12d • General discussion
Why We Do Inventory (And Why It Matters)
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:
- Over-portioning
- Over-ordering
- 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
Inventory isn’t busy work. It’s leadership.
Pre-Shift Takeaway (Action Step)
This week:
- Run a full inventory
- Pull last month’s purchases
- Ask your accountant (or bookkeeper):“What was my variance last month, and where did it come from?”
If you don’t know your variance. You don’t really know your food cost.
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Why We Do Inventory (And Why It Matters)
skool.com/therestaurantpreshift
Real talk for the hospitality game. You’ve mastered the craft — now it’s time you learned how to make money. I’m a Top Chef Restaurateur with no fluff
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