Managing Restaurant & Hotel Food Inventory – (Part 1 of 4)

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One of the most important components of managing your food cost is managing your inventory process.  Controlling your month end food inventory and food cost is essential both for your business as well as for your own professional reputation.  Controlling your end of month food inventory revolves around four specific tasks:  Taking inventory, verifying credits & transfers, verifying the pre-closing food inventory balance sheet, and checking posted inventory.  Managing each step of this process is vital to being on top of your numbers.

Taking Inventory

First of all when taking your inventory, be sure that everyone uses the Shelf to Sheet method of counting inventory. Never use the Sheet to Shelf method, where you use your printed Inventory Taking Sheets to hunt for the items to count as you read down the Inventory Taking Sheet page. If you go Sheet to Shelf, then you will inevitably miss items which are on your shelves but which are not on the taking sheets. Always use the Shelf to Sheet method.

Shelf to Sheet means that when taking inventory you look at what’s on the shelf and then find it on your Inventory Taking Sheets. You move along counting every single item on each shelf in a systematic method, whether it’s top to bottom, left to right, whatever. If you take inventory shelf to sheet you will miss nothing and you will probably end up with write-ins on the worksheet. Write-ins are items which are not on your inventory taking sheets but are on your shelves. Write-ins are possibly items which have dropped off the inventory sheets for some reason, or more likely, they are new purchases for the month which have not been added to your inventory taking sheets yet.

Always count your expensive proteins by the pound, not by the each or by the case! If you are counting your prime ribs by the each or case and they are packed as 6 each 10 lb average per case but what you have on hand actually weigh 11 or 12 lbs each then you are losing money. Also, items such as shrimp may be packed as 6 each 4 lb bricks one month (24 lb) and 10 each 5 lb bricks next month (50 lb). Counting shrimp by the case can have a disastrous effect on your foodcost! Cheese, meat, fish, shellfish, and other expensive items should ALWAYS be counted by the pound. They should also be costed in your inventory system by the pound.

Separate your Inventory into Specific Storage Areas

Your Inventory Taking Sheets should be organized by specific areas. Ideally, you will have a meat cooler, a dairy cooler, a produce cooler, dry storage, prep area, liquor, and freezer (and possibly more). You should have separate Inventory Taking Sheets, and matching separate areas in your inventory software. This way you will be able to compare each storage area (and its representative products) from month to month. If your food cost is high and there is a corresponding unusual fluctuation in your meat cooler, then there is a good chance that your problem somehow relates to that cooler.

Inventory Taking Sheet Checklist

Once you have finished taking your physical inventory, you will want to double check the following items on your taking sheets.  First, check all “zero” entries, any item which has a zero quantity entry.  It’s easy to accidentally skip something so you want to double check to be sure that you really did not have any of that product in-house.  Second, check the units of measure used during the inventory taking.  Spot check a number of items to verify that the correct unit of measure was used so that things which are inventoried by the pound were indeed counted by the pound, items counted by the case were counted by the case, and so on.  Third, double check large numbers.  Verify that any entries with a large number are correct.  Again, sometimes a large number may reflect that somebody has inventoried an item by the each instead of by the case (you have 16 eaches but it was counted as 16 cases).  Fourth, verify that new purchases have been inventoried.  These are items which are new purchases during month.

Once you have checked your inventory taking sheets, it is time to enter your quantities into whatever accounting software your company uses.

Continue the article on the verifying credits & transfers page.

 

Download the Free Managing Food Inventory PDF!

Download Managing Food Inventory

 

Comments from before Site Migration

DAVID BUCHANAN    [ Jun 12, 2012 ]

Weekly inventory is the norm for corporate operations.  But many independent venues still do monthly inventories.

TC [64.202.79.180]    [ Jun 12, 2012 ]
Aren’t weekly inventories more the norm nowadays?

 

  • Tennille Egea

    Do you count preped items for ends of month?

    • Sometimes. If you have prepped expensive items such as prime rib, crab cakes, portioned salmon, whipped butter, etc then I would count these expensive items because the amount prepped can change drastically month to month and impact your food cost. But for those items which remain consistently the same in regards to amount prepped (almost the same amount regardless of the day of the week) and for those items which are cheap and have minimal impact on your foodcost (vegetables, pancake batter, etc) then the general practice is to not count these items.

      The most important procedure though is to do it the same way each month.

      • Tennille Egea

        Thank you very much!

      • joel silva

        In regards to prepped items. For example. Raw wings would be $4/lb at purchase. after prep, yield etc. actual cost is $5/lb. Do i count my beginning and ending inventories of raw wings at $4/lb. and then have a separate section for beginning and ending inventories for prepared wings at $5/lbs?
        RAW WINGS
        beginning/ purchases/ ending/ usage amount / usage$$$
        18.09# 30# 18.5# 29.59 $143.81

        PREPPED WINGS
        beginning/ purchases/ ending/ usage amount / usage$$$$
        7.6# NA 9# -1.40 $14.59

        OR SHOULD I JUST…

        find the avg cost of the raw cost and after yield cost. and weigh it out that way?

        • The best is way is to count them separately, RAW WINGS and PREPPED WINGS. Your PREPPED WINGS inventory would be costings for recipes. This allows you to easily change recipes and know the cost of the product.

          Some places don’t count prepped items but consider them to be part of a standing inventory. I think you should always count prepped items of major proteins/expensive items.

          • joel silva

            thanks. I started doing that way over the last 2 cycles. The only thing i was not sure of was if I should make note of a transfer from raw product to prepped product. I’ve always had a proprietary program to use, but the current situation has me creating a spreadsheet from the ground up

            I couldn’t figure out a way to translate that in the reports, but I figured 20 lbs is bought, and i prepped 5 lbs. As long as i had 15# ending raw, and 5lbs ending prepped at the yielded value, then my numbers would still be close to accurate.

            Secondly, I started using that catering event planning spreadsheet and i found it very helpful and i felt super on top of the prep and ordering than how i normally would organize leading up to a function.

            That being said, i’ve done a few menu changes from season to season, and I’ve never really sought out if maybe other people had a more efficient way to assist in removing, modifying, and implementing of new menu items.

            Third, is there anything that modern technology has assisted in helping the chef admin life a bit. Do people take inventory on tablets? Have you used any app based programs for doing inventory, or the old shelf to sheet with pen and paper still king and the best way to do it still?

            Thanks again for having this site and uploading the resource material provided.

          • So very glad that you find the site helpful. Sooo, here’s a shameless self-promotion…plz consider either joining the site w/ a $3.50/mo membership or giving a donation for my time/work on the site. Here’s info…http://www.chefs-resources.com/membership-account/membership-levels/ Enough said.

            Re: your last 2 cycles…I think you’re in good shape and moving in a reliable direction. The most important thing at this point is to continue doing the same thing each month. Your numbers should even out by cycle 3.

            Re: “Secondly”…The Event Planning Spreadsheet is more designed for individual events/projects and is very helpful for those. But for seasonal menu changes Sync Inventory and Recipes With Excel ( https://goo.gl/gWd1cy ) file may be more useful.

            Third…there is lots of technology out there for chefs these days but unfortunatley I haven’t evaluated them. Here are some of your optionhs to explore: cheftec.com, crunchtime.com, toasttab.con