stock away and plan time for it.
• Missing labels: without a date nobody knows what is old and what is new. Then even the best shelving does not help.
• Overfilled shelves: if nothing can be pulled forward any more, FIFO collapses. Ordering less but more often takes pressure off storage.
• Order quantities that are too large: buying too much means storing longer and raising the risk of spoilage. Our article on calculating minimum stock levels shows how much you really need to keep.
• No checks: FIFO that nobody checks fades away within a few weeks. A fixed weekly walk-through keeps the system alive.

7. Worked example: what FIFO is worth in euros

Take a business with a cost of goods of 10,000 € per month for food and drinks. Without consistent storage rules, 2.5% of that is lost to spoilage in this example, i.e. 250 € per month. With FIFO, FEFO and a weekly walk-through, the spoilage rate falls to 1.0%. That is just 100 € per month.

The savings therefore amount to 150 € per month or 1,800 € per year, without changing a single price on the menu. Because less stock is thrown away, your cost of goods percentage falls too. These figures are example values; how much spoilage your business really has only becomes visible once you consistently write it off and compare it with the stocktake.

8. FIFO in everyday operations with BarBrain

FIFO itself is a storage routine your team applies on the shelf. For it to work, though, you need reliable numbers: what came in, what is stored in which area, and where does stock disappear? This is exactly where BarBrain's inventory management supports you.

• Goods receipt without typing: with the AI delivery note and invoice scanner you take a photo of the delivery note, the AI recognises items, quantities, pack sizes and purchase prices, and you book the goods receipt with one click. Your stock level is updated immediately.
• Stock per area: in the digital stocktake you set up areas such as bar, cellar or cold room. Several team members count in parallel, including opened bottles and GN containers. The result is a stocktake list with quantities and stock values per area.
• Making losses visible: with the POS integration, BarBrain compares your target consumption from sales and recipes with your actual consumption from the stocktake, per item in quantity and euros. That shows you which items are losing stock, so you can tighten your storage routines where it matters.
• Multiple outlets at a glance: for groups and hotels, each outlet is its own account with its own areas. Using the admin overview, you compare outlets, for example on cost of goods percentage and shrinkage, and see where stock is being lost.

This is what the difference looks like day to day:

In short: typing disappears from goods receipt, guesswork disappears from stock levels, and you see losses per item in euros instead of only as a total difference. More than 1,000 businesses in Germany, Austria and Switzerland already work with BarBrain. If you want to see what that looks like in your business: Book a demo.

9. Frequently asked questions