Using figures correctly after the inventory

What do I do with the figures from an inventory? - Guide for catering businesses

Taking an inventory is mandatory, but the inventory data obtained is a treasure that remains hidden from many restaurateurs. Especially in restaurants and catering businesses, these figures provide valuable insights: calculate the cost of goods, uncover weak points, monitor key figures in the restaurant and make well-founded decisions. In this article, you will learn how to analyse and use inventory data to improve processes, reduce costs, optimize the menu and work more successfully overall. It also shows how digital solutions - such as inventory software for the catering industry like BarBrain - can help you evaluate and clearly visualize your inventory data.

Why inventory data is so important

An inventory records the current stock of goods in your business. Whether you count monthly, quarterly or annually - after each inventory, you have figures in your hand that are much more than a formality. This data shows you, among other things:

• Consumption of goods and cost of goods sold: How many goods were consumed in the period and at what value?
• Current stock: What stocks are still in the kitchen, cold store and cellar?
• Deviations: Are there inventory differences, e.g. shortages or surpluses compared to the target?

Without evaluation, this information would remain unused. Regular inventory analysis in the food service industry is the key to better cost control. Only those who know their stocks and consumption can take targeted countermeasures and avoid losses. In the next step, we will look at how you can obtain key figures from your inventory data.

Calculate and understand cost of goods sold

Cost of goods sold refers to the value of the goods consumed in a certain period (usually per month) - i.e. what the food and drinks consumed actually cost you. Cost of goods sold is one of the most important key figures in restaurants, as it directly influences your profitability. There is a simple formula for calculating the cost of goods sold:

Cost of goods = opening stock + purchases - closing stock

This calculation results in the consumption of goods in euros. A quick example: If you had goods worth €7,000 in stock at the beginning of the month, made new purchases for €28,000 and still had €9,000 in stock at the end of the month, then your cost of goods sold is €26,000. If you turn over €100,000 (net) in the same month, this corresponds to a cost of goods sold ratio of 26%.

Whether 26% is good or bad depends on the restaurant concept. Many businesses aim for less than 30% cost of goods sold as a percentage of sales, although 30-35% can also be common depending on the concept. It is important that you regularly track your own cost of goods sold ratio and compare it with your calculations. If the ratio suddenly increases, this is a warning signal - it could indicate inefficiencies or higher costs.

Tip: Calculate the cost of goods sold on a monthly basis. This allows you to quickly identify trends or outliers and take action in good time. A monthly inventory provides the basis for keeping an eye on costs and detecting deviations at an early stage.

Revealing shrinkage and breakage (recognizing invisible losses)

In addition to normal consumption, inventory data can also indicate losses that go beyond the cost of goods sold - namely shrinkage and breakage. These terms refer to unsold consumption:

• Shrinkage: Losses due to theft, spoilage or incorrect portioning (i.e. everything that has "disappeared" without generating sales).
• Breakage: Destroyed goods, e.g. broken bottles or broken containers.

Without an inventory, shrinkage and breakage often go unnoticed. Shrinkage becomes visible by comparing the actual consumption according to the inventory with the theoretical consumption according to sales. The formula for this is

Shrinkage = actual consumption (according to inventory) - theoretical consumption (according to cash register)

And the shrinkage rate as a percentage is calculated as follows: (shrinkage / cost of goods sold) × 100. Industry values show that around 3% shrinkage of the cost of goods sold is still considered normal - anything above this should be urgently investigated. DEHOGA (German Hotel and Restaurant Association) states 3 % as a standard industry value. If your shrinkage rate is higher, something is going wrong.

Example: According to the cash register, you sold 427 bottles of beer, but according to the inventory, 472 bottles were actually consumed - so 45 bottles are missing. This corresponds to a shrinkage rate of around 9.5% . This value is well above the standard value and requires investigation: Were bottles damaged? Was beer dispensed but not recorded? Or was there theft? This shows how inventory data can help to uncover problems that would otherwise remain hidden.

You should also document breakages. Broken bottles or spoiled goods should be recorded, ideally directly during stocktaking. The breakage rate (value of damaged goods in relation to the cost of goods) provides information on how much such incidents cost you. If shrinkage or breakage is high, you can take countermeasures - for example, improve warehouse organization, train employees or introduce stricter controls.

Important key figures from the inventory analysis

By analyzing your inventory data, you obtain several key figures that are crucial for your restaurant:

• Cost of goods (€): Absolute consumption of goods in euros per period (month, week).
• Cost of goods sold ratio (% of sales): Ratio of cost of goods sold to net sales. This ratio shows how much of turnover is spent on goods - the lower, the better for profits.
• Shrinkage quantity and shrinkage rate: Quantity/value of unsold goods (shrinkage) and proportion of cost of goods sold. Indicates how effectively you are preventing losses. Shrinkage above ~3 % is a warning signal.
• Breakage: Value of the broken or discarded goods.
• Stock: Total value of the goods on hand. If your stock levels fall or rise sharply, this has an impact on liquidity. Too much stock ties up capital; too little leads to bottlenecks.
• Inventory turnover: How often your warehouse "turns". Calculated from cost of goods sold and average stock on hand. A higher stock turnover means that goods are sold quickly (which is good for ensuring freshness and reducing storage costs).

These key figures for the restaurant help you to manage your business. You can compare them from month to month and also carry out benchmarking: How does your cost of goods sold compare to similar businesses? If your cost of goods sold ratio is significantly higher than the industry average (e.g. 35% vs. the usual 25%), you should look for optimization potential. Such comparative values reveal weaknesses and show where there is a need for action.

Improve processes with inventory data

Analyzing inventory data means deriving concrete measures for process optimization. You can use the figures to identify where processes are stuck or can be improved:

• Optimize the purchasing process: Are your order quantities right? If food is regularly thrown away, you are ordering too much. Adjust your ordering frequency and quantities to actual consumption. Conversely, you can avoid bottlenecks if inventory data shows that certain ingredients are running out faster than expected.
• Improve storage: High losses due to spoilage indicate storage problems. Improve the warehouse structure - e.g. clear labeling, FIFO principle (First In - First Out) and correct storage conditions so that goods last longer. Proper warehouse organization reduces errors, shrinkage and breakage.
• Standardize portion sizes: If your cost of goods is unusually high, the cause could be portion sizes that are too large. Standardized recipes and portion control ensure that more is not accidentally consumed than calculated. This reduces consumption without sacrificing quality.
• Train employees: Make sure your team understands the importance of correct stocktaking and economical use of resources. Employees should report shrinkage (e.g. spilled drinks) and breakages immediately. A culture of transparency helps to reduce hidden losses.
• Check sales processes: A comparison of inventory and cash register data shows whether everything that was consumed was also sold/received. If not, there may be a problem in the POS system or in the operating process (e.g. certain items are forgotten to be billed). Training or system adjustments may be necessary here.

Such improvements in the warehouse, kitchen and service will make your business run more efficiently. Every process optimization also pays off financially - less chaos and losses, more overview and control.

Reduce costs through inventory analysis

One of the biggest advantages of consistent inventory analysis is saving costs. The key figures reveal inefficiencies that are a burden on your budget. Typical cost traps that you can expose using inventory data include

• Overstocking and spoilage: Excessive stock levels often lead to goods spoiling and having to be written off - pure lost money. Inventory data helps you to identify and reduce excess stock. This allows you to make more targeted purchases in future and avoid losses due to spoiled food.
• Theft and undetected shrinkage: If inventory and sales do not match, you lose goods often worth hundreds of euros. By being aware of this gap (e.g. 5% shrinkage rate), you can take measures against theft and shrinkage - such as restricting access to the warehouse, cameras, or more precise checks on the dispensing of goods. This will bring the shrinkage rate back down to normal (~3%) and save you money.
• Unfavorable purchasing conditions: Perhaps your cost of goods sold shows that certain products are being purchased at extremely high prices. With the data in hand, you can search for cheaper suppliers or negotiate better conditions. Volume discounts can also be used optimally if you know your exact requirements.
• Miscalculated dishes: If individual dishes cause an unusually high cost of goods sold, check the calculation. You may need to adjust the sales price or change the recipe to achieve a reasonable margin again. This requires precise recipe data, but the inventory provides the first indication that something is wrong (e.g. if the total cost of goods sold increases without sales keeping pace).
• Capital commitment: A full warehouse ties up capital that you lack for other expenses. Regular stocktaking lets you know how much money is in the warehouse. The aim is to have a lean inventory that covers demand but does not tie up excessive capital.

Each of these points shows: Inventory data directly helps to reduce costs. By uncovering and specifically eliminating waste, you automatically increase your profits. Many measures are simple: reducing portion sizes or making creative use of surpluses (e.g. developing dishes of the day from leftovers) can contribute significantly to reducing the cost of goods.

Optimize menu with inventory data

Your restaurant's menu also benefits from the inventory analysis. How does that work? Inventory data tells you which ingredients have been consumed, in what quantities and at what cost. Combined with sales figures for the individual dishes, you can carry out menu engineering:

• Identify top sellers and bums: Find out which dishes sell well (top sellers) and which are slow sellers (bums). If a dish is rarely ordered but requires expensive or perishable ingredients, it is a candidate for deletion - it generates costs but hardly any sales.
• Check the cost of goods per dish: Look at which dishes have a particularly high cost of goods sold (in € or %). Is this covered by a correspondingly higher price? If not, the calculation is not correct. If necessary, you should increase the price or use cheaper ingredients. Example: If a schnitzel costs €5 to produce and you want a gross profit margin of 70%, you would have to sell it for ~€16.70. If your current price is lower than this, something is wrong.
• Ingredient and supplier selection: Inventory data shows which ingredients contribute a lot to the cost of goods. There may be cheaper alternatives or seasonal products that are less expensive. Seasonal dishes can reduce the cost of goods without compromising quality - but this requires periodic adjustments to the menu.
• Shelf-stable vs. fresh produce: Analyze whether you have to throw away a lot of fresh ingredients because demand is unpredictable. It may be worth designing the menu in such a way that more long-life ingredients are used and sensitive goods are only used in dishes that are really often ordered.

These optimizations will not only make your menu more profitable, but also more consistent in terms of quality. In the end, you only stock dishes that are worthwhile and popular and have less spoilage. Inventory data provides the factual basis for making such decisions objectively instead of acting on gut feeling.

Evaluate digital inventory data - efficiently instead of manually

Evaluating all these key figures and findings sounds time-consuming - and it really is if you only work with paper, pen and tables. This is where the keyword digital inventory data analysis comes into play. Modern catering businesses rely on digital helpers for stocktaking to minimize errors and automate evaluations.

Digital tools such as cash register systems or inventory apps make data collection much easier. By integrating sales and inventory, you receive real-time evaluations of goods usage and key stock figures, allowing you to react quickly.

Advantages of a digital inventory and inventory analysis:

• Save time when taking stock: apps such as BarBrain make it possible to enter all items directly via smartphone or tablet, often even by barcode scan or automatic quantity entry. This is much faster than manual counting with subsequent Excel entry.
• Fewer errors, more reliable data: Digital systems calculate automatically and avoid transposed figures or estimation errors. Reliable inventory results without manual input errors are the basis for correct evaluation. If, for example, opened bottles are accurately recorded via weighing, the inventory value is correct and you can rely on the key figures.
• Automatic calculation of important key figures: Good stocktaking software for the food service industry does the math for you. The cost of goods sold, cost of goods sold ratio, shrinkage or contribution margins can be available at the touch of a button immediately after the stocktake. This allows you to see immediately where you stand without having to spend hours building reports.
• Clear visualization: Digital solutions often display your inventory data in dashboard form - with graphs, progress charts and traffic light colors for key figures. You can recognize trends at a glance, e.g. if the cost of goods has risen steadily over the last three months or if the stock value is unusually high. This visualization makes the complex figures easy to understand for you and your team.
• Data always and everywhere available: Cloud-based tools allow evaluations to be called up at any time - whether in the office or on the move. It is particularly helpful for owners of several branches to have a central overview of all locations.

In short: digital inventory solutions save time and provide better data. This lays the foundation for effortlessly carrying out the analyses and optimizations described in this article. An outstanding example of this is BarBrain, which we will now present in more detail.

Catering inventory software: BarBrain as a solution

Among the multitude of digital helpers, we would like to highlight BarBrain.com as a specialized solution for food & beverage inventories. BarBrain is an inventory software for food & beverage that significantly simplifies the entire inventory process and data analysis. But what exactly does BarBrain offer?

• Fast, easy stocktaking: BarBrain is available as an app and allows you to count on several devices at the same time - ideal if your team is taking stock of different areas of the warehouse at the same time. This drastically shortens stocktaking times. Every entry is made with a tap or scan, even opened units are recorded precisely .
• Comprehensive product catalog: The system recognizes over 20,000 items from the catering and hotel industry - from spirits and soft drinks to food and non-food consumables. So you can count everything that occurs in your business without having to laboriously create product data.
• Automatic inventory report: As soon as the count is complete, BarBrain automatically creates a finished inventory report. This summarizes all the relevant figures - cost of goods, differences, stock levels, etc. No need for post-processing, you have immediately usable results in your hand.
• Central evaluation and visualization: BarBrain provides you with a holistic overview of your cost of goods sold and other key figures, even across several establishments. This means that if you run two restaurants, for example, you can see the combined cost of goods sold at a glance and make comparisons. The data is presented clearly in a dashboard (e.g. by product groups, branches, time periods).
• Real-time cost control: Thanks to the precise, up-to-date figures, BarBrain lets you know immediately where you stand. High shrinkage rates or out-of-control cost of sales ratios jump out at you so that you can react at an early stage.
• Time and cost savings: According to the provider, businesses using BarBrain save an average of around 10 hours of inventory time per month and avoid errors, which can mean annual savings of several thousand euros. You can invest this saved time in your core business - better guest satisfaction, marketing or new offers.

Overall, BarBrain is a practical tool for evaluating digital inventory data and putting it into action. It is aimed precisely at industry professionals like you who want transparency about their figures without getting lost in complicated Excel evaluations.

Conclusion: With inventory data to gastronomic success (recommended action)

Inventory data is more than just columns of figures - it is the compass for your company's success. If you know what your cost of goods is, where losses are occurring and which dishes are profitable, you can make informed decisions. Our practical look shows how you can use inventory analysis to optimize processes, reduce costs, improve your menu and therefore work more profitably.

The most important recommendation is to use your inventory data regularly and consistently. Ideally, carry out monthly inventories and evaluate the results promptly. Set yourself target values (e.g. cost of sales ratio below X%, shrinkage below Y%) and track the development. Even simple measures - from better order quantities to changing the recipe of an expensive dish - can have a big impact if they are based on data.

To make your work easier, it's worth using digital stocktaking software. With tools like BarBrain, you can virtually put the evaluation of your inventory data on autopilot. The system provides you with all the inventory evaluations you need for the catering industry in a clear format, giving you the basis for taking the right steps. At the end of the day: trust the figures - they show you objectively where your business stands and where you can leverage. With this knowledge and the right tools such as BarBrain at hand, you are ideally equipped to defuse cost traps, streamline processes and continue to offer your guests great experiences - while making a solid profit for your business.