Four Reasons I Don’t Teach Restaurant Inventory

Four Reasons I Don’t Teach Restaurant Inventory


There are four
reasons I don’t teach restaurant inventory
to my clients. I will share those reasons
with you and why I don’t think you should take inventory in your
restaurant either. Coming up right now. Hey, everybody. Ryan Gromfin
here – author, speaker, chef, restaurateur, and the founder
of the www.Restaurantboss.com, as well as
www.clickBACON.com. Now, I know,
I know it’s a little controversial. I don’t necessarily think you should
take inventory in your restaurant, and I’m going to
explain to you why, so just stick with me for a second.
If you think I’m crazy, stick with me. If you have no idea what
I’m talking about, stick with me. But, first thing is, have you subscribed
to my channel yet? Please go ahead and click
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We read them all. Anyways, I know,
I know, this is going to be
controversial for you. If it’s not controversial
for you, great. I hope I could influence you a little bit into
taking my side, the good side, not the dark side that I don’t
believe in taking a restaurant inventory. If you have no idea what
I’m talking about, in this playlist will be a couple of other
videos one on food cost. Go back and watch that one.
Food costs are cost of goods sold. Go back and watch that
video in this playlist to get some background
before you’re here, but if you’ve already
seen that video, great. You’re here. So, why take you
inventory in the first place? It balances things out because
as we know if you’re taking, let’s say, you want to get your
cost of goods sold for a month, well, your month always
ends on a different day. Some days you get a
delivery, some days you don’t, some days you have
high sales, some days you don’t.
So if it ends on a Saturday, well, you had really high sales.
Your food costs might be artificially low. If it ends on a Thursday, you might
have gotten a big delivery getting ready for
the weekend, and then not sold any
of that food so your food costs or cost of goods sold
might be artificially high. So inventory balances
all that out. Again, go back to the video if you
need the calculations on that, but that’s why we take inventory,
and it’s valuable. Don’t get me wrong. I just don’t think it’s valuable for
most independent restaurants. My general rule of thumb is if you’re
doing less than five million dollars a year, don’t do it. That’s my general
rule of thumb. If you got one unit, you’re doing
five million dollars a year, you should be
investing in inventory. If you’re doing two million dollars a year or
you got two units doing a million each, just don’t even bother.
Here’s why – why I don’t teach it? Number
1) It takes too much time. The amount of hours
for you to do a proper inventory where you are updating line items of prices with every single order, properly counting, properly
creating your recipes, properly documenting
everything. Again, properly. We’re going to talk about
this more in point two or point three, but the amount of time
that it takes you is just not
worth it. In that same 8-20 or
30 hours a month, closer to 20-30 hours a month because
it takes about 80-hours to do a really good inventory in
a big restaurant, maybe you’re out there going,
“we can do it in two hours, great. You’re probably not doing it as
accurately as you should be.” But the point is in the 20-30 hours a
month that it takes to get proper inventory, you could be outselling
more stuff, you could be shaking
hands and kissing babies., you could be working on new things –
marketing campaigns, new recipes, all kinds of other things.
Just don’t waste your time on it. It just takes too
much time. Number 2) It’s too
complex! The independence that I see taking inventory
don’t really understand it fully. I’m not saying that to judge
you or talk down on you, it’s just really
complex stuff. And if we’re just
handing it off to a manager who maybe knows how to
do it properly or maybe doesn’t, the chances of them doing it properly are
so small because it’s so complex. The recipes, the detail, the
yield testing; it is so complex. There’s so much to deal with.
I just say no. Number 3) Garbage in,
Garbage out. Because it takes so long
and because it’s so complex, if you don’t do it
perfectly, perfectly, you are going to make
decisions on bad data, inaccurate data that
may not be as perfect as a
perfect inventory, but at least we
know it’s accurate. I see people doing
inventory and doing it completely wrong and
getting horrible data. I see people doing inventory
and doing it completely wrong and getting
horrible data, and then they make decisions
on that data. So garbage in, garbage out. The fourth reason, it’s only
accurate for one moment in time. The day you take inventory,
it’s accurate. So if you take inventory on
the 31st of the month, the last day the month, or the
first day of the month, whichever one, when you take that inventory on
the first day of the month, its accurate, your cost of
goods sold is accurate, but every other day, your cost
of goods sold is not accurate. Also, what ends up happening
here is people will take inventory on the first of the month, let’s say,
or the last day and then it takes a week or two weeks or three weeks for the bookkeeper and everyone to get all that data compiled
and then you get your information back, and its super
old data. So, what I suggest is
a rolling calculation. I’m going to talk about that more in a second,
but I do want to mention this quickly. This is not where
your challenges lie. If you are having cost of
goods sold challenges, taking inventory is not
where the magic is. The magic is getting your hands dirty,
getting in the kitchen, getting in the bar
and managing things. I like key item inventory,
I like counting a few things every day like bottled beer or steaks
or shrimp or scallops or expensive stuff and comparing that day to day,
compare it to your sales, making sure that people aren’t
stealing or it’s not being wasted, but putting the systems
and processes in place, I would rather see you do
that than just counting it and getting all of this
old data. Trust me, this is not where
your challenges lie. When I help restaurant owners
lower their cost of goods sold, lower their labor cost,
increase their profits; none of the people that
I work with… do we incorporate complex
labor systems to get the results? We incorporate dozens
of other things, but labor or inventory is not
where your problems lie. So, the two alternatives I is
using a simple method. If you watch the cost of
goods sold video, you’ll hear me talk about
the simple method, which is just purchases
divided by sales. So food purchases
divided by food sales. Just do it over a
longer period of time, do it over three months
instead of one month, do it over six months or a year
instead of one month. You’ll get more
accurate data. What’s even better than that is
to use a rolling calculation. So maybe the last six months,
and then every month, we kick out an old month and
bring in the new month, but we do it over a
rolling six months. My personal preference
is a rolling four weeks. I love that method so much that
we have created some software to help you manage this,
it’s called clickBACON, and clickBACON does not
require you to cost each recipe. It does not require
you to extract purchase data for each
line item only category. It does give you accurate
information without taking inventory, it’s why I created the
software, it’s why I love it. Please check that out
at www.clickBACON.com Leave your comments and questions below.
Subscribe to the channel. I look forward to bringing you another
great video just like this next month. Don’t worry about the inventory,
stop wasting your time on it. I want to thank you for
watching that video. If you can do me three really
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12 Replies to “Four Reasons I Don’t Teach Restaurant Inventory

  1. Thank you for another great content sir. I get your point that inventory for a restaurant is a difficult and complicated task. What you are suggesting is a simple approach and I like it but how do I deal with theft if I follow what your suggesting?

  2. I have to disagree with you boss, 30 hours a week it will be very wisely spent.
    If you own a restaurant you don’t want to be behind the counter if you trained your team how to prep the right way all you have to do as a owner is to do inventory to prevent theift most importantly provide a great service for your customers and making sure operations is smooth

  3. Thanks Ryan. My question is, How do you incorporate this with your purchase order? If you're not doing inventory, how do you know what to order?

  4. Please tell me how to do the precost for the party of 2000 pax , Generally chef do the postcost for the 2000pax how much he has been spent on that particular 2000pax

  5. Please tell how to do the bulk costing for the central production kitchen for 20000meals per day producing in my kitchen

  6. This is what I’ve been thinking as well. Taking inventory took too much of our time. One month in a year (festive season) we’d be so busy our sales is 5 times more than every other month and we wont even bother with inventory because there’s just not enough manpower/ time to do it. We do make much more money in that month.

    However in other months our sales would go back to normal and we take inventory every day. I do think I could probably use that time to do other things but everyday when we do inventory we always find out shortages in inventory and thats when we know somebody has given a free cake or wasted some chickens. Also we take inventory to determine what to order. When we dont, we would find out we dont have enough items during the lunch hour rush as some staff would forget to order things. Those missing items are a real problem. When we didnt do inventory there would be many more things missing. Now that we take inventory people are a bit more careful with the items.

    What do I do?

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