12/30/2025
The Only Cost Math That Matters
Most restaurant owners argue about food and liquor cost while skipping the one thing that makes those numbers real: weekly inventory.
Here’s the only equation that matters:
Usage = Beginning Inventory + Purchases − Ending Inventory
In plain English:
Everything you started with
plus everything you bought
minus what’s still on the shelf
= what you actually used
You do this math in dollars and in actual items. Dollars tell you the financial truth. Items tell you what’s happening operationally.
The Wine “Deal” Trap
Let’s say:
Beginning wine inventory: $2,000
Wine purchases (great deal): $6,000
Ending inventory: $7,000
Wine sales: $4,000
If you do the lazy math:
Purchases ÷ Sales = 150% wine cost
That number is meaningless.
The correct math:
Usage = 2,000 + 6,000 − 7,000 = $1,000
Real wine cost:
$1,000 ÷ $4,000 = 25%
That’s why I teach: only take deals you can use in 30 days.
Anything longer ties up cash, distorts reporting, and hides problems.
Why Inventory Is Required
Inventory gives you usage.
Usage is what you compare to theoretical cost (recipe costing × POS item sales).
That comparison shows you:
over-portioning
waste
theft
breakage
recipes not followed
pricing or invoice errors
Without inventory, you can’t calculate usage.
Without usage, you can’t measure variance.
Without variance, you don’t have control.
Yes, you can do this in spreadsheets. But humans aren’t perfect, and perfection doesn’t scale.
If you want to grow, you need these numbers weekly, fast and accurate.
Weekly inventory isn’t extra work.
It’s the price of knowing if you’re actually making money.
