Using-Up Food Service Inventory to Sustain Cash Flow

In Foodservice, inventory at it's roots are products purchased in order to prepare and sell for more money than what you paid for them. The variance between sales price and cost is gross profit. Some foodservice establishments have large inventories that become stagnant for a number of reasons. First, many catering companies purchase large quantities of products, whether it be food, beverages or disposables to serve functions with specific menu and service requests.

Many times these purchases create challenges as large parties sometimes drop the number of guests or cancel functions altogether leaving the caterer with reduced cash flow and an increased inventory. This problem multiplies overtime leaving goods that were purchased 2 to 3 months prior sitting on the shelves and becoming lost and forgotten. This problem creates an opportunity as the goods sitting on the shelves from prior months have already been paid for. In other words, they can be viewed as free goods. Herein lies an opportunity to create new with old.

Steps to to use up Inventory to Sustain Cash Flow:

1) Have your team collect usage reports from vendors for the past month. This will tell you everything you bought to sustain current and upcoming business for the month period.

2) Have your team create a list of everything in your establishment that was not purchased over the last months period and how much you have on hand. This list will give you a "pantry" of goods that you need to get creative with.

3) Assess the list and challenge your team to create new menu items, presentations and sales techniques to sell the packaged "old goods" to recoup the cash sitting on your shelves.

You can use this opportunity to create an exciting challenge with possible rewards for your staff. Depending on the size of your excess inventories, it can be helpful to understand the amount of days of inventory you have on hand and also your inventory turnover ratio. More on these calculations later.

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