Inventory

FEFO 101: selling perishables before they expire

Why "first expired, first out" beats guesswork, how to label batches, and what to do with stock that's close to its date.

Expired stock is money thrown away twice: once when you bought it and again when you dispose of it. FEFO, short for first expired, first out, is a simple habit that cuts that waste by making sure the item closest to its expiry date is always the next one sold or used.

FEFO vs. FIFO

FIFO (first in, first out) assumes the oldest delivery expires first. That's usually true, but not always. A supplier might deliver a fresher batch of yogurt before an older one arrives from another branch. FEFO looks at the expiry date, not the delivery date, so it handles those cases correctly.

Step 1: Label every batch

  • Record the lot or batch number and expiry date when you receive stock, not later.
  • For items you prepare in-house (sauces, cut fruit, dough), add a "made on / use by" label with the date and initials.
  • Use one consistent date format across the team, for example 07 OCT 2026, to avoid mix-ups between day and month.

Step 2: Arrange shelves for FEFO

Put the earliest expiry at the front and newer stock behind it. In chillers, keep a small "use first" basket for items expiring within three days. Make restocking from the back part of the opening checklist so it happens every day.

Step 3: Let your POS track batches

A batch-aware inventory system can deduct sales from the earliest-expiring batch automatically, block the sale of expired stock, and list what's expiring in the next 30 days. That turns FEFO from a memory test into a dashboard you glance at each morning.

Step 4: Have a plan for near-expiry stock

Days to expiryAction
7–14 daysMove to eye level, feature in a bundle, or use in a daily special.
3–6 daysMark down, for example 20–30% off, or use for staff meals where appropriate.
0–2 daysFinal markdown if still safe and allowed, otherwise record and remove.
ExpiredRemove from sale immediately and write off with a reason.
Safety first: never sell food past a "use by" date, and follow your local health office's guidance on handling and disposal. Markdowns are for stock that's still within its date and safe to eat.

Step 5: Measure the waste

Record every write-off with the product, quantity, cost and reason. After a month you'll see patterns: maybe you over-order bread on Mondays or lettuce spoils faster than you thought. Adjust order quantities and reorder points based on that evidence.

Example

A mini-mart writes off ₱3,200 of dairy a month. After switching to FEFO shelving and a 3-day "use first" basket, write-offs drop to ₱1,100, saving over ₱25,000 a year on one category alone.

Key takeaway: label at receiving, sell by expiry date, act early on near-expiry stock, and record every write-off.

Sources and further reading

  1. Bureau of Internal Revenue (official site)

This article is general information for business owners in the Philippines, not legal, tax or financial advice. Rules and rates change, so confirm the details that apply to your business with the relevant agency or a qualified professional. Figures in worked examples are illustrative. Last reviewed October 2026.

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