The buffer stock formula
For each SKU, calculate safety stock as:
Safety stock (days) = Lead time variability (days) + Demand variability buffer (days) − Supplier reliability credit (days)
In practice, most Indian restaurants use a simpler rule: carry 3-7 days of buffer on volatile commodities, 7-14 days on stable dry goods, and 1-2 days on highly perishable items.
Buffer targets by category
| Category | Buffer (days) | Storage | Rotate rule |
|---|---|---|---|
| Onion / potato | 5-7 | Dry, ventilated | FIFO; inspect weekly |
| Tomato (crisis-prone) | 3-4 | Cool room | Use buffer first in crisis |
| Basmati rice | 10-14 | Dry, sealed bins | FIFO by batch date |
| Edible oil | 7-10 | Cool, dark | Seal after opening |
| Chicken (fresh) | 1-2 | 0-4°C chiller | Never buffer beyond 48 hrs fresh |
| Chicken (frozen) | 5-7 | -18°C freezer | Label + date every pack |
| Paneer (frozen) | 5-7 | -18°C freezer | Use for gravies; fresh for tikka |
| Spices / dry masala | 14-21 | Airtight containers | Quarterly audit |
| LPG cylinders | 3-5 days equivalent | Secure cage | Track per 100 covers |
How much buffer capital to allocate
| Restaurant size | Weekly COGS | Buffer capital (₹) | % of monthly COGS |
|---|---|---|---|
| Cloud kitchen (150 orders/day) | ₹1.2-1.8L | ₹80K-1.2L | 15-20% |
| Casual dining (80 covers/day) | ₹2.5-4L | ₹1.5-2.5L | 15-18% |
| Multi-outlet (3-5 units) | ₹12-25L | ₹6-12L | 12-15% (central commissary) |
| Catering + banquet | ₹5-15L (seasonal) | ₹3-8L | 20-25% (peak season) |
Buffer capital is working capital, not dead stock. If buffer inventory sits beyond its rotate window, you've over-buffered — not under-procured.
Building the buffer plan
- Rank SKUs by volatility — list your top 15 commodities by spend; mark which ones moved >15% in price in the last 12 months.
- Set buffer days per SKU — use the category table above; adjust up for single-source suppliers, down for dual-source.
- Map storage capacity — measure chiller, freezer, and dry storage in kg/day capacity; buffer can't exceed physical limits.
- Define trigger prices — pre-write buy thresholds: e.g. lock 7-day onion buffer when mandi crosses ₹35/kg.
- Weekly buffer audit — 15-minute check: buffer days remaining, oldest batch date, shrinkage flags.
When to draw down vs rebuild
| Signal | Action |
|---|---|
| Mandi price spike starting (+15%) | Draw down buffer; do not buy at peak |
| Mandi price normalising (-10% from peak) | Rebuild buffer over 5-7 days at new rate |
| Supplier fill rate drops below 90% | Draw down buffer; activate backup vendor |
| Buffer exceeds rotate window | Use buffer stock first; reduce next order |
| Festival demand surge (7-14 days out) | Rebuild buffer 10-14 days ahead |
Integrate buffer into procurement rhythm
Buffer stock works only when it's part of weekly ordering — not a panic buy during a crisis. Tie your purchase order template to buffer days remaining: when onion buffer hits 2 days, auto-trigger a 5-day top-up at current contract rate. The goal is to never buy at peak because you ran out at trough.
Get the procurement buffer template in the playbook →