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.


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


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Tennille Egea

Do you count preped items for ends of month?

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… Read more »

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… Read more »

Tennille Egea

Thank you very much!


Is chemicals, cleaning materials, food delivery packages will include to monthly food cost ??
in my knowledge
only the food material only the count to food cost but I just got confuse so I will pleasure to know about that

Laura K Sweeney

What about bulk spices, should I count those in inventory?

Natasha Leone

It is also helpful if you hire a professional service to do it for you it helps with managing the workload!
I would recommend you check out SweetData Concepts. This is their website


Hi Sales- Do you have a Demo on video somewhere? YT? Thanks

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