Start implementing proper stock controls and improve your bottom line!

Leigh Morum's picture

I was surprised when I first heard that world-wide, the number of restaurant operators that actually control and manage stock properly was fewer than 50%. The fact is that if you own or operate a restaurant, no matter how well you think you're doing if you are not monitoring your stock, you're not managing it properly - and if you're not managing your stock properly then your bottom line is suffering.

The essence of stock control is to keep your cost of sales as low as possible. You need to compare the actual usage of stock (or net stock usage) in your business, to the theoretical usage of stock - and troubleshoot the reasons for any variances between the two.

The actual net stock usage is basically a simple calculation based on physical observations such as human stock counts and tallying up of stock receipts from suppliers...

Net Stock Usage = Opening Stock PLUS Stock Receipts from Suppliers MINUS Closing Stock

This Net Stock Usage is what will determine your actual cost of sales in your business.

Theoretical Stock Usage = Sales of Menu Items through the POS (or till) MULTIPLIED BY Quantities of ingredients (or recipes)

If you have consistent recipes for the menu items you sell, it will be quite easy to determine your Theoretical Stock Usage. It represents the amount of stock that your business should have consumed in order to make the recorded sales.

Since you're dealing with stock, you should be controlling it in units and not value. For example, litres of milk, Kg of fillet, Kg of cheddar etc. We don't want price fluctuations to distort variances between actual and theoretical stock usage so the comparison is done in units. Do this stock variance calculation regularly (stock variance report) to monitor whether or not your stock is going missing.

You might think it's a daunting task to suddenly start implementing proper stock controls especially if you're starting from a low base! It's actually much easier than you think. Don't try and eat the whole elephant - start with the big toe. If your stock controls are a disaster, consider following these steps:

1. Identify a few high-cost stock items (you could even start with just ONE);

2. Check to make sure that any recipes that contain these items are accurate;

3. Start counting these items and capturing your stock takes every day;

4. Run a stock variance report daily to determine if there are unaccounted-for stock losses for these items;

5. As you are able to troubleshoot these stock losses, you could spread out the stock takes to weekly or whatever other period better suits you;

6. As you gain confidence in the process, extend the range of stock items to other items in your restaurant.

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