Author: Julia

Every month chefs hunker down in the walk-in refrigerator and dry-storage room to count what's on hand.  It's not a particularly pleasant task and, unfortunately, is often put off until the end of a long Saturday night when the all they can think about is a cold beer and collapsing in bed.

Regardless of how daunting it may be, creating effective inventory management procedures (and sticking to them!) is essential to running a profitable business. Careful food inventory tracking can help you track: 

• Food Costs
• Waste and Potential Theft 
• Turnover 

Food Cost

If you are like most chefs and farmers, managing your accounting software, like QuickBooks, is right up there with taking inventory as your least favorite task in the business.  You want to enter in your receipts and sales data and be done with it.

If you're entering invoices as food or beverage costs, then kudos to you. You're on the right track.  But there's more to do. For example, as I was reviewing a client's books a few weeks ago, I noticed that his food cost was higher than his sales.  No, his business was not going down the tubes; he just had not taken inventory.  He recorded all the purchases, but did not back out what he had yet to sell. His food cost looked uncharacteristically high.  Though he knew the cause, he had no way of knowing if the true number was in-line or not.

 When calculating your food cost, use this simple formula:

(Beginning Inventory + Purchases – Ending Inventory) / Sales

Waste and Theft

After a few months, you may notice that your inventory is pretty constant.  When I worked at Sebastians, I consistently had $1,000 worth of inventory.  I could easily save myself a step with the above formula, since I knew that Beginning Inventory – Ending Inventory would equal zero.

But it was important that I still took inventory every month. If there was a drastic (and unexpected) change, then I knew I had an issue.  Either someone was stealing, or I was mismanaging my inventory by over-ordering.

Turnover

From a more practical standpoint, taking inventory can remind you what you have on hand.  It can remind you that, "oh yeah, I bought that case of bee pollen…. I better use that up" or, "oops, I'm about to run out of flour."  With this simple tool, you can easily avoid those last-minute-runs-to-supermarket-during-a-Friday-night-rush panics that we've all experienced and are usually a clear sign of poor planning.

What are you inventory practices?

A few times a month, I will post articles from my monthly "Food Consulting" Newsletter Click here to receive the newsletter by email.

"You got to be careful if you don't know where you're going, because you might not get there." – Yogi Berra

You've got to know where you're going if you are going to get there. Streamlined operations and solid financials will only benefit you if you have customers coming in your door. Committing to a strategically developed marketing plan will help you to grow your customer base and improve your business. Creating such plans ensures you are allocating marketing dollars to the most productive marketing strategies.

This essential piece of development need not be a daunting task. The most effective marketing plans are those that are well thought out and documented in a simple, concise format.

A streamlined marketing plan should outline the following:

A summary of industry /market trends– they directly impact how you want to market your business. Some key trends right now are group buying (like Groupon) and planned spontaneity (such as Flash-mobs). You can capitalize on these trends in your marketing plan. It is important to note that the traditional advertising vehicles used in the past are much less influential to today's consumers. Where and how you communicate with customers may need to be reevaluated.   

Customer profiles and key messages– identify your target customer bases and their values and then decide what messaging is most important to communicate to each of them.  For example, I'm currently working with a farm in Newbury who identified that some of their customers are employees of a near-by industrial park so they want to focus how to better connect with that industrial community to bring even more people in.

Clear goals– these help identify what opportunities and actions are most important to pursue. Do you want to differentiate your products from the competition or expand into a new customer base, or promote new offerings? For my client, they want to differentiate themselves from the competition and to focus on how to promote new product offerings.   

Marketing strategies and marketing tactics- describe what actions are needed to achieve previously determined goals. With each tactic that you decide to pursue, be sure to outline:

• The rationale for pursuing that marketing tactic. For example, if you chose to advertise in The Improper Bostonian, you should be able to link their readership with your target customer.
• An allocated budget. When considering your budget, be sure to evaluate the potential return on your investment. For example, if you consider participating in Restaurant Week, you will want to calculate how many additional customers you need to cover the cost of promoting and participating.
•  A timeline. When do you plan to execute each item and when will you be able to evaluate the success of the tactic.

Performance Measurement Methods– how you will evaluate and measure results. For example, if you sent out a marketing mailing on February 28th for a St. Patrick's Day event, how will you know the piece was successful? Did sales increase from the previous year? Did you get the press covered you desired?

Now, get planning! Next month, I will share tips on how to implement your strategic marketing plan. As always, please feel free to email me with any comments or questions on how to create your own marketing plan.

This article was co-authored by Doug Betensky, President of Upside Business Consultants, a marketing consulting and internet marketing firm that helps companies grow.