On the spot

The flash reports are in and (Gasp!) food and beverage costs are up again. By your calculations they should be around 34%, but this week you've hit 39%. Last week 32%, and the week before 37%. There's obviously something wrong here.

You could be dealing with portion control problems, theft, waste, substitutions in recipes, or purchasing mistakes. But before you start installing surveillance cameras and auditing the purchasing logs, let's start with something a bit simpler to check and more likely the cause of the fluctuations...physical inventories.

There are only two realities in the restaurant business: Actual product on hand and cash in the bank. Having an accurate physical inventory is like knowing the cash balance in your bank account. That's why I recommend consistent, weekly food inventories.

But we estimate that 80% of all physical inventories taken by line cooks and bartenders are understated by at least 5%. In other words, the total inventory in dollars reported is lower than the actual amount of inventory on hand. This leads to inflated food and beverage costs.

To see whether this is the reason for your food cost fluctuations, conduct an unscheduled spot check of the next physical inventory. Once a completed, fully extended inventory is submitted on a Monday morning, an owner or senior manager should immediately follow behind and conduct an inventory themselves. Use the exact same count sheets and follow the protocols you've laid out for your staff. Then compare the totals.

If the variance is less than 1%, hand out a cash bonus to the inventory takers right then and there. They deserve a reward for accurate inventory taking.

If the variance is near 5% or more, it's time to take a closer look. There could be several reasons:

  • Inventory protocols and training have fallen by the wayside and need reinforcement
  • Incorrect count sheets. If the counter is looking for what's on the sheet, and not what's on the shelf, you'll have a problem.
  • Incorrect addition and multiplication. Sounds overly-simplistic, but all too often true. Calculators are cheap. Buy lots.
  • The inventory locations are not set up correctly or properly organized.

Have your closing staff use an "Pre-Inventory Checklist" on Sunday night to make sure that all food and beverage storage areas are ready to go. We've created a customizable master checklist that you can set up to match your inventory system. Straighten and organize shelves, have the dining room crew marry all condiment jars and re-stock service stations to the correct par levels, and do the same in the bar area. Refrigerators, walk-ins, freezers and store rooms should be organized so that the same types of items are together, well marked and easily identified. Whenever possible, like items should be stored in one container, not scattered about or stored in partially filled containers.

In addition, make this exercise part of each work station's nightly close-out procedures, including the cooking line and prep kitchen. It will help ensure that the weekly inventory process is smoother, faster and more accurate.

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