Your menu has been developed, and the daily food cost falls within the dollar amount allotted for each resident. No worries, right? If it were that easy, every foodservice department would be under budget.
Unfortunately, it’s rarely easy. Food dollars can be a real puzzle, with production costs much higher than invoice costs. Reasons for this include overproduction, spoilage, waste and theft. A solution is inventory management, which provides a simple way to raise awareness about food usage and kitchen practices that can help you control costs.
Who has time to implement and maintain an inventory management program? The better question is, who doesn’t? Saving money is worth the effort, and the effort doesn’t need to be terribly time-consuming. In addition to best-practice inventory control, there are some shortcuts—let’s call them baby steps—to help foodservice directors accomplish some inventory work in a fraction of the time.
Regular tracking pays off
For two professionals who manage foodservice at healthcare operations in Florida and Indiana, frequency of inventory checks combined with the Gordon Food Service Inventory Manager™ program has meant efficiency and cost-savings.
“We went from doing a yearly inventory only for tax purposes to a monthly inventory in 2016, and it has helped us see what our six kitchens are overstocking,” says Melanie Yochum, Food and Beverage Director at Peabody Retirement Community in North Manchester, Indiana.
A similar story has played out at Shell Point Retirement Community in Fort Myers, Florida, where Hospitality Manager Debbie Dodge serves 4,000 meals a week to residents and guests. “My operations manager takes inventory on Tuesday in advance of placing orders on Friday, so we can back items out of the order that we don’t need.”
At Shell Point, Dodge says she was challenged to lower her items in stock from $20,000 to $17,000, and she was able to reduce it to $16,000 with efficiencies she has found. At Peabody, where Yochum keeps about $45,000 to $50,000 of product in stock, the inventory checks tell her when something’s out of balance.
“If the inventory number comes back above or below that dollar amount, I can ask why,” Yochum says. “I can consult with our executive chef, who might point out we are under cost on seafood but over on chicken, pork or beef—it keeps us within our budget parameters.”
Set yourself up for success
Before implementing regular inventory tracking, one baby step is to have a clear set of product codes to monitor. Best practice dictates a tightly controlled order guide—a list of all products purchased from vendors accounted for in full.
A complete count may not be practical, possible or even necessary, but a list of carefully selected products is a smart way to go, Yochum advises. This list may be your highest-cost items, perhaps proteins or some produce. If spoilage of fresh dairy is a problem, perhaps adding some dairy products to your list makes sense.
“Weekly inventory checks help keep you from having money sitting on your shelves,” she explains. “You order only what you need if you are checking weekly, plus it helps you identify who needs training or education with their ordering.”
Smart stockroom practices are another baby step to cost savings on inventory. The gold-standard of paperless inventory is having specific storage slots for every item. But tracking every slot and every item can be a lot of work. One easy solution is to mark specific storage slots for key items tracked regularly.
Another solution is stockroom organization. Maintaining specific locations—whether it’s in the cooler, freezer or dry goods area—where food is stored speeds up inventory, Dodge says.
“Train your staff where items are to be stocked, from the people who receive deliveries to the kitchen staff,” she notes. “It not only speeds up inventory counting, but it also helps your cooks find products and know where to put unused items.”
Another idea is to synchronize the order guide and the stockroom to ensure efficient counting. This is a practice Yochum employs at Peabody. “My inventory clerk has set up her order guide to follow the way we store items on the shelves and in the walk-ins.”
Analysis of the data
Collecting inventory numbers is only part of the picture. Analyzing and tracking data over time can lead to small changes that make a big difference to the bottom line. The value of knowing what’s on the shelves can help identify things such as product waste or inconsistent portion sizes, Dodge points out. She combines her weekly counts with a cycle menu to limit waste.
“Our production books tell us what’s needed and our inventory tells us what’s used every week,” she says. “You never want to run out, but you can’t afford to make extra pans of food … that adds up in food costs and labor costs in a hurry.”
At Peabody, the monthly count of all food and cleaning supplies, plus a bi-annual count of silverware and dishes, helps detect fluctuations in product count or cost. “If I see numbers that look unusual in one category, I will talk with the chef to compensate,” Yochum says. “It helps to use a spend-down sheet—each month I credit each category the dollar amount of inventory we have, and then I deduct the amount for the following month.”
Product prices rise and fall frequently, and Yochum and Dodge both resist the urge to cherry-pick among manufacturers or suppliers just to get the best price. Yochum says she compares product prices twice a year, but finds food costs to be pretty consistent.
When foods become expensive because of seasonal availability or bad weather, it’s necessary to look for lower-cost options, and regular inventory and pricing checks will point that out, she notes. “But the big thing is not about saving a couple of pennies, it’s about serving food residents enjoy.”
Sticking with one supplier pays off in a number of ways for Dodge. Switching suppliers could result in the need to change recipe or nutrient formulations, and it results in receiving multiple invoices that have to be tracked through invoicing and accounting. Ultimately, she says, it’s about efficiency and consistency.
“When the inventory system works smoothly, it allows me to be the kind of leader I need to be,” Dodge points out. “I’m able to spend more time meeting with residents, checking the tray line and consulting with my team.”