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

Pacific Northwest Bounty BowlThis is the forth part of this discussion on managing your food cost by managing your month end inventory.  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 inventory balance sheet, and checking posted inventory using an excel spreadsheet.  Managing each step of this process is vital to being on top of your numbers.

Use Excel To Verify The Inventory Balance Sheet

You will want to use your own Excel spreadsheet to verify your food inventory.  The Food Cost Calculation File is an excellent inventory tool to use if you do not have one already.  Never leave your fate in someone else’s hands.  In other words, don’t trust the accounting department to get your numbers right.  Know your numbers.  Know what your beginning inventory number is as well as your ending inventory number.  Know your transfers and credits.  Know your sales.  Be aware of marketing events and comps which may have hurt your numbers.  Enter all these numbers into your own spreadsheet to calculate your food cost.

Invoicing Methods

The numbers which the accounting department have will probably be different, but they should be close (+ or – half a point).  If they are not close then you need to know the reason why.  Do they have all your credits and transfers?  Is the accounting department accruing invoices so that your budgetary monthly purchases reflect what is actually being brought into the restaurant for the current month?  Or are they simply paying invoices as they come across their desk and considering those paid invoices as your purchases for the month?

Invoicing Gone Bad

An example of this gone bad would be New Year’s Eve events.  If the sales for New Year’s Eve are posted in December, but the purchases for New Year’s Eve get posted to January (when the invoices cross their desk), then your food cost for January could be exceptionally high, whereas December would look great.  Accounting should be accruing these invoices so that they are reflected in the appropriate month.  If not, you at least need to be aware of the method that they are using so you can give an intelligent response to fluctuations in your food cost.

Food Cost and Inventory Calculation Spreadsheet

I use the Food Cost Calculation Tool to keep track of all these elements.  It will also keep track of Comps, Marketing Event Credits, and Transfers. The nice thing about this tool is that it also will give you a comparative sense of most of these numbers against last month’s numbers so that you can notice an increase or a severe decline in your ending inventory month-to-month, or the inventory of a specific storeroom month-to-month, or the difference in your sales month-to-month.  This is a great tool for putting the answers to your questions right at your fingertips.  It does most of the math for you.  An additional feature of the food cost calculation tool is that it will show you your inventory turns and average inventory for the month.

By using the Food Cost Calculation File and the Declining Balance Worksheet, or your own version of them, you will be able to track your purchases and your theoretical Month End Food Cost.

If you implement these techniques, you will gain several things.  First, you’ll achieve better control of your month-end inventory.  And second, you’ll have authoritative answers as to what has impacted your food cost either for the good or for the bad, as well as insight into how to correct it.

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Comments from before Site Migration

DAVID BUCHANAN    [ May 06, 2015 ]

Chef Marina – I added links at the bottom of this page to part 1 and part 2 of the article. Also, there is a PDF download at the bottom of the page which has all 4 parts in one PDF file (download). And here is a link to the month end inventory tracker.

CHEF MARINA    [ May 04, 2015 ]

Where is the inventory excel form? I can’t find it. I can only read part 3 of 4 and part 4 of 4 -Where is part 1 and 2? No form?



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