When it comes to restaurant inventory, there is often discussion about whether doing inventory weekly or monthly is better. While there are some businesses in different industries that may be able to do a monthly, or even annual inventory count, this is not recommended for restaurants.
There are a number of reasons for this:
- Restaurants have short-term promotions.
- Restaurant inventory, especially food, is replenished frequently over a short period of time.
- Many food products are perishable and have a short shelf life.
The pros and cons of weekly inventory
Weekly inventories come with a number of benefits. Firstly, weekly inventory counts make it easier to control your cost of goods sold and calculate weekly food costs. It also means you are more likely to spot overages sooner. This will help you to reduce your food waste and over ordering, which can heavily affect your overall profitability.
There are, however, some downfalls of weekly inventory that must be considered:
- Seasonality can move to a different week when comparing year over year sales by week, which can make seasonal trends hard to uncover.
- Converting weekly data into monthly data can result in misalignments between weeks and months.
- Weekly inventory can be more time consuming.
- Performance measurement can be more time consuming when you have 52 periods to review (vs 12 periods when doing inventory monthly).
How to offset the challenges associated with weekly restaurant inventory
To help ease the negative effects of weekly inventory, there are some easy steps you can take.
To ensure you can gain actionable insights into restaurant inventory and avoid weekly changes in seasonality, consider doing two inventories for weeks that are split between two months. The first would be done on the last day of the month and the second would be done at the end of the week. Alternatively, you can do a quick calculation:
- Take the ending inventory of the previous week and add in purchases made that week until the last day of the month.
- Multiply your sales from the beginning of that week until the end of the month by your target cost of goods sold percentages.
- Subtract the amount you calculated in step two from the amount you calculated in step one.
To reduce the amount of time spent doing inventory, you can consider separating your inventory into items that should be counted weekly, such as perishable food, and items that are safe to count on a monthly basis, such as non-perishable food items.
To ensure you don’t accidentally miss expiration dates, you should consider keeping careful track of best before dates on items that you are inventorying monthly - although the more (as long as it's done consistently) frequently that you do inventory the better insights you will gain into your profit margins.
Lastly, to help minimize the amount of time calculating performance measurements, consider investing in inventory management software. Not only will this save time spent calculating data through automation, but you will also reduce the time spent doing inventory, improve the accuracy of your records and ensure important information about each item in your inventory (such as expiry and reorder points) are collected.
Taking these steps will ensure the most accurate inventory possible, help you better forecast and ensure you are reducing food waste and spoilage.
Interested in learning more about how you can implement better restaurant inventory processes and technologies to improve your profit margins? Get in touch with Sculpture Hospitality today. Our team of locally-based inventory management specialists would love to answer any questions that you may have.