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Inventory that works

Question:

Which is better, daily expensing inbound inventory with random inventory spot checks, or the traditional monthly inventory?

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Answer:

Taking regular, careful inventory is important for a variety of reasons, including food cost control, product rotation for better food quality, and security. It’s best to inventory all items on a weekly basis at minimum. That gives you a close read on the value of the inventory against your average weekly food sales.

If you take inventory on a Monday theoretically you should only have about three days worth of food in house because you buy fresh food throughout the week – perishables, in particular. What we see too often is inventory value exceeding the amount of food necessary for a few days of service. That means the inventory is too high and there’s cash sitting on the shelves. More importantly, that means that foods other than canned goods or frozen items may be old by the time they get served and quality suffers. Fresh food, obviously, is the category that requires most care. By lowering inventory, food quality is improved and food cost is lowered.

Taking inventory more frequently also forces you to be more organized. When you count things on a weekly basis and have organized systems for doing so – i.e., all shelves labeled, a place for everything and everything in its place – the process doesn’t have to be hugely time consuming. If you’re organized, you can blow through it in an hour and a half at most.

Keeping inventory levels low shortens that time and also enhances security. If I have 100 dollar bills on the table and you take five of them, I’d probably never miss them. If I have five dollar bills on the table and you take one, however, I’d know it. The same thing happens with food and booze. If you have good, tight systems, it helps keep people honest.

Doing weekly inventory does not apply, however, to expensive center-of-the-plate items. Those should be counted daily. It takes just take a few minutes but should be done at the end of every day. What’s on hand should be matched up against what was sold that day to be sure there was no shrinkage. Keep in mind that any time you lose a steak or piece of fish, you’re not losing what it cost you’re losing the profit that it would have made. To make that up, you’d have to sell two or three other items. This has become a thin margin business and you can’t afford not to have tight control of your inventory. The days of doing a general monthly inventory are long gone.

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