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Most owners think inventory is for the accountant. It’s not. Inventory is how you: - Protect your cash - Catch theft, waste, and bad systems early - Understand if your menu and ordering actually make sense If your inventory is off, three things are usually happening: 1. Over-portioning 2. Over-ordering 3. Product walking out the back door And here’s the truth: Inventory is the only place where food cost becomes real. Your POS tells you what you sold. Inventory tells you what you lost. How to Calculate Monthly Variance (The Simple Way) This is the formula every operator should know: **Beginning Inventory - Purchases= Total Available** Total Available – Ending Inventory = Actual Usage Now compare that to what your POS says you should have used. Actual Usage – Theoretical Usage = Variance Example: Beginning Inventory: $10,000 Purchases This Month: $25,000 Ending Inventory: $8,000 Actual Usage = 10,000 + 25,000 – 8,000 = $27,000 POS Theoretical Usage = $25,500 Variance = 27,000 – 25,500 = $1,500 over That $1,500 is: - Waste - Over-portioning - Bad counts - Theft - Or poor menu engineering And if that happens every month…That’s an $18,000 problem hiding in plain sight. What Your Accountant Is Really Asking For When your accountant asks for inventory, they’re not being annoying. They’re trying to: - Accurately calculate Cost of Goods Sold (COGS) - Make sure your P&L actually reflects reality - Protect you from paying taxes on profit you didn’t really make Without inventory: - Your food cost is wrong - Your profit is wrong - Your taxes are wrong Inventory is what connects: Operations → Accounting → Cash → Taxes If those numbers are off, every decision you make after that is built on bad information. Operator Truth High-level operators don’t do inventory to “check a box.” They use it to: - Coach their chefs - Fix systems - Adjust menus - Protect margins - And spot problems before payroll starts bouncing