Inventories and Costing

[Yuzu]

What should be included in the inventory at the end of the month?

I do 90% of the ordering for an Irsh Bar and American Grill. What should be included in my final inventory for the end of the month food cost? What should not?

i.e. Limes for the bar?, Purees for specialty drinks?, Sugar for coffee?, Mustard and Ketchupfor refilling the table condiments?

I get the feeling that I am not putting everything in its proper place here.

Another question about creating a waste sheet. At the present every time a server inputs something wrong - it is voided and the kitchen remakes it. Should this be included in a waste log and then applied to the end of the month food cost? Also, what can we do with a waste log? This is something I need to implement - I was told that it can be used for the taxes at the end of the year.

HELP!!!!

[bohica]

Welcome to C2C Lance. Hope you enjoy the stay.

I would think that in order to get a correct and proper food cost, you would have to inventory everything. This would include those limes, purees, sugar for coffee, and all the condiments on the tables as well. You would also have to inventory all the paper products as well.

Remember you are preparing a statement that correctly challenges all that you buy in order to run an establishment versus all the money that comes in to the place from
customers. If you leave out things that were purchased during the month, how can you attain a true food cost?

As far as a waste sheet goes, it is also used for food that is discovered to have gone bad such as spoiled coffee creamers, or meat or fish that are beyond serving. These items are listed on the waste sheet, given a dollar amount at the end of the month and then put into the inventory as sales.

As far as being able to use waste as a tax write off, I have no clue.

[old man]

Well, waste as a tax write off is wierd, but - it IS a cost of doing business and as such, lowers your profits and lowers your total taxable income. More importantly, having it identified and quantified helps you to manage things to minimize that waste.

Meals cooked wrong, voided and recooked can be considered waste and should be on your waste log - as the price of the meal, not the cost of the meal.

Servers who input wrong orders can be considered a detriment to profits and should be beheaded.

Cooks who ruin food, causing it to be recooked can be considered a detriment to profits and should be strangled with prejudice.

Sorry, got carried away there ...

[SaraCooks]

Servers who input wrong orders can be considered a detriment to profits and should be beheaded.

Cooks who ruin food, causing it to be recooked can be considered a detriment to profits and should be strangled with prejudice.

Old man, please you're among friends here. Tell us how you really feel.

You have an excellent point. you must first discover who these people are before you can murder them. Or maybe train them or fire them. Whichever management style you use.

[Yuzu]

Servers who input wrong orders can be considered a detriment to profits and should be beheaded.

Cooks who ruin food, causing it to be recooked can be considered a detriment to profits and should be strangled with prejudice.

Sorry, got carried away there ...

Oh, to be able to go back to the old days. Alas, everything is so PC now. Especially out here in California and working with an open kitchen.

I do a full inventory and purchase log ... my thoughts are that I am only doing the food and get no credit for the beverages. As such - I put the bag-in-box Cokes and Sprites in a seperate category in the Purchase Log and do not inventory them. The same with all the paper and disposables. To-go containers - I get to see how much we spend a month as an operating expense but should they be a part of inventory and then as such a part of food cost?

[bohica]

"I do a full inventory and purchase log ... my thoughts are that I am only doing the food and get no credit for the beverages. As such - I put the bag-in-box Cokes and Sprites in a seperate category in the Purchase Log and do not inventory them. The same with all the paper and disposables. To-go containers - I get to see how much we spend a month as an operating expense but should they be a part of inventory and then as such a part of food cost?

Some places keep separate food and beverage invetories and costs. Others combine them all in one. Some others still will separate the pop from the booze, wine, beer etc...

As far as "to-go" containers, aren't they a part of what makes up the food? I mean to say that these items are only used for food and nothing else. They are purchased for the sanitary packaging of leftovers or food to be taken from the premises, therefore, in my estimation, they should be included in the food cost.

Would not the bar include the plastic swords and frilly umbrellas they put on the drinks, as well as cocktail napkins, and straws?

[jonesg]

Keep it simple.

Food cost says something, its about food.

Tangling beverages (alkoholky ones) with the food isn't going to give a clear picture of either.

Packaging and frills , I would list them in COGS, (cost of goods sold) or paper goods, 3% is what I see on average.

Shrinkage is just that,
room for improvement but we're only half human.

"creating a waste sheet."

if you don't keep it simple, the excessive vetting will yield faulty information.

"Limes for the bar?, Purees for specialty drinks?, "

The bar runs its own inventory and they usually have seperate cash registers.

"Sugar for coffee?, Mustard and Ketchupfor refilling the table condiments?"

If the coffee is rung up on the bar tab its bar inventory.

Mustard and K'chup is food.

Keep it all seperate then combine it for the overall picture, if its not rosy, the discreet inventories will allow you to pinpoint it.

[chefelsner]

Beverage is considered alcohol. Coffee, Tea, soda, limes, etc. are all food when you do your inventory. Paper/plastic, cleaning supplies should all have separate accounts to list these expenses. The bar needs to requisition all food items that it gets from you so at the end of the month you'll have the proper credits towards your food cost. As far as a waste sheet goes it will only help improve service/cooking/ordering but it won't serve as anything but an explanation when it comes to figure your cost.

[Yuzu]

So we have just finished our first year and everything is in pretty good shape as far as all the numbers go. We have been working off the basic fact that I use Guiness for my fish and chips and box wine for sauces and such and that they use food for the bar and have just been considering everything more else equal as far as that goes.

What I am realizing is that there may not be a good way to realize food cost without doing the requisitions and documenting everything. No way to ever hit a bonus unless waste sheets and requisition sheets are put into play. Unfortunate because we are a small-ish restuarant and its just a lot of extra paperwork for me. Being a working Exec. Chef and only having down time between shifts for computer work.

Any way to look at larger numbers and take a better estimation from there.

I also remember coming up with a couple of basic numbers for sauce and dressing inventory. Once broken down to the ounce is plausible to say that all emulsified sauces are valued at a certain price and demi based sauces are based on a certain amount and so on and so on?

Oh, I am the master of run-on sentences. I'll apologize for that right now.

[bohica]

I have to add this story:

I had taken over a restaurant once that had lost their chef. He used an Excel program to create an inventory. In this inventory he gave a dollar amount to items in the walk-in cooler that have already been prepared. Items such as cocktail sauce, remoulade, stocks and sauces all got a price tagged on for inventory.

We purchased chicken bones (backs and necks) with which to make stock. The cases were $11.49 for 50 pounds of bones.
Add to that the mirpoix and we're talking about under $20.00 for all the ingredients. Even with labor and overhead added to this equation, we're still looking at under $30.00 to make 60 or so gallons of chicken stock.

I was going over the prior chef's inventories from month's past and this guy gave a dollar amouint to each gallon of prepared chicken stock at $50.00 per gallon. At that rate he had 15 gallons of prepared stock in his inventory and the extention read $750.00 He did the same thing with beef stock. Are we talking padding the inventory here or what? I just had to laugh at that and share it with you.

[Yuzu]

That is awesome!!!! I've heard of that but neverv seen anything so blatant/outrageous/stupid.

Or maybe he actually came up with that number? Probably didn't push the right ball on the abacus(SP?)

[ChezLeRecherche]

Isn't it actually the DIFFERENCE in inventory from beginning-of-period and end-of-period that matters? Over pricing the chicken stock can cut either way depending upon whether you have more or less of it at the end vs. the beginning. There must be better ways to cheat.

[Silverfox]

Isn't it actually the DIFFERENCE in inventory from beginning-of-period and end-of-period that matters? ...

I think the difference in inventory AND the food purchases comprise the food cost.

We total purchases and then subtract (if the ending inventory is the larger) the inventory difference to arrive at food cost. Obviously, if the ending inventory is LESS than the beginning, you have to add the difference to get to actual food costs.

Now, that is "food costs", "menu costs" are another matter as are "waste costs", "staff meal costs", and "comp meal costs".

[Yuzu]

Now, that is "food costs", "menu costs" are another matter as are "waste costs", "staff meal costs", and "comp meal costs".

Now do you know if there are any euqtions for computing these costs and where they should be factored into an overall food cost?

Or are they more just useful for the kitchen and realizing where there might be "Leaks"?

[Chef_Gerry]

I use a program called costguard. You can find it on the web. It will make your life much easier. There is a learning curve involved and you need to take the time to set it up, but it is well worth it. In my kitchen we count everything that goes into preparing any food item, including condiments. Items for the bar are purchased by the kitchen then transfered to the bar on a transfer sheet, this becomes a "purchase" on their side and a "credit" on mine. Costguard also allows you to inventory prepared items like salad dressings and soups and anything else that you prepare. The real beauty of the program is that it can import invoices from your purveyors, saving you a lot of time on data entry.
It also has the ability to allow you count food in different areas on different count sheets and then marries that information to create a total of that item for month end costing. I could go on and on.
Bottom line, if you want to make your bonus you need to have a system that will let you know exactly how you are doing.
Costguard does that. I have used it for 10 years and would not run a kitchen without it. I know that there are other programs out there, but this one works for me. Good luck