Hidden Treasure: Why Regular Inventory Counts Matter for Your Restaurant's Bottom Line

Hidden Treasure: Why Regular Inventory Counts Matter for Your Restaurant’s Bottom Line

Woman Working a Counter in a shop | Rea & Associates

Running a successful restaurant is no easy task. Every element must come together exactly right, from recipes to staff to finances. However, one often overlooked part is inventory management. You might be thinking, “Does it really matter if I count inventory at my restaurant?” The short answer: absolutely. Let’s delve into the details of why keeping a close eye on your inventory is not just a chore but a crucial aspect of running a successful restaurant.

The Cost of Neglect:

Counting inventory may seem like a time-consuming task, and as a result, some restaurants neglect it, or worse, skip it altogether. But what are the consequences of such neglect? 

  1. Inaccurate Cost of Goods Sold (COGS): Your COGS is more than just a record of purchases; it’s a direct guide to making good business decisions. If your COGS only reflects what you bought, not what you used, decisions based on it could lead you astray. Accurate COGS is vital for understanding the relationship between your product and sales, helping you make informed operational adjustments. 
  2. Excessive Inventory: Neglecting inventory counts allows it to accumulate unchecked. While a full stock might seem like a sign of success, the dollars tied up in excess inventory could be working harder in your bank account. Too much inventory not only ties up cash but also increases the risk of spoilage and theft. 
  3. Spoilage and Theft: With surplus inventory, the risk of product spoilage increases, especially if items reach their expiration date before being used. Additionally, theft becomes more likely when excess inventory provides cover—missing items are less noticeable when there’s an abundance. 
  4. Lack of Control: Regular inventory counts keep your management in the loop about quantities and costs. Understanding these aspects empowers better product, employee, and overall restaurant management, contributing to enhanced profitability. 

How Often Should You Count?

Now that we’ve established the importance of counting, the next question is, how often? Best practices recommend weekly counts, but at a minimum, monthly counts are crucial. Here’s why: 

  1. Weekly Counts for Timely Insights: Weekly counts supply a continuous stream of data, enabling you to find and address issues promptly. Waiting a month may result in lost profits as problems go unnoticed. 
  2. Strategic Timing: Optimal times for counts vary, but Sunday nights or Monday mornings are often ideal for many restaurants. Inventory levels are typically lowest at the end of the weekend, and business tends to be slower, allowing for a more focused counting process. 
  3. Efficiency through Consistency: The more often you count, the more efficient your team becomes. Establishing a routine fosters a sense of consistency, making the process smoother over time. 

Tools for Efficient Inventory Management:

Developing a system that helps swift counting and valuation is key. While Excel can be a starting point, investing in an inventory management system provides automation and a wealth of data. Be cautious when using Excel, as manual price updates are necessary. Many robust inventory systems offer automated pricing updates, delivering comprehensive insights into your inventory. 

Embrace the Effort for Profits:

Counting inventory demands effort, and there’s a learning curve for your team. Yet, the benefits far outweigh the challenges. Discovering where your products go, understanding their costs, and finding ways to improve your bottom line are invaluable outcomes. In the world of restaurants, where every penny counts, effective inventory management is an excellent opportunity to enhance profitability. 

In the intricate business of running your restaurant, inventory management plays a vital role. Counting inventory isn’t just a mundane task, but a strategic move that can make or break your business. From accurate COGS to preventing excess inventory issues, the benefits are diverse.  

Take charge of your restaurant’s financial success. Embrace regular inventory counts and, if you haven’t already, consult with your Rea advisor. Your business deserves the careful attention and expertise that can only come from a partner who is as committed to your success as you are. Every ounce of effort put into counting inventory will resonate in a more profitable and sustainable restaurant. 

 By Mike Lewis (Dublin)