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Stock

Stock turnover.

Poor or absent inventory management can make the difference between a profit or a loss before the plates come out of the kitchen door. Stock turnover measures the efficiency of your inventory. This was missed out of the ratio section as it needs it’s own discussion. To gauge stock turnover you should be breaking your produce into as many sensible categories as you can, but as few as you can get away with. For example; food, wine, beers, spirits, soft drinks. If you know you have certain areas of your stock that could slew your figures, break it down further, premium goods tend to shift slower than others, especially on a wine list.

Stock turnover days

(average stock / cost of sales for the year) x365

This shows how many days your stock is kept on average. Unless your food is frozen, you want to see your turnover days less than the expected shelf life. A slow turnover on drinks maybe shows you have a large wine list or you are overstocked. If you have stock turnover days longer than the credit given by your supplier, you are literally paying to hold the stock.

Should you do a lot of business with your wine merchant and he approves your storage methods, you could cut a deal on imprest stock. By this, the wine merchant owns the stock and you pay for replenishment. If you want a stock of wine but don’t want to hold it on site, there are various businesses that will let you own wine on their list, but they store it for you until needed. This has a couple of very important advantages, you don’t pay the tax on the list if it is stored under bond and you have paid for this in advance which could save you a fortune on appreciating values. The downside is that you have cash sat on someone else’s shelf.

Next come beers which should be turning over within a fortnight. Spirits and wines would be ideally moved within a month.

If you are able to work out stock turnover it also means you understand what you have purchased and what your inventory levels are already. Just understanding that means you have data far in excess of what many restaurants have available.

Stock rotation

The ideal way to deal with stock is to use the oldest ingredients first. This method of stock control is called first in first out or FIFO for short. The other end is LIFO, last in first out, which is not a great practise for a restaurant to follow. In reality LIFO is often the default position.

Ask yourself a question. How often have you seen a hurried staff member fill up the beer fridge or the walk in larder from the front? All the stock at the back is at a more advanced stage on the calendar and should be pulled to the front for use. Filling from the front develops into a habit and eventually you have expired stock at the back, straight off the profits.

To make sure you are rotating your stock is a timely manner you should have an accurate picture of what you have in stores and also how quickly you are using this. Without this information it is very easy to over order. Over-stocking adds extra days or worse to your stock turnover. When you do stock checks build in the discipline of checking expiry dates and then moving this inventory, if it is still good, to the front.

This also applies to your dry goods store as this is often neglected and those giant bags of sugar and salt do deteriorate as well. Develop the habit of asking what the expiry date or purchase date is on any ingredient or stock item. This is not a memory trick, you need proof of that date, just the same as the hygiene inspector does.

If storage conditions fail, e.g. a local power cut defrosts your freezer, you now have a situation where you have to treat that produce as something differently and the original dates do not apply anymore. Many suppliers are helpful in this manner and will advise on the packaging how long you have left when defrosted or opened.

Poor stock rotation is not only bad for your bottom line but it does have a serious impact on your reputation. Older ingredients often loose their flavour and texture, taste suffers. Stock rotation, inventory management and food hygiene all go hand in hand. Getting simple processes in place to synchronise treatment of storage and purchasing will actually save work rather than create it.