I was looking at a restaurant blog today that had a free “Control your cost of goods checklist” offered.  I had a quick look just in case I could learn something new and was horrified to see how they suggested controlling your costs.

OK let’s see if this sends some warning bells clanging in your head!!

They suggested estimating sales for the coming week, e.g. $20,000. Then if your cost of goods needs to be at 25%, you have a budget for that week of $5,000 for food. So that’s what you spend. No more, no less!!

On Tuesday of this week my family and I stopped at our local Pizza Hut to pick up a pizza that had been ordered 20 minutes earlier and had to wait another 25 minutes until it was ready. I overheard the supervisor telling a newly arrived team member that the budget sales for the day were $1500 and that they had already done $3,000. That explained the delay and the fact that they had run out of certain sizes of dough, were making boxes as the product came out of the oven etc. Hey, we have all been there.

Now think of what would have happened if the Manager/Owner had followed the advise of the blog I have just mentioned. ‘Oops, sorry closed today due to no stock!!’

Control of COGS only comes from vigilance, weekly stock takes, and follow up with team and supervisors as to how to control costs without having a run out situation. Always have at least a week and a half stock on hand for items that are delivered once a week and similar overlap for those items delivered more or less frequently.