There are four reasons I don't teach
restaurant inventory to my clients.
I will share those reasons with you and why I don't think you
should take inventory in your restaurant either. Coming up right now.
Hey, everybody. Ryan Gromfin here – author, speaker, chef,
restaurateur, and the founder of the www.Restaurantboss.com,
as well as www.clickBACON.com.
Now, I know, I know it's a little controversial.
I don't necessarily think you should take inventory in your restaurant,
and I'm going to explain to you why,
so just stick with me for a second. If you think I'm crazy, stick with me.
If you have no idea what I'm talking about, stick with me.
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Anyways, I know, I know,
this is going to be controversial for you.
If it's not controversial for you, great.
I hope I could influence you a little bit into taking my side, the good side,
not the dark side that I don't believe in taking a restaurant inventory.
If you have no idea what I'm talking about,
in this playlist will be a couple of other videos one on food cost.
Go back and watch that one. Food costs are cost of goods sold.
Go back and watch that video in this playlist
to get some background before you're here,
but if you've already seen that video, great.
You're here. So, why take you inventory in the first place?
It balances things out because as we know if you're taking,
let's say, you want to get your cost of goods sold for a month, well,
your month always ends on a different day.
Some days you get a delivery, some days you don't,
some days you have high sales,
some days you don't. So if it ends on a Saturday,
well, you had really high sales. Your food costs might be artificially low.
If it ends on a Thursday, you might have gotten a big delivery
getting ready for the weekend,
and then not sold any of that food so your
food costs or cost of goods sold might be artificially high.
So inventory balances all that out.
Again, go back to the video if you need the calculations on that,
but that's why we take inventory, and it's valuable. Don't get me wrong.
I just don't think it's valuable for most independent restaurants.
My general rule of thumb is if you're doing less than five million dollars a year,
don't do it.
That's my general rule of thumb.
If you got one unit, you're doing five million dollars a year,
you should be investing in inventory.
If you're doing two million dollars a year or you got two units doing a million each,
just don't even bother. Here's why -
why I don't teach it? Number 1) It takes too much time.
The amount of hours for you to do
a proper inventory where you are updating line items
of prices with every single order,
properly counting, properly creating your recipes,
properly documenting everything.
Again, properly. We're going to talk about this more in point two or point three,
but the amount of time that it takes you
is just not worth it.
In that same 8-20 or 30 hours a month,
closer to 20-30 hours a month because it takes about 80-hours to do a really
good inventory in a big restaurant,
maybe you're out there going, “we can do it in two hours, great.
You're probably not doing it as accurately as you should be.”
But the point is in the 20-30 hours a month that it takes to get proper inventory,
you could be outselling more stuff,
you could be shaking hands and kissing babies.,
you could be working on new things - marketing campaigns, new recipes,
all kinds of other things. Just don't waste your time on it.
It just takes too much time.
Number 2) It's too complex!
The independence that I see taking inventory don't really understand it fully.
I'm not saying that to judge you or talk down on you,
it's just really complex stuff.
And if we're just handing it off to a manager
who maybe knows how to do it properly or maybe doesn't,
the chances of them doing it properly are so small because it's so complex.
The recipes, the detail, the yield testing; it is so complex.
There's so much to deal with. I just say no.
Number 3) Garbage in, Garbage out.
Because it takes so long and because it's so complex,
if you don't do it perfectly, perfectly,
you are going to make decisions on bad data,
inaccurate data that may not be
as perfect as a perfect inventory,
but at least we know it's accurate.
I see people doing inventory and doing it
completely wrong and getting horrible data.
I see people doing inventory and doing it completely wrong
and getting horrible data,
and then they make decisions on that data. So garbage in,
garbage out.
The fourth reason, it's only accurate for one moment in time.
The day you take inventory, it's accurate.
So if you take inventory on the 31st of the month,
the last day the month, or the first day of the month, whichever one,
when you take that inventory on the first day of the month,
its accurate, your cost of goods sold is accurate,
but every other day, your cost of goods sold is not accurate.
Also, what ends up happening here is people will take inventory on the
first of the month, let's say, or the last day
and then it takes a week or two weeks or three weeks for the bookkeeper
and everyone to get all that data compiled and then you get your information back,
and its super old data.
So, what I suggest is a rolling calculation.
I'm going to talk about that more in a second, but I do want to mention this quickly.
This is not where your challenges lie.
If you are having cost of goods sold challenges,
taking inventory is not where the magic is.
The magic is getting your hands dirty, getting in the kitchen,
getting in the bar and managing things.
I like key item inventory, I like counting a few things every day
like bottled beer or steaks or shrimp or scallops or expensive stuff
and comparing that day to day, compare it to your sales,
making sure that people aren't stealing or it's not being wasted,
but putting the systems and processes in place,
I would rather see you do that than just counting it and getting
all of this old data.
Trust me, this is not where your challenges lie.
When I help restaurant owners lower their cost of goods sold,
lower their labor cost, increase their profits;
none of the people that I work with…
do we incorporate complex labor systems to get the results?
We incorporate dozens of other things,
but labor or inventory is not where your problems lie.
So, the two alternatives I is using a simple method.
If you watch the cost of goods sold video,
you'll hear me talk about the simple method,
which is just purchases divided by sales.
So food purchases divided by food sales.
Just do it over a longer period of time,
do it over three months instead of one month,
do it over six months or a year instead of one month.
You'll get more accurate data.
What's even better than that is to use a rolling calculation.
So maybe the last six months, and then every month,
we kick out an old month and bring in the new month,
but we do it over a rolling six months.
My personal preference is a rolling four weeks.
I love that method so much that we have created some software
to help you manage this, it's called clickBACON,
and clickBACON does not require you to cost each recipe.
It does not require you to extract
purchase data for each line item only category.
It does give you accurate information without taking inventory,
it's why I created the software, it's why I love it.
Please check that out at www.clickBACON.com
Leave your comments and questions below. Subscribe to the channel.
I look forward to bringing you another great video just like this next month.
Don't worry about the inventory, stop wasting your time on it.
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