FIFO Inventory Method: Restaurant Rules and Example

By mise · Updated September 29, 2026

Quick answer: FIFO values what you sell at the cost of the oldest units, so ending inventory sits at the newest costs. In kitchens and stores it also means using the oldest stock first so nothing expires.

FIFO has two sides: the accounting one (what cost goes to COGS) and the shelf one (what gets used first). Both prevent surprises.

Costing example

Movement	Units	Cost
Purchase 1	100	$2.00
Purchase 2	100	$2.40
Sold	150	100 × $2.00 + 50 × $2.40 = $320
Ending inventory	50	50 × $2.40 = $120

FIFO stock rotation

New deliveries go behind older stock.
Label with received and use-by dates.
Check dates at every count.

mise keeps the date and price of every delivery, so value and expiry are visible at each count.

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Keep reading Restaurant waste log: free template and how to track waste Kitchen Inventory List: Template and Routine Produce Inventory: Sheet, Shelf Life and Waste Inventory Valuation Methods: FIFO, Average, Specific All guides

Frequently asked questions

What does FIFO mean in a restaurant?

Use the oldest product first: first in, first out.

What is FEFO?

First expired, first out: the date-driven version of FIFO.

Is LIFO allowed?

Under US GAAP yes, under IFRS no. Most small businesses use FIFO or weighted average.

How much does mise cost?

A 7-day free trial, then US$33 a month per location (£26 in the UK).