Originally Posted by Fablesable
@Someday You bring up a great discussion!
I would like to ask, just for clarification, what you meant by the last question in your original post "beyond counting for potential theft and wastage, is there REALLY much point in doing inventory on a weekly/monthly basis?" I immediately take this question as the non-understanding of how relevant wastage is to the longevity of a restaurant staying in business. I know you have the experience in this industry so I am not assuming you do not understand, I just wanted to clarify in more detail what you think about this.
The reason I brought it up is to move the conversation beyond the obvious answer that inventory helps you recognize theft and waste. I didn't want 10 answer of "You do inventory so you know people don't steal from you." I'm well aware of how waste relates to these things. Just trying to move the conversation off that track.
Originally Posted by Fablesable
Taking inventory is not just about the food cost percentage which is the profit one makes in their business although it greatly helps to understand and have knowledge of this in order for your business to flourish. We know the main purpose of conducting inventory counts is to measure the amount of food, supplies and other products your restaurant uses over time. This usage can be converted to a cost, which is then compared to total sales for a given period so that you can get a feel for how much profit your business makes from the product sold. Taking inventory affects your ordering processes as well. It will let you know how much you have as well as how fast it is being used, and therefore how much you need to order each week. If you have too much fresh food in the refrigerator, it will go bad and if you do not have enough, you will run out of food and disappoint your customers. As "inventory" signifies all food, beverages, serving supplies and cleaning supplies you have in your restaurant, every piece of inventory should be counted at least once every week so that you can prepare menu items for your customers and stay in CONTROL of the goods you have on hand. Taking inventory will also help with variance and usage as well as looking at issues with poor food handling and how many comps are given along with wastage and theft.
OK so, can the information of "how much I spent on food" be gleaned from looking at your invoices and totaling food purchases for any given time period? If you are counting inventory, adding up the total, costing items, then multiplying to find the "value" of your inventory, why can this information not just be gleaned from "how much I spent on food." Again, this assumes that when you buy something you will at some point sell it for money. So if I buy a case of 4x1 gallon jugs of rice wine vinegar, which may take me a year to go through, it won't go bad. So instead of incrementally costing out the remaining amount of vinegar left in the jugs, one could effectively take the "hit" on it up front by not counting inventory every week/month. Make sense?
Originally Posted by Brandon ODell
Purchasing more one week and less another isn't going to make your food cost fluctuate because your food cost is not a measurement of the value of your inventory. It's a measurement of how much food you used. Your food cost doesn't go up when you purchase more food, it only goes up when you sell, waste or lose food to theft, if your purchase prices go up, or if there is a record keeping error like wrong prices in your point of sale system, on your menu or on your inventory.
Correct me if I'm wrong, I thought "food cost" was the amount of money that a place spends on food. I referenced FC% as an expression of percent of sales in my original post. You are basically saying that "food cost" only happens when something is removed from our inventory and sold to the diner? Could you expound on that some? Seems to me if you purchase more food, or especially more food than you can sell reasonably, then your food cost (and FC%) would increase...?
Knowing your actual cost of goods isn't enough either. You also need to know your ideal cost of goods (what your food should have cost to sell). Only with both these numbers, and a properly organized inventory sheet can you pinpoint a cost problem quickly and get it fixed quickly.
You don't want to find out on the 5th of May that some manager accidentally mispriced your most popular menu item on the 1st of April, and you've been eating it on cost for more than a month, or that an employee started swiping a pound of shrimp a day four weeks earlier, or that your new prep cook is pulling the tails off beef tenderloins and tossing them in the trash when he should be trimming them out for beef bourgignon, or that the sous chef you've allowed to start costing recipes doesn't know the difference between weight ounces and fluid ounces.
There are a thousand ways to lose money on food. If you don't count both your actual cost of goods and your ideal cost of goods, you'll spend a lot of time chasing your tail and making excuses to the owner or GM when someone who was better organized, and tracked their costs weekly, knows about the problem first and fixes it before the owner or GM ever knew there was an issue.
You lost me a bit on that "should have cost to sell" bit there. Can you explain some more? I guess I don't know what an "ideal cost of goods" is either. Do you just mean what your COGS SHOULD have been vs. what is actually was, as it relates to your %'s? Like, "we needed our COGS to be $5000, but it was actually $6000?"
The whole purpose of taking inventory as it relates to FC% and COGS is to track the usage of product in our inventory to account for changes and use of things over time, so a case of fish sauce that takes a year to use is accounted for slowly over time...correct? (simplified, I know, but still)
I guess I'm saying is that, if we assume all of our purchases are going to, at some point, be sold for money (even if the date is far into the future) what is the purpose (beyond theft and waste) of tracking the inventory on a week to week basis, assuming that all purchases will average out over the course of X amount of time.
Do I really need to know that I started with a gallon of rice wine vinegar, and now I have 7/8ths of a gallon of rice wine vinegar? Etc...
I'm also not suggesting that a chef shouldn't be costing menu items, keeping waste sheets, looking at invoices, tracking spending, etc. I'm just strictly talking about counting inventory on a weekly/monthly basis.
Originally Posted by Justa Chef
ok...let's put it like this for you. Inventorty is nothing but an administrative tool for people in an operation who want to delve into the BOH financials. It allows you to figure out your COG's and food cost. Some chefs chose to utilize this Tool others don't. If you're making money hand over fist, there is no reason to do an inventory. You are paying your bills, your employees and pocketing a good chunk of change. So why bother. Others have a "Need to know" so they choose to go through the process. Some chefs don't mind using a food processor, other chefs insist on hand cutting everything. I guess it's personal preference. You are asking the need to do it, and that to me is a rhetorical question you need to answer on your own my friend. I have been in the same scenarios as yourself. In some places I've done weekly's, others monthly and others not at all. If you choose not to, far be it for me to steer you otherwise unless you have a financial problem, in which case I've already spoken my piece and why I do it. No need to dwell on it.....
Again, I'm not CHOOSING anything, I'm just talking in hypothetical questions.
Are there scenarios where a chef doesn't do inventory and the business is still healthy and profitable?