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Saturday, September 26, 2009

Suggestion from HFTP Annual Convention

My recent presentation at the HFTP Annual Convention in Las Vegas included 3 Q&A spots. In the first Q&A break, there was a suggestion by an audience member regarding purchases and sales.

This food cost professional suggested dividing each day's food purchases by the food sales. I'm a big fan of using sales as a compass for food purchases. At the end of each month, one of the most highly scrutinized statistics is the food cost percentage. This daily check will help to prevent surprises.

Since many operators have between 10 to 14 days of cost of sales in their inventory, I also recommend tracking the most recent 14 days of purchases and sales. You may stock up on a few shelf stable items if market prices warrant. Using a 14 day ratio of purchases to sales will help prevent surprises while allowing for an occasional long term buy.

Simply create a 7 column spreadsheet with DATE, PURCHASES, SALES, % DAY, PURCH 14, SALES 14, % 14DAY. You enter the date, purchases and sales each day. Calculate the 14 day sums once you have enough data. Then you can calculate the daily ratio and the 14 day ratio each day. These ratios will provide you with a compass for controlling food cost.

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