Question from reader regarding inventory control
Howdy folks, I just got a private-message thing here with a question from another reader. It says "Can you teach me a little more about "calculating percentages" on a hot dog cart & inventory control. I assume you have a hot dog cart? Do you have any forms (tools) already put together that you ight can share with me. I have not yet started but will be in the next few weeks. I could use all the help I could get. Thanks."
I post it here because many of you have more experience at this than I do. I'm not sure I'm the one to be teaching that class. We got this guy in Phoenix, BP's Hot Dogs who does such finite analysis of all inventory, time and sales that he can tell you at any given moment how many dogs he has, how many he's sold and how many he's selling per hour.
The percentages thing--first of all that is conducted by an outside auditor and second, it's very much about opened product and inventory and we don't usually retain opened product so that tool isn't of that much use to us. Simple inventory control for us is we know what we're ordering, selling and throwing away. So just maybe the basic concept of starting in and counting out would be good for you.
Each day you should know how many dogs, buns, sodas, chips are going out on each cart. Record this on a sheet of paper for each cart each day. Also record your "starting bank" which is the cash on hand to make change. At the end of the day, count out the cash and record it, record any remaining inventory like buns, chips, etc. and record how much extra dogs you have which will be disposed of in whatever manner. Usually it's dog-food but the Sabbretts are actually engineered to be saved overnight, that's an acception to the rule.
But once you have this information, this data collected, you can start to understand which carts are most productive in terms of sales, which are most efficient, and lots of other stuff. But the numbers should jibe. The starting bank + the money in sales should = the money represented by the missing inventory + the leftovers or wastage for the day. Some guys get it down to where if the count is a dollar off, they'll go find out why. "Sorry boss, I dropped a soda, it exploded so I threw it away" is the kind of answer you want to hear. Tell them next time, just record it as wastage and everything is fine. But that gets more into marketing data than inventory control.
Back to inventory control for a cart, we just addressed our "front of house". The "back of house" for most of us is the commissary where we keep things refrigerated or frozen. Our limited menu allows us to primarily rely on simple FIFO or "first in, first out" type of product rotation I assume the reader knows. Make sure the dates on everything is very clearly marked with a sharpie. For the big restaruanteur, what goes on in the walk-ins and freezer is a crucially big deal. If restaurants published their full financials we could all see which among them has the best executive chef unless they are a franchise in which case that expertise is all computerized. Because most small-houses, most of the bistro-type restaurants which people tend to think are pretty classy, a lot of those guys go under because they are throwing away product. For something like Red Lobster, they get finite data on ALL of their locations, they know exactly what locations are under-performing just like we can spot them on the street.
Getting back to lil' ol' us, inventory control should be a piece of cake. If you have multiple carts out there, it does add some pretty boring administrative work, piling all that data up in spreadsheets every day or week, but you kind of have to do it. Gods I'm glad I haven't got into that yet. I do events. All the numbers are in my head. I simple count-out at the end of the event tells us where we are in terms of target net. I dump it into the spreadsheet when I get home and now and then I run my numbers to make sure I'm staying within my margins. Since it's just me and the wife working, I don't even bother with a COGS on myself because that adds in cost of labor (the only thing that analytical tool is good for anyway) and I frankly don't count my labor in anyways. Nobody else in this family does so why should I?