Inventory counts are not busywork. They are the fastest way to find margin leaks before they hit the bank.
This guide gives you a monthly full count and a weekly spot check routine built for small teams.
Quick Summary
- Full count monthly + 10-item spot check weekly
- Expected usage = Beginning + Purchases - Ending
- Investigate when top SKU variance is 5%+ or total variance is 2-3% of sales
Step 1) Prep (15 minutes)
- Freeze receiving and transfers for one hour
- Print the count sheet in shelf order
- Pull last 30 days of invoices
- Highlight top 20 cost drivers (meat, dairy, cooking oil, beverages)
Step 2) Count in Pairs (30 minutes)
- Weigh open boxes (do not eyeball)
- Count by unit and convert to weight
- Note partial cases and damaged items
- Verify freezer + walk-in + dry storage
- Separate house-made prep items (sauce, stock, dough)
Step 3) Calculate Variance
Expected usage = Beginning + Purchases - Ending
Variance = Actual usage - Expected usageIf you use recipe costing, compare expected usage (recipe sales) to actual usage (inventory math).
Example (Small American Deli)
- Beginning turkey breast: 12 lb
- Purchases: 40 lb
- Ending: 8 lb
Expected usage = 44 lb
If recipe sales say you should have used 40 lb, the variance is 4 lb (10%). That is a red flag: check portioning tools, prep loss, and waste logs.
Common Causes of Shrink
- Portion creep
- Prep loss not tracked (trim, burn, overcooking)
- Miscounts on partial cases
- Vendor shorting or price/unit changes
- Unrecorded staff meals or comps
Fixes That Actually Work
- Lock portion sizes with scales or scoops
- Run yield tests on high-loss items (meat, seafood, produce)
- Turn big prep items into sub-recipes so costs roll up
- Audit the top 5 SKUs every week, not just monthly
Want This Done Automatically?
KitchenCost recalculates recipe cost, yield loss, and food cost % as your ingredient prices change, so inventory variance is easier to spot.
Try KitchenCost.