How often do you take inventory?

I was thinking about inventory this week as  I was working on an inventory project. It’s a good time to think about inventory and how it can help your business.

When was the last time you took inventory? Be honest with yourself. If it was the last time you ordered product, good on you! If it’s been a while, I have some ideas that might help you a bit. Technically, you need to take inventory as frequently as you order. So if you order produce five times a week, you should inventory produce five times a week.

When it comes to a fiscal inventory…that is, counting everything on hand and extending the value of the stock on hand…you should do that at least once a month for accounting purposes. Some operators take weekly inventory to keep on top of food and beverage costs, especially if they’ve been having a problem.

Some operators take inventory after each meal period to pinpoint product theft, but once a month is enough to calculate the cost of goods consumed for the income statement.

When you take inventory before calling in an order to a supplier, you do it to determine the amount required. The amount you need to order depends on how much you will use between successive deliveries. Still some operators take a fiscal inventory only once a year, which is all that is necessary for income tax purposes. But the operators who take a fiscal inventory only annually have no idea what their food cost is running the other 11 months of the year.

I’ve learned over time that not taking a monthly fiscal inventory is fairly common among many independent operators. Many believe that they have a consistent level of inventory that never changes. There’s a fallacy in that logic, even if the operation has the same amount of sales volume every month and the menu-sales mix remains constant…neither of which is a realistic expectation. Inventory levels will fluctuate for various reasons.

With a little organization of your inventory records and storage areas, the inventory process can be made an efficient and painless process. One should approach inventory taking with the same intensity and attention given to counting each day’s sales receipts. The process of counting everything on hand should not take more than two hours, depending on the size of the restaurant. Techniques such as zoning and having a process of inventory taking known as sheet to shelf, are ways of streamlining the process of inventory taking and can aid in further organization and time spent, which always translates into dollars saved.

The extension of the value of inventory may take another two hours if extended manually or just seconds if you do it with a computer. Just remember: There are no shortcuts for accuracy in inventory: You must count everything in order to give yourself an accurate picture of your restaurant's financial health. A further practice of always having two people do inventory, to cut down on mistakes made is a prudent practice and aids in speed of inventory.

Those are just some simple ideas that can be implemented if you take the time to do inventory as often as you should. We’ll be getting in a bit deeper into inventory in future posts. Just know that we can show you how keeping on top of your inventory can make your business more profitable. Give us a call for a consultation.

David Wennerlyn

Contact us at: BottomLine Profit Restaurant Consulting, LLC. 773-470-8239

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