What is FIFO (First In, First Out)?
FIFO is an inventory valuation method where the oldest stock (first in) is used or sold first (first out), ensuring perishable items are consumed before they expire.
FIFO is both an operational practice (use older stock first) and an accounting method (value consumed stock at the price of the oldest inventory). In hotel kitchens, FIFO is essential for food safety — new deliveries go behind existing stock on shelves so that older items are used first. In the accounting system, FIFO determines the cost of goods sold on financial statements.
Example
A hotel kitchen receives 50kg of chicken on Monday at $5/kg and 50kg on Wednesday at $6/kg. Under FIFO, Monday's stock ($5/kg) is used first. The cost of the first 50kg consumed is recorded at $5/kg.
Why FIFO (First In, First Out) matters
Hotels deal with perishable items daily — food, beverages, cleaning supplies. FIFO ensures older stock is used first, reducing waste and spoilage. For accounting, it provides a consistent and defensible method for valuing inventory and calculating cost of goods sold.
Related terms
Track FIFO (First In, First Out) automatically with Hospio360
Stop calculating metrics in spreadsheets. Hospio360 gives you real-time reporting for your entire property.
Start free trial