Restaurant Inventory Tips
Do you know the food formula for inventory
Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold (COGS).
Inventory Percentage is calculated by:
Cost of Goods Sold (COGS) divided by Food Sales = Food Cost %
Surprising there is a lot of restaurant that do not do inventories.
The term proactive means to head off a problem before it occurs.
Food inventories are one of the most important parts in managing your bottom line.
Think of it this way, how can you begin to help your bottom line if you don’t know where you stand in food cost shrinkage?
You might have theft issues or Point of Sales (POS) problems or maybe your menu is too low in prices. Either way you will never know how much you are losing in food.
Conducting a weekly inventory will help you better understand your losses, it might even pinpoint as to why your food cost is high.
Let’s say you are losing 4 portions of French fries per day due to:
- Batch Cooking
- Customer complaints
- Incorrect in pricing
- Server errors
How much French fries did you lose?
- Case price is $30.95
- Bag price $30.95 / 6 = $5.16
- Portion price is $0.38
- Portions of the fries are 6 ounces
- Each bag of fries weighs 5 pounds
- 16 ounces x 5 = 80 ounces per bag
- 80/5 = 13.33 portions of fries per bag
- 13.33 portions of fries x $0.38 $5.07
Let’s say you wasted 4 portions fries a day
- Weekly 28 Portions
- Monthly 124 Portions
- Yearly 1460 Portions
Dollars that you lost are
- Weekly $10.64
- Monthly $ 47.12
- Yearly $554.80
- Cases lost for the year 18
- Bags lost for the year 108
- Portions of fries for the year 1460
Keep in mind the losses above is only one item on your menu.
Can you imagine if you lost a significant amount of money in other menu items? Your losses will be in the hundreds if not thousands of dollars per month per year.
Your inventory shrinkage could put you out of business. The importance of conducting a weekly inventory should be at the top of your to do list. There are a lot of restaurants that actually do a monthly inventory. If you do not do a monthly inventory, that is 30 days of not knowing your losses in revenue. It is highly recommended to do weekly inventories, this way you’ll know where you stand on your losses and will be able to react quicker which equals losing less money.
Getting organized as you do your inventories:
- Organize all your rooms that are going to be counted
- If you have in food in open cases, count what is in the case and use a black marker to mark the outside of the case.
- Count one room it time starting from one side of the room to the other side of room.
- It is best to have two people conducting the inventory. One person will count the product and the other person will write down the product. Two eyes are better than one; it lessens the Chance of error.
- Never settle for high food cost, investigate as to why the shrinkage is so high.
- Always keep your staff in the loop in regards to your food cost. Come up with an action plan to help reduce that shrinkage. Maybe even assigning a staff member to watch out for that particular item or items that you are losing money on.
- If you think that someone stealing from you, may want to think about doing a perpetual inventory. Come up with the top five inventory items that you losing. Count those items at the beginning of that shift and again at the end of shift. If you are losing product between those counts then it is safe to say someone stealing from that shift.
Protect your inventory as if it was your wallet.