Having Shelf Control
Inventory, especially in a pizzeria, is a very daunting proposition. The reason to take on such an arduous task is to pursue a healthier restaurant with a more considerable profit margin. Theoretically, classic inventory should do that, but not in all cases. So first and foremost, let’s identify why you would want even to do inventory.
The Roller Coaster
The roller coaster effect is when you buy so much product one week that you don’t need to buy that much the following week. So if you’re going purely off how much you purchased versus how much you’ve sold, you could have a misnomer of what your actual food cost is. There are many other ways to fight the roller coaster effect without doing classic inventory. If you know how much a food item should cost versus how much you’re selling it for, and you know the cost of goods sold versus what actually occurs, then you have a solid footing. From there, you can seek to find out your variance. Any store that does not have a day-to-day awareness of the variance will end up with a roller coaster to some degree. But if recipes are followed to a very specific level, that will be avoided.
People steal product. If you can identify how much you have on-site versus how much you sold, you’ll have a variance report that will detail any waste or theft. People don’t steal flour as they steal cans of beer or bottles of wine. If you are wildly off on your tomato count, that’s a matter of waste and portion control. Another reason to have inventory is to gauge how much you should be purchasing and for general pricing follow-through to keep up on increases.
How to do It
So how to pull off inventory in a pizzeria. Classically, you would gauge how much product it takes to make any individual item on a recipe level. And then build it out on a more significant level and gauge how much you sold. You count all the items on-site, a Sunday night I find works best, then add all the things purchased during the week and compare to what is sold and what is still on-site as inventory. Then compare what should be on-site vs. what is to get your variance.
This process is straightforward when you have a hundred burger buns and a hundred burger patties, and you sell 68 burgers to know that you should have 32 burger patties and burger buns left. If you have 30 patties left, you know two went missing via theft, comp, void or waste. This process is not as simple for an item like flour, which is also the product used to make the pizza and possibly used to push out the pizza. Pizzeria flour might also be cross utilized to make knots or, when blown out, thrown back into the next batch of dough. All these instances run rough-shot on an accurate inventory. That’s not to say it’s not worth measuring flour for inventory, but it makes a lot more sense to get your inventory nailed down with cheese before flour.
Cheese is your most essential and also most expensive item. If you can nail down exactly how much cheese you should put on every pizza vs. what occurs, you can save thousands. Bear in mind you’ll need to consider all comped pizzas, voided pizzas and donation pizzas. Along with staff meals, testing pizzas and re-fires before blaming portion control and theft.
Tech Aware Inventory
My point is that there are many pitfalls in doing classic inventory in a pizzeria, but it is doable. It’s even more doable in the modern age by linking your vendor invoices with your POS sales and logging store pars into that same platform. The systems available that do this today work best when they analyze POS data for comps, voids and discounts. Having all these connected digitally is the future, and it’s as inevitable as credit cards. And even with that, it will require a ton of oversight and a very nuanced look on a consistent level.
The other option is to have someone working damn near full time to marry up what you purchased versus what you sold versus what you show as waste. And that’s just for one store. If you get a commissary involved or have multiple vendors, this will only get more and more tedious. Excel is a fantastic program, and you will have to create custom reports with data entry down to a line item to pull this off. I know a restaurant group that does this for their 15 locations, and they require three full-time accountants to pull it off along with buy-in from every general manager to do the work of proper inventory and par lists.
There are some other alternatives to classic inventory. A pure cash approach of how much you paid vendors vs. how much you sold will give you totals and also allows for the roller coaster. You’ll have to dive into trends to see average spend versus an average sales week to see an anomaly at play. This process is less tedious but still requires oversight. It’s not specific, but it does provide a gauge, and sometimes that’s all you can afford to do from a time perspective.
If all your menu items have an average 25-percent food cost, but your food cost is coming in at 30 percent, you have a five-percent variance. But if you have a five-percent variance, you could drive down and say, “Now, why is there a percent variance in the food cost?” Is it because we’re not considering our pizza boxes, ad liners and comps in the price? Or is it because we genuinely have that much waste? Then it becomes an ROI exercise. Can you pay for someone to fix this cheaper than the problem itself?
Par lists can help a lot. If you and your staff understand how much you should have on-site versus how much you need to get by without over or under ordering, you can ride the line to proper on-site inventory. But when someone over orders, it’s usually because they’re not following a proper par. A food waste log is also very proactive. With a food waste log, anything that gets tossed gets notated, whether it’s on a simple piece of paper, a Google Sheet or a whiteboard. Nothing ever gets tossed without a notation. I’ve also seen the food waste trash can where all viable wasted food gets tossed in the can. Then it’s weighed at the end of the shift to gauge how much was lost for the day. Obviously, cheese is worth a lot more than flour, but this is a good idea in concept.
The bar industry is way more ahead of the game on inventory than the food industry. Bar waste can be hundreds in a few ounces depending on the product. Tap controls, digital inventory apps, even AI visualizers are all on tablets and getting better every year. Follow those like a hawk and find an app that works for you and your store’s setup.
Go after big heavy ticket expensive items first. Also, do inventory on simple to track items like cans of beer first. See your pitfalls adjust to what works with the protocol you and your team can work through. Remember that if you find 300 dollars in waste and it takes you over 16 person-hours to figure it out, it will be a net loss. If you hire a company to do it for you, it will cost double what it would take your team to do it. Proper pars, portioning, video cameras, spot checks and actual evaluated profit vs. loss food cost all need to play a role first.