How do I track food costs and inventory for my restaurant?
Food cost tracking starts with consistent inventory counts. Most restaurants do this weekly, counting everything in the walk-in, freezer, dry storage, and bar. The count gives you your ending inventory value, which you need to calculate actual food costs for the period.
The basic formula is beginning inventory plus purchases minus ending inventory equals cost of goods sold. Divide that by your food sales and you get your food cost percentage. For most restaurants, this should land between 28% and 35% depending on your concept and pricing. If you’re outside that range, something needs attention.
Purchases need to be tracked by category. Separate food from beverages from paper goods and cleaning supplies. Your POS system should track sales by similar categories so you can compare costs to revenue in each area. If your bar shows a 35% pour cost when it should be 20%, you know where to look for problems.
Physical counts need to connect to your accounting records. Weekly counts inform operations, but monthly counts tie out to your books. The ending inventory value on your balance sheet should match what you actually counted, valued at cost. If those numbers don’t match, something is wrong with either the count or the accounting. Working with restaurant accounting professionals helps ensure the operations side and financial side stay aligned.
Variance analysis catches problems early. If your theoretical food cost based on recipes and sales mix says you should be at 30% but actual costs are running 36%, that 6% gap is real money. It could be waste, theft, over-portioning, pricing errors, or invoicing mistakes. You can’t fix what you don’t measure.
For the tracking itself, some restaurants use spreadsheets while others use dedicated inventory software like MarketMan or BlueCart that integrate with accounting systems. The tool matters less than the consistency. A simple spreadsheet updated weekly beats sophisticated software used sporadically.
The setup matters as much as the ongoing tracking. Your chart of accounts should have proper categories for food costs, your POS and purchasing data should flow into your books cleanly, and your inventory valuations need to reconcile each month. Greater Boston bookkeepers who understand restaurant operations can help you build these systems so you get reports that actually tell you where you’re making or losing money.
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