Home – New Forums Money matters Inventory and “stuff” tracking

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  • #995690
    d3mad
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    TL;DR The questions are bolded :D

    We’re in the fast-food/restaurant business and my whole accounting “principles” are all self taught and I am quick to acknowledge I’m doing some things wrong. My biggest error to date has not been tracking the sale of water over other drinks (ie, GST sales vs non-GST sales). I have come out of this ok since it’s pretty easy to calculate and it’s all been within my first BAS period and I basically did a stocktake and worked out how much I have sold in that time and credited back the GST that would not have been charged as a result of their sale. (this isn’t specifically the point of this post, but if anyone want’s to comment on that, feel free—I really am the first to acknowledge that I’m still learning here).

    So I’ve realised I need to track certain things, both at an inventory level and a cost per sale basis for other items. At the moment we have been using a paper based ordering system and a cash register. It’s a good little register, but it severely lacks in some of the features I’ve needed. Mainly just flexibility. Lunch Specials vs full serves vs sets etc.

    All this is about to change in the next week or so when our POS system arrives. Everything will be tracked a whole lot more with better reporting (hopefully).

    This thread mostly stems from the fact that currently I’m just recording everything as an income and expense and have not been doing any stock/inventory control.

    Inventory wise we only sell some cold drinks, that’s it. The odd grocery item, but that’s outside the norm. So to begin with, the emphasis is getting inventory tracking up and running and correctly recording GST sales vs non-GST sales and what sells and what doesn’t.

    Considering the drinks are our only inventory item, what is the best way to track other “stuff” (such as meat by the kilo, sauces, grains, etc)?

    We are a Thai Food Restaurant/take-away and other than rent, our biggest cost is raw goods (meat and veg). Our accounting package doesn’t really allow for recording kilos of chicken breasts, numbers of chicken wings, and the various cuts of pork and beef that we use (well, it kind of does, but more on that in a bit). There are many other things that are a little less well defined such as tubs and tubs of sauces, herbs and spices, vegetables, sugars, flours, etc.

    I’m hoping that with better trackability and records of sales (Pad Thai vs stir fries vs entrees) we can better evaluate the actual cost of sales. Then to compare chicken vs beef, and chicken used in entrees vs mains etc… This is not even mentioning Lunch Specials vs Full Meal serves :/

    Am I being too anal about it? Do I need to go to this depth? Am I being far too analytical?

    Back to the first point and our accounting package, sometimes we purchase things on-the-bone vs off-the-bone, some things come in packs of 400g vs other times by the kilos. The “Quantity” of my accounting package is normally reserved for the number of items and often I’m able to convert it to a kilo basis (especially for the meats, this is relatively easy), but other things aren’t so easy, especially when buying cartons of sauce at 700ml and there are 6 or 12 in a box and we get 3 boxes (as an example). Noodles are another great example where units just don’t add up.

    I’m just not sure to what level I need to be accounting for these and at what point I need to get on with everything else. I know I need to “account” for it as far as expenses go, but how far to analyse this for the purpose of streamlining and efficiency.

    For info, I’m using the manager.io software for accounting and it suits most of my needs greatly.

    #1203468
    Tact
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    Hi D3mad,

    I’m going to speak from experience since we’ve helped an Asian fine dining restaurant do a turnaround in this respect.

    1. Your accounting system should be able to handle inventory tracking. Systems like Xero have that functionality built in. They’re also able to link up to your POS system to minimise the data loading.

    2. I’m impressed by your dedication to the data. I find a lot of restauranteurs disregard the numbers completely. At the end of the day you do need to make sure your dishes are bringing in margin. That being said, don’t try to do too much too fast. There’s a lot of room for wastage in restaurant COS (switching oils, contamination, food sent back) so you need to give it time for the data to ‘smooth’ out. I’d start by doing a budget cost per dish and compare it to actual sales/margin to see if you should change the sales mix/price.

    3. For tax accounting purposes, as a restaurant you need to pay attention to making sure you’re on top of GST (since you can’t claim on all ingredients) as well as your payroll. For management accounting I’d say you want to pay attention to your gross margin and wage costs as compared to sales volume.

    Let me know if you have any other queries. This kind of problem solving intrigues me.

    ~Salmin

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