# Good food cost percentage or sabotage?



## bizkit (Feb 6, 2007)

I'M THE SOUS CHEF AT MY RESTAURANT AND EVERY FOUR WEEKS I DO INVENTORY, THE CHEF TRIES TO RUN LOW ON EVERYTHING, HE STARTS ABOUT A WEEK AND A HALF BEFORE I INVENTORY. IT SEEMS LIKE WE 86 ALOT OF ITEMS DURING THIS TIME. _*IS THIS NORMAL?*_ I'VE WORKED FOR ALOT OF WHAT I CONSIDER GOOD CHEFS AND THEY NEVER DID THIS. NOW I'M NOT SAYING ORDER ENOUGH TENDERLOIN, OSSO BUCCO, OR TRUFFLES FOR THE WHOLE NEXT PERIOD, OR JUST OVER STOCK BECAUSE YOU SEE A GOOD PRICE. BUT GET WHAT YOU NEED. OUR PATRONS DESERVE IT.


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## foodpump (Oct 10, 2005)

Check to see if his salary or bonus is tied into foodcost. Learn what you can from the man, including HIS mistakes....


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## aurora (Jan 25, 2006)

The first priority should be to keep enough inventory to satisfy the needs of the restaurant and your customers. Running the inventory down to do inventory is simply laziness on the part of your "Chef". Properly rotated inventory should not go bad. We place orders and receive deliveries twice weekly for most food and supplies. We order daily for produce and other fresh items as necessary.


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## jayme (Sep 5, 2006)

Bizkit-
Shouldn't the ordering be tied to your menu? Most places, there is a nearly standing order that fills the usual quantities used per week, based on your menu items. You only take inventory and place orders every 4 weeks? I would expect weekly to be more likely.


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## powers (Dec 7, 2006)

Inventory in no way effects food cost. It only ties up capitol. What effects food cost is food cost. You have what you've spent and compare to your last inventory and your current. If the food cost doesnt match what each dish breaks down to in comparison to your sales, then you have someone wasting, stealing or not rotating properly and in effect throwing away. That's how Ive always done it, but then again, I don't know everything.


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## greg (Dec 8, 1999)

I've worked for chefs that do this also, claiming that it results in a lower food cost. I worked for one that simutaneously: 
A. Knew that if food cost was high, to look for under-counted items, and
B. Believed that a lower amount of inventory on hand at the end of the month reduced food cost.

As powers says, B is not true. Unless less product on hand resulted in less spoilage (given that spoilage is not taken into account when food cost is calculated).


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## panini (Jul 28, 2001)

The main concern of doing inventory is to be consistant. He may have started something he can't change. Why don't you ask him?
pan


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## oldschool1982 (Jun 27, 2006)

Allot of great adivce so far. 

Personally I've seen and practiced the process of running down my prepped items OH especially if I didn't have the ability to take into consideration the product that is in the prepped items. I.e. 5 gal of meats sauce is x amount of beef, x cans of tomatoes and x amount of other ingredients. Powers is absolutely correct about the inventory/capital thing.

My guess is that he's got a bonus tied to the overhead and is trying to keep it low. I have worked for places that also monitored your 86'd count since the only way to 86 an item is block it in the computer. The consequences for abuse of the 86 were far greater than an inflated OH inventory.

There have also been a couple kitchens I ran where it was impossible to have anything less that a 20k stock pile because of special orders, menu complexity, etc, etc. 

I have to admit I'm amazed that ya'll do a monthly. weekly is definitely more work but also allows you better control and fixing issues. When it's a month, things can fester for a couple weeks before you realize that you have an issue and then it's too late. I would also suggest a DFC (daily food cost) for your more expensive items like meats, cheeses, seafoods, dairy and anything else you would consider high value and would need the extra monitoring. I've used that on many occasions with great success.


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## the_seraphim (Dec 25, 2006)

where i work we have 3 deliveries a week plus dailies for bread and other SOL products.

inventory is done every month or two, but orders are made based on projected sales and expected stock levels (based on the computer counting how many we sold and thus how many we have and taking what we have now from what we need next week plus x number decided by the KM dependant on the life of certain products, waste, unexpected high volume of sales etc)


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## cookingwithfat (Feb 12, 2007)

I don't see how running inventory down effects food cost. I take major deliveries twice weekly and produce and highly perishable items daily. I calculate my weekly budget based on the amount of revenue taken in the preceding week. We do inventory quarterly, and it is purely for the bookkeeper to figure the worth of the business and for filling quarterly taxes. He does tell me my food cost relative to input/output, but I already know what the food cost is on a weekly basis. All that being said, I still don't get how running inventory down would reflect in lower food cost. On a monthly spread he will have to spend more money to restock after inventory is done and if things are calculated monthly the bookkeeper is not going to look at one week. Weird.


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## the_seraphim (Dec 25, 2006)

only possbile advantages i can think of are:

*fewer yet larger deliveries may be cheaper
*less energy to maintain chillers and freezer temps (dunno)
*less wage cost to count a full inventory at stock taking time
*easier to find the things you need in a sparesly populated store (assuming of course your running a just in time delivery system whereby you can guarantee you will have just slightly more than you need at anyone time... else you will waste time looking for things that arent there)
*less wage cost when ordering, takes less time to say 14 of those than it does to say 2 of those, 7 times

but those would be negligable surely....

perhaps he is planning to leave the company shortly and thus wants to maintain a low capital held within the business as stock, but thats unlikely


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## oldschool1982 (Jun 27, 2006)

Ya know it's all relative. There's no getting around the fact that inorder to calculate your food cost it's still the same formula no matter how it looks. Without actually seeing what is going on it's hard to speculate whether or not there's some form of padding or manipulating the numbers. There are definitely many ways to do that but in the end they are hard to keep up with and eventually found out.

It's already been mentioned that the fact you 86 so much stuff can't be good for the restaurant and this is absolutly correct. Nothing worse than deciding to go somewhere for a dish you heard about and they are consistantly out of it or any other number of products. There's definitely a fine balance to running things and it is an art as well as a science. Utilizing computer programs to do your orders, set stock levels and so many other things they are capable are great tools but when they are used as a tool. Not as the "chiseled in granite" way it has to be done. No if's and's or but's. But it's not my way to impose this thought so "what ever works for you" is the best way. Just as long as it's honest and accurate. 

It's always been my belief there is and should be a certain amount of "fly by the seat of your pants" because this keeps you in touch with everything and I do mean everything. It's hard to actually define but after so many years of doing things you just get a gut instinct because you've seen this time and time again. 

As far as what the Exec is doing....Like I said at the begining there's know way to know with out observing but something tells me that, well.... "Something may be rotten in ....." 

Food cost starts at the back door and ends with the back door and encompasses every aspect of the operation in between. There's no amount of running the inventory down that is gonna help a food cost. It will only reduce the overhead cash flow and as long as you're utilizing good FIFO procedures then there will also be no affeting the FC due to spoilage.
Again JMHPO


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## even stephen (Oct 10, 2005)

I agree old school,
I wish I had the time and labor to do a weekly inventory.
As it stands now we do a monthly. Dropping stock levels
at the end of the month is common. Its about being financially
responsible. It certainly looks better to the owner or higher ups
to have less $ tied up in unnecessary inventory. Anyone who bases
bonuses on food cost and/or inventory levels is an idiot. Its inviting
a certain amount of chefs to manipulate numbers. Time after time
I have seen chefs back in thier inventory $ numbers to achieve a 
certain foodcost. Its a dead end road. Your inventory grows and
grows and grows. Having an enormous amount of inventory is a 
red flag for accounting. It opens the door to the possibility of a
padded inventory. No one likes to see an independent accountant
or specialist show up for a physical count on the last day of the month.
My inventory takes 11 hours start to finish. In larger properties you
also have the added pleasure of scanning pages and pages of the 
general ledger looking for miscoded invoices and intercompany transfers,
credits and debits. It is an incredibly boring painstaking task, but its
like mining for gold. 2 or 3 pallets of gold. 2 or 3 special functions, large
beverage transfers, the list goes on and on. You can be the best with
your kitchen and still get creamed at the end of the month if your not careful.
Its a jungle out there. I've always been taught its good business and 
responsible to run a tight ship, do a monthly inventory, not forgetting all
untransfered nonalcohalic beverages and revenue creating garnish, drop
your inventory at the end of the month as low as you can in a responsible
manner, and be involved with the inventory personally on a consistent basis.
The days of kickbacks and extras are pretty much in the past. There are
a thousand different types of foodservice settings and a thousand ways to
do business at the end of the month. Just remember, throwing someone under the bus is a pretty dicey thing to do, many owners and managers are
working together very closely and its very possible its a group effort to 
decieve. blah, blah, blah.


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## rivitman (Jul 23, 2004)

Running down inventory insures that the old gets used, and that fresh is rotated in. Less spoilage loss. It helps keep storage area organized. I see it most often in kitchen full of lazy cooks who dont rotate stock or put things away in an orderly fashion, or date them in any way, the Chef and sous constantly mucking out and re-organizing.

Remember, your chef has to cope with the owner, and the owner may be screwing him over. In many cases, the owner will determin the FC, giving the chef scant evidence of how he arrived at that figure.

I'm dealing with it now, and it's not pretty. Food and services given away to charity being charged off to MY FC %? Yes indeed. Bar supplies? Yep. Janatorial? Perhaps.

If you think you have it bad, your chef is probably worse of, dealing with some marginal machiavellian goofball of an owner.:beer:


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## even stephen (Oct 10, 2005)

Make a spreadsheet on excel and log all your invoices.
Copy all your invoices if you have to.
Put together your own p&l if you have to.
Miscoded invoices are ultimately your responsibility.
There are some pretty normal standards for the industry
available if you don't know them. If you can't get it through
to the owner then thats just bad luck. Move on. All promo, employee
meal, and comps should end up with a credit to cost of goods.
If janitorial, cleaning, chemical, waste removal, etc are being
charged to food cost, then there certainly is a reason for an elevated
food cost. Do you have a budget and forecast?


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## bizkit (Feb 6, 2007)

There are a lot of helpful answers and insight to my monthly question of why. Food cost is food cost, it's what you pay. If there is no theft, spoilage, waste ect. and your menu is priced correctly you should be OK. Running the inventory down without 86ing menu items does show the chefs that you are going through everything, no old items (except that very expensive spinach powder that isn't going anywhere). As far as I know there is no bonus for good food cost. Often I ask, how did we do? The answer is always the same, "I don't know". We do find out when it is high. The owners of the restaurant are not involved at all. They do come in from time to time, they have dinner, say they like how every thing is going then their out and we'll see them in a couple of months. Everything is left to the GM who makes the prices for our menu. My thinking on this is not to run so low that we are gonna disappoint our patrons. Order what you need if only 2 out 10 items get sold during the end of period you will sell the rest on the next period and that money wouldn't get spent. As long as you don't order out-of-control it should create a balance. thanks to everyone for your helpful input.


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## oldschool1982 (Jun 27, 2006)

Ya know I'm sure this is done all over but since stephen worked(s) in Atlanta, I know that almost everyone that is in charge of a restaurant operating cost does this. In fact I still have the logs and tracking info from three of the places I was at. These "marginal machiavellian goofball owners" (as Rivitman calls them and in some cases very appropriate I might add ) had a way of screwing with you while you were ther and long after you were gone. In fact I had, on more than one occasion, needed to bring some of this info on a return interview just to prove that I wasn't the one screwing with the numbers. (When owners talk amongst themselves the Chef becomes the big screw-up not them ).

Anyhow this is good sound advice. You could also go a step further and keep a personal log of all activities in the building. You'd be surprised how handy those things are ) Okay enough on that rant.....

As far as bonus/incentive and food or any costs goes... it was once a comon practice to tie these and inspection scores to a bonus/salary structure. I gave up on those along time ago since there was always and I do mean always (well except for that one quarter at Rio Bravo... ) the higher-ups or owners always seemed to find a way to take it out of your hands.  

There is one benefit to what stephen suggests, it's the fact that it does keep the owners on their toes. It's harder for them to "blow smoke up your...." when you are told by them that your costs are "@#$*&^g outta control" and then you slap them upside the hedad with your log. It's amazing how many invoices/inventory sheets they "forgot" about. The downside is that you end up destroying that "false sense of trust" they think they had snowed you with and it makes it easier to be replaced by the sous the day you return from having knee surgery.   Doohhh!!!!:lol:


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## gmengrmetsales (Feb 21, 2005)

I can see where he is coming from on food cost, especially if you are buying from Broad liners and their minimums. Maybe try and find a small business owner in your area that will sell in less than case lots. I deal with a alot of small restaurants and I sell less than case lot and deliver less than $100 orders. There should be someone in your area that does this. I supply all over the US if your interested.


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## foodpump (Oct 10, 2005)

Just a note to the Seraphim's comments about an empty fridge running more efficient than a full one: 
Nope. A full fridge runs more efficient than an empty one. Refrigerating empty space, or air is alot harder to do. If your fridge was chock full of say, pop, the fridge would be working alot less, think of the items as a heat-sink, or in this case, a cold-sink.


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## greyeaglem (Apr 17, 2006)

I've noticed this trend since I got back into the business. The owners claim they want as little capital as possible tied up in inventory, which makes sense, but then you have the problem you mentioned. They run everything so low that you're constantly out of things. It's aggravating to have to tell people you are out of what they want or to change a special menu item at the last minute because you don't have the ingredients. In my book, if it's that big of deal to have money tied up in inventory, then the place must have money problems. At the start of a new venture I can understand it, but if the place has been in operation for some time then that basic inventory should have been paid for several times over by generated profit and therefore no different than an operating cash reserve. The other reason can be storage issues. The place I work at now has that problem. There just isn't enough srorage space even with deliveries coming in several times a week. We get by, but it isn't easy.


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## even stephen (Oct 10, 2005)

30 to 40K is a lot of money to be tied up when its unnecessary.
With deliveries every day there is no reason tie up that much money.
At the moment I've got a relatively small inventory. About 28 to 32K
at the end of the month. If your organized you should never run out of
anything anyway. 10 or 15 grand may not be a large amount of money
to tie up for some chefs out there, but, its a pretty big chunk of money
to me. If I can free up that money by simply being responsible, then I 
think its part of my job. Gee! Is tomorrow the 1st?


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