Effective Inventory Management

Mismanaged inventory is a silent profit killer. Excessive inventory costs you because you could have done something more profitable with the sitting money, while inventory run outs cost you in terms of food cost. And running out of staple items is simply poor management.

Yet there are four simple solutions of which the first one is about completing a regular undistracted inventory count. Allow yourself time to do it properly, not in the middle of a dinner rush or staff training.

The second solution is about valuing each inventory item in terms of days. When you divide your item count by your daily usage, you get an inventory count in terms of days. For instance, let's say that you have 235 chicken breasts and that your average daily usage is 25. So you have 9.4 days worth of inventory. Do you really need that much inventory? With 2 or 3 deliveries a week, you can reduce your par and the cash flow sitting in your walk-in.

The third solution is about food production. Instead of projecting your usage in count per day, project in terms of percentage of guests. For instance, instead of saying "I will need 5 chicken for Monday", say "10% of my guests order chicken on Mondays". So when your guest count increases, your par increases. When your guest count decreases, your par decreases too. By connecting your food projections to your guest count projections, you will eliminate excess inventory when revenues go down and, you will not run out when your revenues increase.

The fourth solution is to develop your menu in a consolidated manner, thus making sure that each inventory item is used in multiple recipes. Excessive single use items are time consuming to track, take too much space in your storage and will likely expire on your shelves.

So eliminate distractions, evaluate your inventory in terms of usage days, tie up your food production to your guest count projection and develop your menu in a consolidated manner.