Expert Advice on Hospitality Topics

Controlling Food Inventory to Generate Maximum Profits

Posted by Nick Kaoukis on Fri, Apr, 29, 2011 @ 10:04 AM
By Douglas R. Brown
Atlantic Publishing

Part 5: Purchasing and Ordering--Procedures and Practices

Purchasing and Orderingfood purchasing

What exactly is the difference? Purchasing is setting the policy on which suppliers, brands, grades and varieties of products will be ordered. These are your standardized purchase specifications; the specifics of how items are delivered, paid for and returned. These specifications are negotiated between management and distributors. Basically, purchasing is what you order and from whom. Ordering, then, is simply the act of contacting the suppliers and notifying them of the quantity you require. This is a simpler, lower-level task. Here are the basics:

  • Develop a purchasing program. Once menus have been created that meet your customers' satisfaction and your profit needs, develop a purchasing program that ensures your profit margins.
  • An efficient purchasing program incorporates: Standard purchase specifications based on standard­ized recipes, and standardized yields and portion control that allow for accurate costs based on portions actually served.
  • Keep in mind: Purchasing more than you need usually results in poor portioning, excess spoilage, waste and theft. Not buying enough can mean paying retail prices, or using a more expensive substitute.
  • Purchasing procedures. These procedures should include creating written purchasing specifications for every product and selecting good, reliable purveyors. Your purchasing procedures should do three things:
  1. Allow you to purchase the required items at prices that meet your food cost goals.
  2. Maintain control over your existing inventory.
  3. Establish a set of procedures to be sure that you receive quality product at the best price.
  • Purchasing responsibility. Either take on the purchasing yourself or assign a specific employee to do it. Make sure that this person keeps current with ever-changing food prices.
  • Price checks for different vendors. Sometimes you may find that one vendor is less expensive than another for a while, and then this may shift. Keep current with competing vendors' prices.

Purchasing Specifications

By creating purchasing specifications, you can control which items you purchase and you can maintain product consistency. This information is extremely important if you have more than one person that does ordering in your operation. You need to record the following basic information:

  • Purchasing specifications. They state the exact requirements for the amount and quality of items purchased. These specifications should include:
    1. Product name
    2. Quantity to be purchased (designated with correct unit such as pounds, can size, etc.)
    3. Indication of grade, if applicable
    4. Unit by which prices are quoted
    5. What the product will be used to produce
  • Meats. Meats should be inspected by the USDA or
    other appropriate agency. The parts or packaging
    should carry a federal or state inspection stamp.
  • Eggs. Eggs should have a USDA grade; frozen and
    dried eggs should be pasteurized.
  • Shellfish. Shellfish should be purchased from
    suppliers that appear on public health service Food
    and Drug Administration lists of Certified Shellfish
    Shippers or on lists of state-approved sources. The
    control tags must be available if live shellfish are
  • Introduce a record sheet. Make it readily available for all your employees. They need to be sure that they're ordering the correct items in the correct amounts. You're also more likely to attain your desired food cost by keeping these records and maintaining purchasing controls. Keeping your food cost down will help you to maximize profits from your menu prices. The following form illustrates an example of a purchasing specification form:

Purchasing Specification Form



This article is an excerpt from the Food Service Professional Guide to Controlling Restaurant & Food Service Food Costs, authored by Douglas R. Brown, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company

Topics: inventory, Restaurant Inventory, food inventory, Control, Hospitality, inventory schedule, inventory counting, controling costs, purchasing, inventory control

Controlling Food Inventory to Generate Maximum Profits

Posted by Nick Kaoukis on Wed, Apr, 20, 2011 @ 14:04 PM
By Douglas R. Brown
Atlantic Publishing

Part 3: Controlling Inventory LevelsFood Inventory

The first step in computing what item to order and how much you need is to determine the inventory level, or the amount needed on hand at all times. This is a simple procedure, but it requires order sheets. To determine the amount you need to order, you must first know the amount you have in inventory. Walk through the storage areas and mark in the "On Hand" column the amounts that are there. To determine the "Build to Amount," you will need to know when regularly scheduled deliveries arrive for that item and the amount used in the period between deliveries. Add on about 15 percent to the average amount used; this will cover unexpected usage, a late delivery or a backorder from the vendor. The amount you need to order is the difference between the "Build to Amount" and the amount "On Hand." Experience and food demand will reveal the amount an average order should contain. By purchasing too little, the restaurant may run out of supplies before the next delivery. Ordering too much will result in tying up money and putting a drain on the restaurant's cash flow. Buying up items in large amounts can save money, but you must consider the cash-flow costs.

  • A buying schedule should be set up and adhered to. This would consist of a calendar showing:

               -Which day's orders need to be placed.

               -When deliveries will be arriving.

               -What items will be arriving from which company.

               -Phone numbers of sales representatives to contact for each company.

               -The price the sales representative quoted.

  • Post the buying schedule on the office wall. When a delivery doesn't arrive as scheduled, the buyer should place a phone call to the salesperson or company immediately. Don't wait until the end of the day when offices are closed.
  • A Want Sheet may be placed on a clipboard in the kitchen. This sheet is made available for employees to write in any items they may need to do their jobs more efficiently. This is a very effective form of com­ munication; employees should be encouraged to use it. The buyer should consult this sheet every day. A request might be as simple as a commercial-grade carrot peeler. If, for example, the last one broke and the preparation staff has been using the back of a knife instead, the small investment could save you from an increase in labor and food costs. 



This article is an excerpt from the Food Service Professional Guide to Controlling Restaurant & Food Service Food Costs, authored by Douglas R. Brown, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company

Topics: inventory, Food Costs, food inventory

Better Inventory Management Equals a Better Bottom Line

Posted by Nick Kaoukis on Thu, Feb, 24, 2011 @ 14:02 PM
By Elizabeth Godsmark
Atlantic Publishing

Part 2 of 6: Inventory Tracking--Getting Maximum Value Out of Your Stock

Track Inventory - Track CostsLiquor Inventory Tracking

In order to control inventory, you need to know exactly what stock you have/had and where it is or when you sold it (known in the trade as "cradle-to-grave" accounting). To operate a cost-effective tracking procedure, it is crucial that you document all liquor, wines and beverages as they progress through the inventory cycle. Choose whatever tracking method works best for your establishment, but don't think you can do without some form of system. You can't. On a positive note, however, developing such a system is one of the best ways of keeping a tight rein on expenditure. Follow this six-step guideline and you shouldn't go wrong! There are several cheap, off-the-shelf forms that you can use to help you with your record keeping.

  • Step 1: Purchase order. The purchase order is the first form in the cycle. It provides a detailed record of every item purchased.
  • Step 2: Perpetual inventory. This second form tracks the movement of liquor, wines and beverages from the storeroom to various locations within the establishment. It also tracks each product's turnover rate. The perpetual inventory is also used for accounting purposes.
  • Step 3: Requisition form. This records the actual transfer of inventory from the storeroom to a specific location within the operation. This form is also used to record breakage.
  • Step 4: Bar par form. This records the quantity of each brand of liquor, wine or beverage currently stocked behind the bar.
  • Step 5: Depletion allowance form. This form is used to track the amount of spillage and wastage and to record any complimentary drinks.
  • Step 6: Physical inventory form. Used primarily when completing end-of-period accounts, it records the result of physical stock audits.


Monthly and Annual Inventory Control

Daily inventory control is the first, essential step towards keeping costs in check. In fact, no business can function without daily records. But, look ahead. To maximize control of overall costs, establish sound monthly and annual inventory procedures. Drain every dime out of your liquor, wine and beverage inventory -long-term!

  • Monthly inventory. Month-end figures are crucial for determining the financial success of your operation. Devise a simple monthly inventory sheet and use it, without fall.
  • Physical count. Carry out a monthly physical bottle count. Check totals against the perpetual inventory figures.
  • The "Cyclops." This handheld scanner reads the Universal Pricing Code (UPC). It can really speed up the monthly stock check!
  • Weighing scale. Use a precision liquor-weighing scale. These devices are extremely fast and easy to use. They can calculate to within 1/40 of a fluid ounce.
  • Annual inventory. Use annual inventory figures to review overall costs. For example, now is the time to consider price increases or to discontinue lines that are no longer cost-effective.
  • Resolve queries. Merely recording monthly and annual inventory figures is not enough. Resolve any discrepancies immediately. It all adds up!


Topics: inventory, inventory counting, inventory control