Source: National Restaurant Association and RestaurantOwner.com
Most independent restaurants calculate their food cost only once a month, but virtually all of the major chains calculate theirs each week.
According to industry averages, chain restaurants ‑ before corporate expenses ‑ are two to three times as profitable as independent restaurants. While weekly food costing isn't the entire reason for that profitability, it's part of it.
To accurately calculate your cost weekly, you'll need to take inventory weekly as well. The only method for computing accurate cost of sales is to take physical inventories and then calculate the value of inventory on hand. Many operators erroneously believe that what they spend on food and beverage purchases is their cost of sales. While this may be true in the long run, for specific-period analysis it is inaccurate.
The correct formula for calculating cost of sales for each category is this: Beginning Inventory plus Purchases minus Ending Inventory equals Cost of Sales.
Taking weekly inventories doesn't mean you have to spend half the night to do it. Here are a few tips to help you take inventory quickly. Properly applied, these principals will help you to be more accurate and should reduce the time spent counting your food inventory to under two hours.
It is virtually impossible to take an accurate inventory when the stock room or walk-in is in disarray. Be sure all store rooms, shelves and refrigeration units are organized and clean. Product should be easy to see and count. Labels should be used for hard to identify product. Don't put items in incorrectly marked boxes or containers.
Count it on Sunday.
Most restaurants are open seven days a week. A natural tracking period is from Monday to Sunday. Also, inventory levels will be at their lowest on Sunday evening. If you are closed Sunday, then count it on Saturday evening or early Monday morning.
Separate your inventory into groups.
Group your inventory into cost categories, such as meat, seafood, produce, dairy, grocery, etc. This will make it easy for cost calculations and help to organize your inventory. Grouping your inventory also makes it easier to zero in on cost control problems.
Arrange items in shelf order.
Some managers advocate arranging items on the inventory sheets in the order they count the inventory. If you are using an order guide, arrange your spreadsheet to match that of the order guide. You can then record your counts on the order guide and transfer them to the spreadsheet for calculating the total value.
Use two people for taking inventory.
One counts and the other records; the one recording is also an extra pair of eyes so nothing is overlooked. Also, be sure to use a pencil to encourage correcting mistakes.
'Paint' your restaurant.
Always conduct inventories by starting at one end of the building and counting everything in a contiguous order. This practice will help ensure nothing gets skipped. Jumping from one area of the restaurant to another and back again will almost certainly cause you to miss something. It is much easier to flip to the proper page several times for a particular item rather than try to visit all of the places that item may be stored.
Keep counted areas off limits.
Some kitchen managers like to get a head start on the inventory counting process. This approach is fine as long as counted product isn't subsequently sold that same day. Once you have counted an area, make sure nobody removes or adds product to that area. For instance, maybe you have already counted the freezer, but later find out that the cooks need another case of frozen hamburger patties you have already counted. Be sure you adjust your count before putting them into production. That case will end up in an area you have not yet counted and thus will end up being double counted.particular item rather than try to visit all of the places that item may be stored.
This article is presented courtesy of RestaurantOwner.com, a source of operational and business resources for independent restaurant operators. For more information, visit www.RestaurantOwner.com.