After setting up a comprehensive food inventory from scratch for one of my better liquor inventory clients, I have assembled a tally of seven big things I felt were important to know prior to building a food inventory list.
If you have ever thought of setting up a food inventory control program at your bar, it would be very wise to read on to avoid many of the headaches I encountered. I have done basic food inventory gigs for people in the past, measuring proteins and other high dollar items, but this is the first time I built an entire inventory, with all the spices, oils, sauces, condiments and every little ingredient that was in the kitchen. So this will provide valuable insights for those that like to count their dollars as I do.
1. States MATTER
All your food is either a liquid or a solid. Defining this for all your inventory is the first step when you are building out your items.
The units in which you are invoiced for items are typically the units you want to use when building your inventory. If you pay for items in units like KG, G, LB, ML, and L, those are the units you use to build out each respective item.
As a review:
- Solids are typically invoiced in weight-based measurements like KG, G and LB.
- Liquids are usually invoiced in ML, and L.
- There are also items invoiced by total units without a specific weight or volume. Eggs, for example, can come in units like 15 dozen. Avocados are also often shipped in this fashion, with set units like 20 per box. Some produce like fresh parsley is often sold as a “bunch” without a specific weight as well. In these cases you may have to do some partial estimates like 0.3 or 0.5 of a unit when you are counting or assigning recipes. Knowing what units each item is shipped in and assigning the correct measurement to items is fundamental towards counting successfully.
PRO TIP: Counting solids is simple. Whether you’re talking about a chunk of meat or a shaker with dried basil leaves, you just place solids on a scale, tare for the container (if there is one), and whatever the scale reads is what you have on hand.
Liquids are a bit more complicated. Before you can weigh liquid, you must know the DENSITY. To measure density, just grab a 30 ml measuring cup, place it on a scale and tare it, then fill it with whatever you’re measuring. Whatever the scale reads in grams divided by 30 ml is your density per ml. Most liquids are around 1 gram / ml. However, items that are more viscous, like ketchup, can be 1.1 gram / ml. Items mixed with oil, or that are whipped, will be lighter than 1 gram / ml.
COMMON QUESTION: What do you do when you have an item like pickles, which is shipped in liters and has a mix of solids and liquids inside of it? You can calculate the density by weighing the bucket when it is full, emptying it, then weighing the empty bucket. The weight of all the liquid and solids that are contained within, divided by the stated capacity on the label, is your “density” per L or ML.
This density is never going to be exactly the same for every unit you purchase because you are never guaranteed to receive exactly the same amount of pickles in every unit you order. However, it is a reasonable estimate of how much food each purchase will reliably produce and one of many estimates involved in counting food. You can use this same method for any item that is a mix of solid and liquid in a can.
For items that are shipped in units without a specific weight or volume, they must be built as units in the inventory and partial amounts are best counted using a “pointing” method. For example, if during the count a half avocado were found, it would be inventoried as “0.5 of an avocado.” This is not as precise as weighing, however, because the items are shipped according to unit; the counting method must be consistent with how it is shipped.
2. Know Your Containers
In a typical kitchen, you will find a multitude of plastic and metal containers that are used to store food. For example, there are 1/9, 1/6, 1/3, and half plastic and metal inserts that are normal for all kitchen lines to have. There will also be big plastic bins, plates, and metal pans.
In your inventory method, if you are counting any item that is in a container, you must “tare” your scale with the container it is being stored in to get an accurate reading. Knowing the weight of these containers makes the counting process much more quick and accurate.
As a side note, it is worth mentioning that there will be slight variations for containers you will have to learn to live with. The manufacturing process for metal inserts is not a perfect one, so the best way to determine the weight of a certain size of inserts is just to grab 3 of them and get an average weight. The differences are not usually large, but it is something you must be aware of when using container weights during the counting process.
3. “Close Enough” Measurements
Food inventory has a lot of measurements that are not exact, and therefore lead to natural variances. This is not a problem so long as the operator knows this as they are reviewing variance reports.
For example, an operator cannot expect an item like pickles to balance perfectly every time an inventory audit is done. The reason why is because you have to use whatever jar of pickles is in front of you to estimate the density of that product. But God has not created any jar of pickles that are exactly the same. They all come in different shapes and sizes, and therefore you won’t get exactly the same density in each jar. The jar you use to establish your density is just a benchmark.
The same thing is true with a 5 KG bag of wings. Sure, the bag weighs 5 KG when you place it on a scale, but each bag has a variable amount of blood that affects how much usable product there is. There are also slight variations in the weight of containers, like metal inserts and cardboard boxes, which are not manufactured identically.
Factors like these will lead to natural variances in the reports. In fact, as you build out your entire inventory, along with your recipes and theoretical costs, you must come to peace with several of these natural variances. The inventory reports will simply never be 100% perfect, but as long as it’s “close enough,” you’re good.
4. Proper Time and Staffing Allocation
A typical food inventory takes around 4-5 hours. It is also important for the person running the kitchen to be the person counting the inventory. No one knows the food inventory of a restaurant better than the person who spends all their working hours in the kitchen. While an outsider may be able to do the basics, only the chef will know all the different cuts of meat, ingredients for prepped items, and the multitude of small details that are discovered during a detailed inventory count.
For successful food inventory auditing, there needs to be a proper amount of time allocated to complete the job and also the right person assigned to the task.
5. The Pros and Cons of Batch vs. New Items
When it comes to items that contain multiple ingredients, an auditor faces the dilemma of either creating an entirely new item in inventory without ingredients or a “batch,” which contains multiple ingredients already in the inventory and is accounted for as such. The math for either method works out to be the same, but it is a tad bit more of a hassle to update costs for an entirely new item than one that has its prices updated automatically as invoices are accounted for.
For example, we may have an entirely new item called “Beans and Corn,” which is costed at 50% beans and 50% corn, but the cost has to be calibrated by manually calculating out the cost of beans, the cost of corn, and assigning those costs to the item. Every time the cost of beans and corn changes, that price needs to be recalculated and updated. If we create a batch mix that has the ingredients for 50% beans and 50% corn, the cost for those components update as invoices are entered for each inventory audit. If you have automation in place for entering invoices, this gives you extremely accurate data, which is important for all the items that are mixed and prepared prior to being served.
However you choose to account for the cost of ingredients, you must know the ups and downs of either method.
6. Understanding and Tracking Yields
Certain foods shrink when they are cooked, and the difference between its raw state and cooked state is called a yield. Bacon, roast beef, and pork butt are some examples of items that are purchased by weight, but by the time they are plated for a guest, they have shrank dramatically from their originally purchased state. Canned goods suspended in liquid also lose a significant amount of volume once they are drained and only the solids within remain.
When an experienced chef looks at a food variance report, they already know certain items will always “bounce around” due to the variation in yields. For example, if raw bacon is turned into bacon bits, the bacon will shrink dramatically during the cooking process. How much it shrinks depends on the fat content in each slice, which is never the same. The same thing is true with cooked meats like roast beef or pulled pork, which lose a significant amount of weight when cooked.
When building an inventory, the auditor has two choices: he can either created a “yield item” that applies a percentage to a cooked item (so you can estimate what the raw weight of it is), or the auditor can simply count all items in the same fashion, whether they are prepped or not, and rely on the variance report to estimate the “yield.”
If in the example above we measured five boxes of raw bacon and 60 grams of bacon bits, the “yield item” method would convert the 60 grams of bacon bits into raw bacon using a multiplier. You obtain the multiplier by weighing a batch of bacon prior to cooking and then weighing the bacon bits after it has shrunk. You take final weight / previous weight * 100 to get your percentage. You take the weight of your prepped item and divide by that percentage to convert it.
In the other method, if we weigh all the bacon as the same, the variance report will show a loss due to the bacon bits being dramatically lighter than their previous state. If the variance reports consistently show a 30-50% loss on bacon on each report, that would effectively be your “yield” and a reliable method to track what is actually moving through the inventory in terms of dollars.
Regardless of how you account for yield, a food auditor must be aware of the items that change form during the counting process and have a method for accurately tracking them.
7. Variance Reports and The Big Picture
Judging effective food inventory control is really more about comparing dollars in against dollars out than units in against units out.
As discussed earlier, due to the irregular weight, shape, and inconsistent yield of food items, there are natural variances built into food that make it impossible to balance a variance report perfectly. There are also non-variance items, which add significant cost to an operation (like Canola oil for deep fryers), that are impossible to run variance reports on since their usage is not rang into the point-of-sale system.
When you are looking at a food variance report, the main thing you have to ask is does this make sense when it is compared to the amount of money I have budgeted for food, and are we within an acceptable range? If your food theoretical is at 30%, and your variance report is showing your costs at 33%, I would not necessarily be upset with that result. That extra 3% above theoretical may be from a combination of natural variances and untracked non-variance items. If doing reports over the course of the year reveals costs consistently being at the 33% mark, I would say the variance report is doing what it is supposed to do. Now, if costs were at 40% or above, that would justify some investigating. But if you’re in the ballpark, that is usually good enough in the big picture.
Kevin Tam is a Sculpture Hospitality franchisee with more than a decade of experience working directly with bar, restaurant, and nightclub owners on all points of the spectrum. From family-owned single bar operations to large companies with locations on an international scale, Tam works with them all and understands the unique challenges each kind of company faces. He’s also the author of a book titled Night Club Marketing Systems – How to Get Customers for Your Bar, a regular writer/contributor for Bar & Restaurant, and publisher of an eBook called: The 5 Commonly Overlooked Areas That Kill Your Food Cost.
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