21 Aug 2020 Why is inventory important for your restaurant?
In this post we want to show why is inventory important for your restaurant.
The cost of goods sold (COGS) and the staff cost (Prime Cost) represent the highest costs in a
restaurant, often reaching more than 60% of the turnover, so having these costs
under control is CRUCIAL in the MANAGEMENT of our restaurants.
Cost of Goods = Initial Stock + Purchases – Transfers received + Transfers issued –
As we can see in this formula, stocks (initial and final) have a high impact on the cost
of goods and if we want to have them under control, stock taking is a MUST.
I have come across many restaurants that do inventory monthly, quarterly, annually or not
at all. To me, all those options are the same as doing nothing at all.
Inventory management allows us to see if there are significant differences between what
we think we should have and what we really have. These differences can help us
identify several problems like theft, waste, under/over-portioning, etc.
Some say they do their stock take…
For example, when we do the inventory once a month and find differences between
what we have and what we should have, we can no longer do anything to fix it.
Who is going to remember that bottle that was broken, or that the new employee forgot
to add some bottles of water to the EPOS system, or that the manager didn’t
write down some beers for the team? Who is going to know what happened with
those drinks? No-one is going to remember how those differences happened, and
if they are normal in our operations, or if there is an issue at the restaurant.
Some say they don’t want to pay anyone in their teams to do their inventory…
I have also heard this other version: “I don’t want to pay a guy for 5 hours to count
bottles and food”. If you put someone on the rota to do stock take and
their salary is £12 per hour, it’s £60 a week. In a year it would be £3120. I understand, it hurts. But in my experience, the cost of not having control is much higher. 5 wasted beers, 1 bottle of spirits and 1 bottle of wine and boom, it’s already worth your money to have that guy checking your stocks.
That’s why it’s important to do a stock take weekly or fortnightly, so that the
differences that we find in our stocks can be under control, and we can take
immediate action to improve operations and the cost of goods.
Here is a video showing how to do inventory. We hope you find it useful.
You can buy the stock take template here: