Do inventory weekly of all COGS items [Hack #048]

Do you know where your money is going?

This is a lot of work. No doubt the commitment is upwards of 10hrs weekly. At a management rate, it could get to a few hundred dollars weekly. However, the instant savings will make that number seem like a gift.

In the mid-2000’s, I took over a restaurant that was failing pretty spectacularly. The owners couldn’t understand why they were losing $5-7K/month. The first action I took was to begin complete weekly inventories.

Four things instantly occurred:

  1. The entire staff saw us doing inventory and became aware that we were now focusing on this cost. They expressed interest because it was a change and more importantly became aware of their own behavior as it pertains to inventory control. Locks were made to keep honest people honest and inventory has the same affect.
  2. We released several thousand dollars in “held” inventory that created instant cash flow. We offered a Bin End list from our overstocked wines, rand food specials for any items that were frozen or extra and even returned some items that were obvious scams from our suppliers. This happens when you don’t do regular inventory and have your eyes on the results.
  3. Our ordering improve because we had accurate intelligence about our depletions. They were relying on their beverage reps to place certain orders and not running any ledger or inventory systems. By adding this information we ordered what we needed, when we needed it… and nothing else.
  4. We knew exactly how much was being spent and within two weeks had dropped the overall COGS% from 40% to 30%. In a restaurant that was doing about $1MM annually, that translated into almost $100k in instant profit. For this operation, it also meant staying solvent.

With today’s technologies, you can even further improve your inventory performance. Services like Orderly give you all the tools you need in an inexpensive format to get this beast under your power. Do that and see your real profit rise. 

Got a cool restaurant hack of your own? Let us know!

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