The Elements of Food Cost & Profit: Inventory Management – Regular Inventory Recording


Many operators large and small avoid taking inventory on a regular basis because they think that it’s a pain to do at all, much less do it over and over again. Setting up an inventory system is actually much easier than it used to be and it is essential to attaining the best actual food cost possible.

It still takes an up-front commitment to getting set up and off to a good start.

Quite often, when helping a client set up an inventory process, I recommend first doing what we call a Kitchen Reboot*. One of the aspects of doing a Reboot is to go through all storage areas including service lines front and back, and “weed out” unused products. Either donate, compost or otherwise dispose of unnecessary items. This clears up space and shortens your inventory guilt (you will no longer waste any time wondering how you are going to “use it up”). During a Reboot we recommend cleaning all storage areas and re-organizing, if possible, how items are stored with a goal to reducing inventory, streamlining the walk-through process and minimize over ordering.

Whether you do the Reboot or not, we will need to create a list of items in the order that the storage areas are walked. The areas themselves each need to be listed “sheet to shelf”. There are many ways to do this using spread sheet software, purchased foodservice management software, and in some cases, free vendor supplied software included in on-line ordering systems.

There are varying degrees of maintenance. I would say the biggest challenge is updating prices. One of the benefits of vendor supplied software is that in most cases, updating is automatic. This is a huge benefit that makes Inventory Management almost easy.

However you decide to get it done - Inventory Management and Regular Inventory Reporting reduces costs and increases profit. When calculating food cost, you are using a real number to represent what your business consumed in preparing the food products for your customers for a specified period of time.

(Starting Inventory + Purchases) – Ending Inventory = Value of Product Consumed

Utilizing this process on a regular basis allows you to be specific in many areas in giving direction to your team. You can clearly see if certain categories/items are being over used in prep or during service if more product disappeared than your recipes and sales can justify. Awareness results in less waste, fresher product to your customers due to healthy inventory turnover, and more proactive, knowledgeable and responsible team players.

This process has some added benefits related to purchasing. When you set it up you are also creating a streamlined order process that reduces mistakes like missed items and over ordering, and it makes your kitchen staff aware of the condition of all products in house.

We recommend weekly Inventory / Calculation for all restaurants. The schedule may vary for other types of food Service operations.

We can go over all of your options and help you find the shortest path to success in setting up your inventory and reporting process.

The Inventory Process creates added trust between Owners, Managers, and Service and Culinary leaders on the team.

Knowing is much better than “thinking” your food cost is “OK”

*Kitchen Reboot has other elements in addition to Inventory Clean Up. The Reboot is a complete analysis of the kitchen – de-clutter, equipment, sanitation, safety, general deep clean, etc. We also seek and think through opportunities to: streamline operations, reduce reliance on labor, troubleshoot prep load challenges, anything to improve performance in the kitchen. Talk to us about Kitchen Reboot– Doing this project gets results.