Club Management - September/October 2007 - (Page 13) Accounting & Financial Management Making Food and Beverage Inventories Count By Bill Schwartz, CHTP I It is 3 a.m. on the last day of the month, and some of the most highly paid people in the food and beverage department are standing in the freezer counting shrimp. Not that counting shrimp is a bad thing, since everyone knows that shrimp have legs, but the process of taking inventory is no sane person’s idea of a good time. Typically mandated by the accounting department, the process involves counting most items and multiplying that count by the current cost to get a total inventory value. The forms go to the accounting department and eventually a profit and loss statement is issued. If all goes well, people keep their jobs. Taking inventory for accounting purposes is perhaps the least profitable use of the information. On the other hand, taking inventory for control purposes can result in savings ranging from $10,000 to $50,000 per $1 million in annual food and beverage revenue. Interestingly, counting for control doesn’t require accuracy to the ounce, doesn’t require everything to be counted, and never needs to be extended. Counting for Accounting vs.Counting for Control Shifting the focus from accounting to control uncovers many new benefits without requiring any extra time. To get the maximum benefit from time spent taking inventory, think about the ways in which counting the inventory can help increase control and thereby reduce food and beverage costs. David Voorhees, CCM, is the general manager of Big Canyon Country Club in Newport Beach, California. Voorhees provides a great example of the difference between accounting and control with his club’s approach to wine inventories. “We compare the number of each bottle used during the period with a Movement Report,” Voorhees says. “Rather than focus on dollars, we need to see how many bottles were used in order to compare that with how many should have been used during the period. The variances show us wine that may have been miscounted or otherwise handled improperly, and we can typically correct the problem right away.” Voorhees’ use of units as opposed to dollars and the fact that he compares that usage with a control value – in this case, ideal usage – exemplifies the difference between simply extending the inventory and using it for management purposes. Control Objective #1: Less Inventory to Count In a perfect world, there would be no such thing as inventory. Vendors would simply hand out product from their waiting trucks as it was needed. There would be no theft, no spoilage and lots of extra space in the kitchen where the inventory used to be stored. Cash flow would be maximized, and the elimination of refrigerated storage spaces would lower overhead costs. Nobody from the kitchen SEPTEMBER/OCTOBER 2007 • 13
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.