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Correlation vs. Causation

The first thing everyone wants to do when there's a Food Cost problem is to take it from the center of the plate. But, sometimes, that isn’t always the problem. Sometimes it’s a

combination of several smaller problems that all add up.

You’ll find more often than not, that it’s a combination of overproduction, waste, spoilage, not following recipes, and theft.

While there is no easy fix that will take care of a food cost issue, the one thing I can assure

you, the first step in controlling usage is to control your purchases.

I have mentioned before, “The more you have on hand, the more they use and the more likely they’ll steal.”

It’s the “Endless Supply” mentality.

If you keep buying it, they’ll keep using it. Associates have a habit of taking extra products and stocking up and hiding products for later. Look in your cabinets of the service areas under tables.

Recently, while walking through a unit, I counted 17 rolls of plastic wrap out between the kitchen and the front of the house. At an average of $15 per roll, that’s $255 for one product.

It’s a never-ending vicious cycle.

You’re doing an order and don’t see a product in the storeroom so you buy more. Associates see an endless supply on the shelves, and they take it. You do your inventory and it’s not on the shelf, so it doesn’t get counted and then you order more.

Remember, your inventory calculation for Cost of Goods is the value of the products used, not purchased. If a product doesn't get counted during inventory, it is calculated as being used.

There is a difference between Causation and Correlation. Buying more products is not the cause of high product usage. While there may be a correlation between purchases and usage. Increased purchases certainly doesn’t help, but it is not the cause. Overproduction and waste are the cause of high product usage.

You control your usage by controlling your purchases. You dictate what the staff uses by what and how much you purchase. There is a difference between controlling usage and running out, but if you reduce your on-hand inventory, you will increase your cash-flow opportunities and help to control usage.

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