Restaurant inventory: spreadsheet vs. software

We built restaurant inventory spreadsheets before we built software, so this isn’t a pitch against Excel. A good spreadsheet is a lot better than no system at all. But there’s a point where it starts costing you more time and money than it saves.

What a spreadsheet does well

• It’s cheap or free. You probably already have Excel or Google Sheets.
• It’s flexible. You can lay it out exactly how your kitchen works.
• It’s fine for a small, stable menu. One location, one person counting, prices that don’t move much.

Where spreadsheets break down

• Prices go stale. Weather and market demand keep moving ingredient prices ^[1], and in a spreadsheet every invoice means typing new prices in by hand. Most people stop after a few weeks, and from then on inventory values and recipe costs are wrong.
• Typing errors creep in. Mistakes in invoice entry, waste records and transfers are a known cause of food cost that looks wrong ^[2].
• Recipe costs don’t update. When shrimp goes up, every dish that uses it should change. In a spreadsheet, that only happens if someone updates the links and the formulas didn’t break.
• One wrong formula breaks things quietly. A deleted row or a value pasted over a formula, and totals can be off for months before anyone notices.
• Only one person really understands it. When they’re off or leave, the system goes with them.
• Counting means paper, then typing. That’s two chances to get it wrong.
• Variance is hard. Comparing actual food cost with theoretical every month is one of the most useful checks in the kitchen ^[2], and it’s very hard to keep working in a spreadsheet.

The real cost of “free”

Here’s an example with round numbers. Say your chef or manager spends 4 hours a week entering counts and invoice prices and fixing the sheet. At $25 an hour, that’s $100 a week, more than $400 a month. On $25,000 a week in food sales, one point of food cost is $250 a week. Catching even one point you would have missed can cover the cost of software.

Signs you’ve outgrown the spreadsheet

1. Your food cost swings a lot from week to week and you can’t explain why.
2. You haven’t updated ingredient prices in more than a month.
3. Your recipe costs are from when the menu was written.
4. Counting and entering takes more than a couple of hours a week.
5. You have, or are opening, a second location.
6. Only one person can run the sheet.
7. You’ve found a broken formula and don’t know how long it was wrong.

If three or more sound familiar, it’s time to look.

What to look for in inventory software

• Invoice prices that flow into inventory and recipe costs automatically
• Recipe and plate costing, ideally including labor
• Counting on a phone or tablet, by storage location
• Par levels and order suggestions
• Actual vs. theoretical food cost (variance) ^[2]
• Simple enough that your team will actually use it
• A free trial, so you can run it alongside your spreadsheet for a couple of counts before you commit

Spreadsheet vs. software at a glance