Cafe and Bar Consultants: Inventory and Spoilage

Restaurant, cafe or bar inventory is complicated but tracking it is critical for your manager to know which menu items are in demand, which supplies are in need of replenishment and which ones are wasted. Restaurants need a continuous (and not periodic) system that constantly updates their inventory. Speak with café and bar consultants to set up a continuous inventory.

First, you need to record your complete physical inventory. Find out how many kilos of meat are currently on hand, litres of cola, pats of butter, heads of lettuce, etc. Your manager needs to enter the data into a spreadsheet or an advanced software that can offer more functionalities. As supplies get delivered and meals are served to customers, your staff should track each change and update this inventory. A good POS can automatically update these changes.

Your staff will inevitably burn meals and spill food that will be thrown away. Food spoils too when stored for too long. While your staff should record all these losses, it can also just slip through the cracks, that’s why restaurants still need to take regular physical inventory even with a fully computerised inventory system, to make sure the data remains accurate all the time.

Make sure your physical count matches your continuous inventory at any given time, otherwise there is a problem. It could be that your staff are not entering purchases or sales properly or that there’s plenty of wastage that nobody is recording. Staff theft is also a possibility. While the physical count doesn’t always exactly match the electronic inventory, a good system will let you know how much is being lost and whether you should worry about it or not.

A continuous inventory system equips you in times of surprises. It lets you know when there’s a need to order more or less of specific ingredients. For example, if the level of veal stays the same for a couple of days, not only does it tell you not to re-order, it also tells you that the customers are losing interest in your veal dishes. A good inventory system also lets you know of errors such us wrong deliveries, etc.

How to set up a good inventory system

If you have excess inventory, it ties up cash that your restaurant or bar can otherwise put to better use. A good inventory system allows for a more efficient way to order items as they are needed and prevent wastage. Your inventory will tell you when there’s a need to rotate the menu selection because of the age of the ingredients or when discounts and meal specials are needed to help clear out the ingredients that are close to spoiling.

A good inventory system starts with proper inventory control when your restaurant receives an item, especially food products with risk of spoilage and contamination. Your staff should check the packing slip against the items in the shipment and purchase order. They should be trained to call the supplier immediately if there are discrepancies. Once all items are inspected to be complete and of good quality, the receiving order must be signed. Seek help from café or bar consultants.

Your restaurant, café or bar inventory system may be fully or partially integrated with your POS to automatically update the count every time you sell an item. You can do a physical inventory count and include ordering modules to restock supplies at a specific level as well. While a fully integrated system is very expensive and time-consuming to implement, your waste and theft loss will significantly be reduced. You might also need an expert to customise the software for your restaurant. As café and bar consultants, we’ve observed that most restaurants now use partially integrated systems which still need staff to manually input received supplies and conduct a physical count to verify inventory totals.

If you don’t have an integrated inventory system, your staff must physically count the stock and periodically update your restaurant’s inventory records. This is suitable for smaller restaurants, cafes or bars that don’t have a wide variety of dishes. It doesn’t take a long time to count fewer inventory items but manual updates come with more risk of loss because a physical count may lag behind the actual inventory by a week or more.

You need to secure your storage so staff can’t access the items outside of their duties. Make sure that food are kept at the correct temperature range to avoid spoilage and organise your storage facilities to keep food items with the same humidity and temperature requirements together. Make sure the product labels are easy to read to save time and encourage employees to put things back in the proper place. Heavy items should be stored lower to avoid the risk of injury from collapsing shelves and falling items as well.

Tax audit

Restaurants, cafés and bars account for overheads including wages, utility bills and ingredients. Gross profit is the money that a restaurant takes in whereas the net profit is the difference between the gross profit and all operating costs. Restaurants basically buy food, prepare a dish and sell it to make money. Hopefully it was as easy as that but some perishable items spoil and they need to be thrown out to avoid serious health violations.

As café and bar consultants, we know that food spoilage often appears suspicious to auditors. To prevent the ATO from suspecting that your business is underreporting profits at tax time, you should keep track of all expenses including the value of all spoiled food every week or month.

It gives you more reason to do all you can to minimise loss due to spoilage and waste because a high rate of spoilage can not only interfere with your profits, it can also trigger a tax audit. Develop a system that makes sure that the items closest to their date of expiration should be used first and that perishable items are properly refrigerated. Do your best to reduce the amount of perishable items in stock. You can even get spoilage insurance to avoid a loss of profit.

Cafe / Bar Consultants

Need a bit of assistance with your café and bar? Contact cafe and bar consultants today and learn more about our fixed fees. You won’t regret it.

Some of our clients include Buckley’s Entertainment Center, Ballarat Leagues Club, Daylesford Hotel, Bacchus Marsh Golf Club, Campbell Point House, Midlands Ballarat, The Urban Newtown, Maryborough Midland Society, Brink Drinks, Dontek, UV Wraps and many more.

Aside from business consultation, we also offer accounting, bookkeeping, back office, SMSF and POS services designed to help you achieve greater financial success.

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