My boss only does yearly inventory. How in the world can you know your food cost and food loss by doing yearly inventory?
This means he's taking a guess, banking that the food cost will average out over time.
But what this gives you is basically a useless number.
You can't really use any foodcost percent he might toss at you to make any meaningful or accurate adjustments in price, recipe, or menu.
I know. I'm in the same position.
We are able to compare our food and supply costs to our weekly, monthly, quarterly or yearly gross to determine our period food cost. We stay at between 26% and 29% depending upon what is popular in any given period.
That all being said we are a small mom and pop run restaurant and we don't answer to corporate types. My now long-winded point is that inventory is not always necessary to calculate food costs.
The one thing you gotta remember is that you don't take inventory to the bank. It doesn't matter if you have 50# of chitlins in the freezer. It doesn't help your cash flow until you sell it.
I Have costed every item on my dinner menu.
Each and every plate runs a maximum of 30%, and my two most popular are in the high teens.
I have no control over breakfast, and little over lunch.
I do have, nor am I permitted, total control over all food coming into and leaving.
The owner doesn't want inventory, nor does he share his food costing methodology.
He tells me my food cost is 36% and demands 30.
I have told him I will develop a 25% summer dinner menu, that can be done in my tiny, ill equipped kitchen, which I will.
He may or may not like it.
But it's the only way I can think of to subsidize the losses of the current system. I have to sacrifice the dinner menu. This stinks, but I'll do my best.
It's not a matter of being unreasonable, or not being cooperative. What I present him will be the very best I can do with my limited resources in purchasing dollars, equipment dollars, and staffing dollars.
There can be no compromise because the whole thing will be nothing but a bevy of compromises. I wouldn't be able to If I wanted to. It will be bare bones. He can then choose to keep me on or not.
The entire time I have been here, the owner has never been present at service.
The whole time I have been here, the owner has never sat down to dine in his own restaurant.
This enormous degree of detachment from an independent operator who seemingly expects a certain level of cuisine, is disheartening. One chef, and one side cook plating and garnishing cannot put out 120 dinners in 3 and a half hours in a walk in closet, and have plates to brag on. It's not dining, it's chow time.
I'll be moving on eventually, as I have aspiration to work in an adequatly equipped kitchen, with others of my drive. I see gleaming stainless steel in my dreams, instead of formica and grease stained paint.
I'm sorry, anyone who doesn't do inventory and claims to know what there food cost is, right now, today, is just wrong. That doesn't mean you aren't making money or aren't sucessful, you just don't know what your FC is.
What inventory tells you....In a restaurant business not much. Let me explain. Food is an extremely perishible commodity. If you don't use it you toss it. So let's look at what happens. Let's say for the sake of argument that you have a weeks worth of food inventory on hand at all times. At best (except for some VERY unusual circumstances) your inventory represents about 2% (100%/52 weeks) of your food costs for the year. Now lets assume that your entire inventory disappears. At most you have added about 2% to your food costs for the year. In reality the inventory probably doesn't fluctuate more than 20-30% from one week to another. So what happens is your inventory may represent 1.4 to 2.6% of your annual food costs at any one time. If the beginning inventory was at the low end of this range and the ending inventory was at the high end of this range your food cost would only be off by .8% of cost which would be around .3% of sales. If anyone is managing any business by looking at such small percentages then there would seem to be a more fundamental problem in the business. However having said that, there are good and sufficient reasons to take inventory. As the one poster stated he only takes inventory for the tax man. In states with personal property taxes this may be a legal requirement. Another might be if you have long-lived food supplies (I'm thinking frozen here) or large non-perishibles. But for most restaurants serving fresh food inventory is not much of an issue. I would argue long and hard with any IRS agent who wanted to see an inventory of a restaurant. Over the long haul you can ignore the inventory and you won't be SERIOUSLY mislead about the performance of the restaurant. That's not to say there won't be a misstatement over the short run but it should work out over the long haul. Just a beancounter's opinion.
I was always taught that you can cost out a menu item, but you have to remember that is just a round figure. If a menu item costs me $4 to put on a plate is one thing, but how do you account for the time you burned 3 orders, or you dropped it on the ground or whatever?
Like I said before, the cost of all goods sold during a month is what effects the bottom line so that is what I concentrate on.
Also, Rivitman, I wonder if you have ever run a business? It is one thing to say you would do something, but another once you actually have to do it. I am sure your boss is just looking at a P&L, saying "WTF!" That is where he is getting his numbers. I would be pissed if my P&L said my food cost was 36%, the highest it should be is 26% with a total cost of goods at 33%. Thats 10% of profit you are spending!
Lets say I run tight margins and need to re-cost monthly.
I can take the number from that month spend on food. But what If i used food that came in the previous month, or the month before? Hmm?
Is that free food? No, it's not. It cost something, but for the sake of accuracy, it should not be part of food cost until it's used.
Those lamb racks you bought at the end of last month but sold none of? Should that be a component of that months food cost? Not in my book. It hasn't even been offered for sale. It's in food purgatory.
Sure, you can use a rolling average, but that wont tell you much about what you might be doing wrong. At best it's only useful for observing trends.
Spoilage? Misfires? Poor trim? Bad yields? Mistakes? Comped meals?
All this stuff should be tracked and logged. As should "shrinkage" aka theft.
If I have costed every dinner plate out, and I KNOW for a FACT that my per plate costs are under 30%, then, the problem is somewhere else.Who knows where. If I have no real control over any service but dinner, my concience is clean, I KNOW what my plates cost. If the boss's P+L looks bad, well, I did my part. If they want it fixed, I need the cooperation, rescources, and authority to do it. I have none of that. I could have the system set up and running in a couple of weeks, and would probably spend two or three hours a month on it.
For accuracy, inventory is pretty important.
Knowing your inventory makes ordering easier.
Knowing your inventory means being up to date on prices, and being able to adjust menu prices quickly.
Your 26% is your particular standard. I shoot for 30%, and I do it on the food over which I have control. Many run higher. Some lower, though you are probably not talking much better than institutional food when you get close to 20%. How much the market will bear is always a guessing game. Busy location, busy restaurant, competition etc all play a role, so you 26% is not one size fits all.
I already have the problem of being the most ezxpensive place among the competition, so i take a hit trying to keep the food quality up and prices down.
And ultimately, that is the owners call. I would like to provde the level of cuisine I think my owner wants, but it's not possible at 25% in my opinion, not at our current price structure. Sure i can raise prices, but we did that last year, and the result were a lot of lost revenue.
But, If I'm told to raise em' up they go, because I'm not arrogant enough to argue with the guy that pays the bills.
A profit and loss statement is fine for normal business purposes. For the purposes of running a kitchen, it's not a very useful set of numbers.
No, inventory is not fun. Not for most anyway. It's a drag. If my boss doesn't want to do it, fine. Less work for me. But he doesn't know what my food cost is. So I'll just keep pricing up until I hit his number derived his way, adjust the level of the cuisine doen to match the numbers. It's all I can do.
And "monkeys" is a little over the top.
Everybody here works very hard.
But the systems are holdovers from long ago, obsolete, and innacurate. I'm put in the position of doing things against my better judgement as chef all the time.
I do the very best I can with what I'm given. Were I given carte blanche to fix it, I would. I'm working to goals that are conflicting:
1. Maintain a certain level of cuisine.
2. Do so at a fixed food cost.
3. Do so in the face of rising commodity prices.
4. Do so while keeping menu prices in check, so I don't lose business to the burger, pizza, and fish n' chips places down the street.
5. Do all this without total control over every crumb and scrap of food coming and going.
I can think of two things:
1) Owner lumps paper/supplies/coffee or soda machine rental/C02/canister charge/etc. into your food cost
2) 3-4 tickets a night go missing
Hrm wait, you're not allowed to buy supplies. :)
Anyway it's not unusual.
I'm sure missing tickets are not a problem. My staff are all long time employees. And honest to a tee. Probably the only benefit of a tight labor market area. Neither is pilferage a problem.
What's being charged off to me?
Im told that if it's edible, or drinkable (except front of the house alcholic beverage) it's charged to me.
This is what I'm told anyway, as I'm not told or permitted to see the details. I'm just given a number, and have to guess at where the food cost holes are.
And take it all out of the dinner menu's hide for the most part.
I use it, but can't vouch for the breakfast/lunch crew. They have been asked.
But I think the problem is systemic as far as the system of accounting goes. Without good numbers. or any understanding as to how they are derived, the best I can do is guess, and follow the best known kitchen practices.
I ask for data like this: :D
At best the response is this: :confused:
Often, I get this: :mad:
One thing I would have to say is that beverage costs are NOT food costs, so that right there is adding 2-3% right there. Spoilage usually accounts for 1-2 % in MOST cases. The other thing that you might think about is the owner might be skimming off the top too??? Maybe he is going to Sam's Club and charging it to the restaurant as well? That would up the food %% a bit!
You know I have delt with owners like this before, and you know what I do? I do the best I can, and if that's not enough, then.......
If I were him I would just be happy that I had an employee that cares so much about making my business work right.
This food cost issue DOES bug me. It bugs me to the point of losing sleep and possibly hair.
In spite of every obstacle (and there are many) I still like my job. But reality is likely to seep in as I beat my head against the wall.
It's my training and willingness to run a professional kitchen vs many years of status quo.
As always, it's thier call.
I got into this profession becasue I never again wanted to be tied down to a single employer. To me, mobility is the greatest thing about being a cook.
I am learning to taking the inventory/par and my chef ask me couple question and its was very embarrassed to answer his question and I really need help and he want to know how do i know to get more items when their none or something like that but he just want to know when its the best time to ordering and again its was very embarrassed trying inform him when i am starting to going the culinary flelds please someone help me