5 Best Ways to Manage Inventory
5 Best Ways to Manage Inventory

So running a bar/restaurant can be a pain in the ass.  The worst part for me is always keeping track of inventory.  Inventory sucks and nobody wants to take care of it because it’s literally never ending.  You can count all the bread one week, then the next week you count all the bread again, and then you do the same damn thing the following week.  Nobody likes counting bread.

BUT counting that bread adds up real quick!  If you ever want to make any money you’re going to have to keep your COGS down as low as possible.  That means you’ve got to control your inventory costs.  As a former industrial engineer I’ve learned the importance of running as lean as possible if you want to free up enough capital to keep your business liquid enough to have the flexibility to handle unforeseen events.  This lean model is even more important in the case of food handling with the short shelf life of your inventory which is food.  In the case of liquor you don’t have the short life but you have a million little bottles that people love to give away, drink when no one’s looking, and to over pour.  So it’s key to your businesses’ success to keep a keen eye on all of your food, liquor, and beer costs.  Here are a few of my favorite tips:

POS output to excel

What I really like to do is output my weekly sales out to an .xslx at the end of every week.  On that same spreadsheet I keep the recipes of each of my menu items.  If you program your spreadsheet the correct way it can multiple the number of sales for a certain item with the recipe of that item.  That should give you your theoretical ordering amount for each of your vendors.

From here you can calculate waste; WASTE = ORDER AMOUNT – THEORETICAL ORDER AMOUNT.  It’s not a hard computation but I wanted to be sure we’re on the same page 😉  .   It’s also nice to have the spreadsheet so you can break it down by vendor and have your order guide for your chef to basically just hand to your sales rep.  If there are any big discrepancies between the two numbers then that’s when you know to dig in and find out what’s going on!

Restaurant Portioning

Portioning

Portioning is huge if you don’t want to see dollars just flying out the door.  Portioning is the art of making sure you’re giving the customer exactly what it is that they paid for.  No more and no less.  This isn’t only smart for the pocket book but it’s also important to quality.  If you’re giving too much liquor in a certain cocktail then it won’t taste like it was supposed to.  If you’re adding too much cheese to a pasta then it won’t taste the way it’s supposed to.

Allot of time, especially in this industry, people seem to forget that every little thing we sell actually costs money.  Your employees will look at that pile of napkins and grab 4 more than they need or are supposed to hand out just because they think, “Well it’s a stupid napkin, that doesn’t cost anything!”.  Well guess what, that napkin does cost you something.  It might not be allot but I’ll tell you 4 napkins per employee, per table sat, per day, for an entire year will add up to hundreds of dollars!  Again a hundred dollars isn’t that much either but you can see how if you don’t keep your eye on enforcing your portioning then you will eventually die a death from a thousand cuts.

Training

Nothing you do will count for anything if you don’t train your employees the right way to do it.  You can have the best inventory program in the world but if your employees don’t know about it then it doesn’t mean a whole lot.  Or if they know about it and don’t know what they are supposed to do about it then, again, it doesn’t mean a whole lot.  Every change you want to make will require you to ensure that you convey your ideas, intentions, and expectations to your employees.

I have a strong disdain for most formalized training programs.  Anyone that knows me would know that I hate sitting through stupid meets learning about pointless crap.  If I hate it so much then there is no way I’d ever make my employees do it.  I personally like making sure that I convey the appropriate procedures and guidelines to the employees that I trust to convey that knowledge.  I mean, it’s a bar, these people aren’t doing brain surgery.  I know most bar owners would strongly disagree with me on this but I think it depends on your bars theme and your own style.  I’m a little too easy going at times and it’s probably one of my weaknesses.

But I just wanted to convey on this point that you can train your employees without having some crazy training program.  That being said, your employees do need to know what the hell it is that they are supposed to do.  So make sure they get trained but however you do it, you should make it your own!  No reason to follow a book’s bullet point restaurant training regimen to ensure the training quality you’re looking for.

First in first out
First in first out

First In First Out

First In First Out aka FIFO is a key strategy for any restaurant that wants to control it’s COGS.  FIFO literally means what it says, the first piece of inventory that comes in should be the first piece to leave.  Think of standing in line at the supermarket, the person in front of you was before you and will thus be attended to first.  This is the same concept for inventory.  This ensures that you rotate through your inventory as efficiently as possible while minimizing spoilage.

This may be seem like common sense but there are also accounting methods for the opposite, Last In First Out aka LIFO.  I’m not an accountant, so I don’t know if or what the advantages are for this different method, but from a practical standpoint it’s a terrible idea.  You don’t think about how much sense FIFO makes until you think about it’s counterpoint, LIFO.  If a restaurant used a LIFO inventory system then it would literally have the same produce sitting on the shelves indefinitely since you’d keep pulling the latest produce dropped off by the supplier.  Your COGS would skyrocket!

This is important because it may seem like common sense but if you don’t do the training and develop the systems to incorporate a FIFO management system at your establishment then your employees will do whatever is easiest.  This means that they’ll grab whatever item is closest to them.  So it’s important to continually make sure your kitchen is in order so that what’s easiest for them to pull follows your FIFO inventory principles.

Ruins Pub Special
Ruins Pub Special

Specials

Any good chef has a large repertoire of recipes ready to go to fully utilize the leftover bits from the week.  With a restaurant this important skill can’t be overlooked.  As a restaurant, this is mostly for you independent brothers and sisters out there, you’ll find it nearly impossible to always accurately predict exactly how much food to order.  So whenever you expect a super busy week and you over order but it never comes to fruition, what are you supposed to do with the extra food that you ordered?

Run specials obviously!  This is why I’ve always wanted more than just a kitchen manager running my kitchen.  I wanted a real chef that knew how to take all of those random overages and turn them into beautiful and delicious dishes!  This doesn’t only help control your COGS.  This allows you to showcase your kitchen’s skill and creativity to come up with new innovative dishes.  It allows your kitchen to have fun and play while at work, coming up with new ideas and learning new skills.  Then last but not least it gives people a reason to keep coming back and to follow you on social media.  Post as many pictures and involve as many people as possible with your specials.  They’re there to showcase your culinary prowess all while saving your bottom line!


Also published on Medium.

One thought on “5 Best Ways to Manage Inventory”

  1. Hey Scott, that was great! I learned more than I expected from someone who obviously has done more thinking about this than — well anyone I know! I think this blog is a really good idea.

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