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Restaurant Accounting: Inventory Control Is Key To Controlling More Than Costs

By Maren L. Hickton

The two most costly expenses of any restaurant operation are food/beverage and labor, yet many restaurateurs choose not to conduct regular food and beverage inventories. "We don't have time for all of that..." or "What do I need to do that for? I know what I am paying."

One restaurant had stacked cases and cases of bottled beer which were over four years old. While beer does vary widely and some varieties continues to age, beer should not be exposed to heat or light and most brews should be drunk as soon as possible. So the beer that was "such a deal" ended up being poured down the drain. The same applies to a lot of perishable items such as baking ingredients -- all of which have a determined shelf life.



We have all seen or experienced situations where a Chef or Owner has had to scramble before a party with purveyors to nail down an order for lots of food at the last minute. So if you don't conduct regular F&B inventories, you may soon realize that you're out of business with upset guests before you even get started.

Inventory reports not only evaluate both how well your kitchen crew and service staff are controlling portions and what your total food cost is in terms of percentage of your menu price, but should also include a item box for "shelf life", which can be added to inventory report forms.

To set up a computerized or manual report, you could configure a format in this fashion using any variety of simple spreadsheet applications on your computer:

1. Items. This column would categorize and sub-identify (i.e. Meat = category, Poultry = identify, Fresh Boneless Chicken Breasts, Prep-Frozen Wings etc. = sub group) all food and beverage items that you would need to purchase to run your operation and is determined by your projected sales. Solicitation of active participation from your Chef, Head Cook, Bartender and/or Wine Steward would be ideally included in determining what to purchase. There have been cases where, I meet owners who decide to handle the F&B buying and then complain that either "the Chef has no creativity" or "we aren't selling anything". If we hire these professionals, we must let them do their job.

2. Unit Cost. The second column is the unit column, or how the food is ordered by the pound, case, bottle, can and so on. These is the unit quanities that you will be counting.

3. Starting Inventory. The third column is the inventory that you had in stock when you conducted you last inventory report.

4. Purchases. The fourth column would list any purchases that you made since your last inventory report next to the corresponding category.

5. Subtotal. The fifth column would total items (3.) and (4.).

6. Closing Inventory. More efficient with an assistant to call out inventory as you record information on column six of this report form -- ALL food and beverage in your kitchen, bar, cold and dry storage areas.

7. Product Used. Subtract closing inventory (6.) from Subtotal (5.) and record in column seven.

8. Unit Cost. This eighth column identifies the most recent price paid (as costs will fluctuate--sometimes wildly) for each item on your list. Unit costs should be monitored regularly to receive the best possible price and value for QUALITY product. But keep in mind that good working relationships with purveyors is essential to remain successful and switching purveyors for price alone is usually not a good idea.

9. Total Cost. Multiply the unit cost (8.) by the product used (7.) which will give you the total cost you spent on F&B in column nine for a given period.

10. Items Needed. It will be fairly easy to determine what you will need for your next week/s of business based on the fact that you will now know what has been used in the last week/s and have a relatively good idea of what is planned in terms of business for the upcoming week/s.

*****
Maren L. Hickton is the principal of Maren Incorporated, a Full-Service Hospitality Consulting and Marketing Firm based in Pittsburgh, PA. Maren writes about a variety of business challenges that independent restaurants encounter.

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