Food & Beverage: Overstocked? Eliminate These Expensive Kitchen & Bar Errors - By Ken Burgin

A tough economy demands leaner, more efficient methods, but so much food & beverage stock control is a joke! Check these 7 common problem areas to drive your review - how many of them need attention? Stock = Cash.

Areas Where Problems Often Occur...

1. Staff Don't Understand What the Figures Mean.

The stocktaking formula is simple:

Opening Stock + Purchases - Closing Stock = Stock Used

Use the example of wine: We started the week with 6 bottles, bought 12 more and finished with 4 ie. 6 + 12 - 4 = 14 used. Stocktaking is this principle on a much larger scale! Ask management applicants to explain how they would teach stocktaking to a new employee - the results may surprise you!

Opening & Closing Stock are essential figures for a Profit & Loss Statement - another set of figures managers should understand. Most don't.

2. Staff are Laying in Supplies for a Siege.
Overstocking is very common, even when deliveries are available 6-7 days a week. One reason is because staff get into more trouble for running out of a product than for being overstocked - they buy up to avoid drama! But it's like storing cash on the shelves, rather than in the bank. If you're buying 10 cases to get one extra free, waste and shrinkage also increase - these deals are usually about the sales rep's bonus rather than saving you money. And does your insurance cover it all?

Remind people about The 80-20 Rule - most of your sales come from a small number of menu and stock items. Weekly POS figures will identify them - what could you hold less of? If you just counted the most valuable 20 items, would that give you enough control?

3. Stock Moves Too Slowly. This is dangerous with perishable food, and common with liquor.

To work out your turnover rate, calculate how much you need for a week (multiply your sales by the typical cost of goods %) and divide this into your total stock on hand.

Eg if your liquor sales are $10,000 and costs are usually 40%, you will need $4,000 of stock per week. If a stocktake shows you have $24,000 of stock on hand, that's 6 weeks supply! Most operators like to keep it to 4 weeks or less, so in this case, you'd have to reduce the stock from $24,000 to $16,000. That's $8,000 cash back into the bank!

To do a similar calculation with food, work out the number of days of stock you hold. If it's more than a week, a review is needed - even reducing by 

4. The Stocktaking Process is Inefficient. Make it a ritual, but not a religion - undertaken on the same day of the week or month, and counted in the same order. Check that the process is organised:

• Generally, the people who count the stock should not be those who use it.


• Always count in the same way - from top to bottom, left to right or however you do it.


• Check list sizes match portion sizes eg 2 boxes of cans aren't counted as 2 cans.


• Compare like with like eg the pasta packets are the same size.


• Use printed sheets that align with the software or spreadsheet that's used.


• Use software (like Profitable Recipe Manager) to make recording faster.

5. EVERYTHING is Overstocked! Look around - are store room shelves loaded with old plates and bowls? Broken appliances kept just in case? Do you have 12 months of photocopy paper and filing cabinets full of old records? Chances are the roster is also overstocked - with hours. Part of the fix is a good throw-out or 'enema' - don't be polite about it.

6. Discrepancies Are Not Confronted. When stock goes missing, and a double check still shows losses, what do you do? Many small operators tolerate it, and the problem will grow. Others say it's inevitable, or 'industry average' (like some of the Minor Staff Dishonesty examples). Owners helping themselves will also undermine the rules. When did you last confront an obvious theft?

7. Other Stocktake Issues:

• What about disposables and napkins etc? Large operators hold less and less of this stock on hand - are you doing the same?


• Do you pay too much attention to things that don't matter eg weighing salt or bulky, low-value commodities?


• Do you assume basic commodities are of little value eg spices in large cans are very costly.


• Are high-value items keptunder lock-and-key eg saffron, dried mushrooms and liqueurs?


• How many items are counted as 'the same as last time'?


• Watch out for transfers between bar and kitchen eg Guinness for the 'Beef & Guinness Pie' or strawberries for cocktails. How are they tracked?


• Who drives the stocktake or accounting software? If you're using a stocktake system or it's linked to the POS, the results are only as good as the data input and setup. Don't waste that big investment...

Profitable Hospitality offers management and cost-control systems (Manuals & CD-ROMs) for restaurants, cafes, hotels, bars and clubs. The systems are based on the extensive consulting and operating experience of CEO Ken Burgin, and enable busy owners and managers to set up complete operating and cost-control systems in minutes, not months. Profitable Hospitality also runs regular management training workshops in the areas of kitchen profit & efficiency, restaurant marketing and functions management. A free monthly e-newsletter keeps you up to date on the latest industry management issues. www.profitablehospitality.com.

Reader Comments:

Be the first to leave a comment for this article