Why Your Food Cost Is a Lie If You Don’t Count Inventory Monthly

Many restaurant operators think they know their food cost. They pull numbers from their POS, subtract purchases from sales, or trust a software program to calculate it. But here’s the hard truth: if you’re not counting your inventory monthly (at a minimum), your food cost is a lie.

Food cost is not simply what you spend on ingredients versus what you bring in through sales. It's a moving target, heavily influenced by waste, theft, over-portioning, spoilage, and inaccurate recipe costing. Without a consistent, detailed inventory process, you’re flying blind.

The Illusion of Accuracy in Your Food Cost

Let’s say your restaurant does $100,000 in sales and you purchased $35,000 in food that month. Easy math tells you your food cost is 35%, right? Wrong. That number only tells you what you spent—not what you used.

The only way to truly know what you used is to do a beginning and ending inventory. If you started the month with $10,000 in food on hand and ended with $12,000, your usage isn’t $35,000—it’s $33,000. That’s a 33% food cost, not 35%. And that 2% discrepancy could represent thousands of dollars each year.

Now imagine you haven’t done inventory in months. Those swings could be massive—and so could your financial blind spots.

The Cost of Inaccuracy

When you skip inventory counts, you create a false sense of security around your margins. You may think a dish is profitable when it’s actually costing you money. Or worse, you could miss theft, improper storage, or employee mistakes that eat into your bottom line over time.

Over time, these discrepancies compound. Without real data, you can’t make smart decisions about pricing, ordering, prep lists, or even staffing levels.

Monthly Inventory = Accountability

Counting inventory monthly creates a culture of accountability. Employees know that usage is being tracked, waste is visible, and every ingredient is part of the bigger financial picture. You’ll catch problems early—before they spiral into major issues.

Plus, monthly inventory helps identify trends: rising food prices, higher-than-normal usage, prep errors, and even menu items that may no longer be pulling their weight. You can’t fix what you don’t measure.

It’s Not Just About Counting

To make your monthly inventory count meaningful, it has to be accurate. That means:

• Consistently using the same units and pricing methods

• Training the same staff (or using a third party) for consistency

• Doing counts when the kitchen is clean and organized

• Matching product counts to the exact items in your recipes

Monthly inventory is not just a task—it’s a strategy. It helps you tie real numbers to real outcomes, ensuring you’re not making decisions based on fantasy margins.

In Closing

Your food cost isn’t just a number—it’s the heartbeat of your business. But if you're not doing monthly inventory, you’re basing critical decisions on incomplete (and often misleading) data. Count inventory every month. The numbers don’t lie—but they do if you let them.