So long, February. The shortest month of the year is passing quickly, and guess what: in a few days, it’s time to take inventory! But didn’t we JUST take inventory a couple of weeks ago?
“Yippee! It’s the end of the month and I can’t wait to do inventory!”-said no one, ever.
Given a choice many of us in the industry would rather do just about anything else but take inventory. Whether your operation conducts daily, weekly or monthly inventory, the task always seems to loom large; a dull, dreary chore met with dread. A crack on the head with a cast iron skillet might seem more appealing than spending hours tediously counting and recording cans of ketchup and pounds of potatoes.
The reality is that inventory is the foundation of determining food cost and calculating monthly financial statements. When we look at the importance inventory holds in our business, food in particular, we realize that inventory is money that has been invested in a perishable product. From purchasing to receiving, storage and product tracking, the trick is to maintain an inventory level that is high enough to prevent running out of product or being dependent on specific delivery times, but low enough so that money isn’t tied up in excess product with a limited shelf-life. Since we know that we have to conduct inventory at least every month, we can examine best practices that will make the process more efficient, accurate and a little less wearisome.
Update Count Sheets
Ensure most recent pricing on variable items especially items that have significant price fluctuations with seasonality, or high demand price increases around holidays.
All Items That Have Been Received are on the Count Sheet
Include any items that have been purchased as a one-time buy, for example an ingredient or ingredients procured for a special function need to be accounted for if a portion of that product is on hand at the time of inventory.
Organize Inventory Sheets by Location so that Inventory can be Taken
"Shelf to Sheet”
If you look at your inventory lists first, and then try to compare them to the inventory on your shelves, you'll probably miss items. Efficient inventory is taken Shelf to Sheet which means that when taking inventory you look at what's on the shelf and then find the corresponding item on inventory sheets in a specific location, for example-dry goods, dairy, freezer, etc.. You move along counting every single item on each shelf in a systematic method, whether it's top to bottom, left to right.
Organize Shelves, Refrigerators, and Freezers
Organize all areas using the First In, First Out (FIFO) method. Those items you received first… you should sell first. Maintain organized storage areas, and place like items together, this practice directly affects the previous point. From receiving to final use, place items in the same place consistently and train staff to return product to those specific locations-this practice will expedite the inventory taking process. For example taking inventory for spices and dried herbs can be completed efficiently if these items are stored in the same area in alphabetical order.
Identify, Record, then Discard Spoiled Items
Make sure any spoiled inventory-this can include food that may have been over-cooked, not stored properly, spoiled due to an equipment malfunction, or was unused by an expiration date-is recorded on inventory sheets. Maintaining waste sheets throughout the inventory period will help track any waste or spoilage.
Use Two People to Take Inventory
Improves accuracy, is more efficient, better control, two sets of eyes are better than one, conducting inventory by teams lessens the occasion of mis-recording inventory.
Take Inventory at Close of Business on the Last Day of the Month
Be consistent, and remember that part of the process involves turning in monthly inventory sheets to a controller or accounting department in a timely manner in order to complete monthly financials.
Use Two Units of Measure
The smallest unit such as bag and the case pack size-For example, a case of potato chips may be sold with 72 units that cost .50 per unit. Be specific about units. Recording an amount as “a bag” does not necessarily describe the amount on hand. A half of a bag of rice means what? The inventory sheets should indicate how the bag is sold, for example by the pound, and the inventory would be how many pounds of rice are on hand when inventory is taken.
In the spirit of accuracy and human error, a spot check on a few specific items can help quickly identify miscalculations if an inventory item was not properly recorded. Performing a selective daily inventory is a powerful way to control costs and catch problems before they are out of control. 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.
MAINTAIN POSITIVE VENDOR RELATIONSHIPS
A customer/vendor relationship is ideally a partnership. Suppliers not only provide you with the goods and services you need to run the operation, they can also be an important source of information, advice, trade credit, and provide up-to-date market pricing information. Trust is a major component in the customer/vendor relationship. As a customer you need to be assured that, when a problem comes up, the person at the other end of the supply line has your best interests at heart.
Are your vendors knowledgeable about the marketplace or just selling? Do they have an understanding of F&B needs and dynamics specific to your Club’s business? When you’re looking for innovative ideas and current trends, a loyal vendor can let you know about products that are doing well elsewhere. A good customer-vendor relationship relies on communicating needs, whether determining delivery days and times or setting schedules for meetings, an astute and considerate vendor doesn’t just drop in unannounced, especially at peak business times.
ACTIVELY MANAGE THESE INVENTORY FACTORS THAT INFLUENCE FOOD COST
Bar snacks, happy hour promotions or giveaway non-alcoholic beverages
Identify Prepared Foods
Or, “Food-in-Process” and determine dollar amount/food cost for: soups, stocks, salad dressings, pastry prep, etc. Determine these amounts based on busiest and slowest times to accurately reflect the dollar amount of food in process.
Track Food that is Used in Other Departments or Venues by Using Transfer Forms
Food that is Billed at Cost
Sometimes used for member events and marketing
Credits that Reflect Returns or Pricing Errors on Invoices
Inventory Over or Under Valued
POS Items with Incorrect Pricing or Incorrect Sales Reports
Be cognizant of over-use of the “open food” key on the POS, which does not identify specific items that are sold
Oversight with Untrained Staff that Place Orders
Vendors may take advantage of inexperience. For example, with trade credit or rebates from manufacturers after a certain number of case purchases (never confuse a rebate with a kickback) and be aware of promotions from unscrupulous vendors that ultimately have you purchasing more than you need, these practices do not save money in the long run.
Review of specs on invoices for fabricated products and portion consistency with in-house production
Market to Menu Price Forecasting
Collect pricing data from vendors each week
Manage Vendor Relationships
Maintain Recipe Standards, Menu Item Costing
Effectively Manage and Record Waste
Non-alcoholic Beverages and Beer/Wine/Liquor used in Food Prep are Considered Food and Should be Counted Accordingly
So does any of this mean that taking inventory will now be a thrilling, fun filled experience? Will we gleefully compile our count sheets, sharpen our pencils and have at it with positive anticipation and gusto? Adopting these practices will at least make the process a little less dismal with the upside being you’ll soon establish a system that accurately reflects the current status of your food investment. And if these bits of encouragement don’t motivate, consider these words about inventory from an American treasure, playwright, and once part owner and manager of the famed Brown Derby restaurant in Hollywood, the great Wilson Mizner: “If you count all your assets, you’ll always show a profit”.
Chef Mary Howley is the culinary consultant to the RCS Hospitality Group and a former Executive Chef of her own catering company, several country clubs, and fine dining restaurants. She studied throughout Europe and honed her skills on the East Coast working with a myriad of culinary styles. She had the honor to serve as research and development chef for Food Unlimited, and held the position of Pastry Chef in two James Beard Dinner Events.