Chapter

13

Inventory and Maintenance

In This Chapter

Every action you take when planning your business is a seed. If you plant crab apples, don’t plan on harvesting a golden delicious. That’s especially true when it comes to a project like your food truck. Because it’s a relatively small business, all the decisions you make will immediately affect every other area. If you change how you run the window, for example, your kitchen operations will immediately be altered. It’s particularly important to take this interconnectedness of your operations into account when you start thinking about purchasing, managing your inventory, and even maintaining your truck. You could be running the most popular truck in the country, but if you’re spending too much on food, aren’t managing your inventory properly, or aren’t taking care of your physical plant, you won’t be able to establish long-term success.

In this chapter, I discuss purchasing food and supplies, managing inventory, and maintaining your truck. Purchasing and maintenance aren’t the sexiest part of the food truck game, but they’re just as important as the food you’re serving.

Purchasing and Managing Supplies

Prior to placing any orders for supplies it’s of the utmost importance that you have a clear understanding of your concept, staffing, and expected preparation time. By identifying where and when you’ll be cooking and prepping your food, you’ll have a better sense of the types of products you’ll need to buy.

If you’re selling hamburgers, for instance, you can purchase regular ground beef, prepackaged and formed hamburgers, or grind the beef yourself from certain cuts. The easiest option is the prepackaged and formed hamburgers, but that decision leads to secondary questions: Will it allow you to produce the best-tasting and highest-quality product? Will your butcher make you a proprietary mix of meats for your burgers? What’s the most cost-effective way to get the product you want? That’s what purchasing is all about.

Truck Tales

Pat LaFrieda is a New York butcher who was credited with reinventing the hamburger. When recession hit the city in the late 2000’s, LaFrieda’s restaurant customers were looking to take the best cuts, like Dry Aged New York Strips, to turn them into high-end comfort food such as a signature burger. LaFrieda, now known as the mad scientist of burgers, gave them what they wanted and established a national trend in the process. He created proprietary blends of beef for restaurants like Shake Shack, Minetta Tavern, Spotted Pig, and 5 Napkin Burger that have sprouted national chains and been copied by butchers around the country. Thank you, Pat, for giving us the gourmet burger. Our stomachs salute you.

Understanding the Role of the Purchasing Agent

For most hospitality businesses the purchasing agent is the unheralded champion of profitability. Think of this person as the great offensive linemen on a football team; he protects the quarterback and is invaluable to the success of the team, but he’ll never win the MVP award and is rarely talked about in the press.

After you’ve decided on your menu and put your systems are in place, the work of your purchasing agent—probably you—has just started. You know you’ll need canned corn or barbeque sauce, but you most likely haven’t figured out the brand or size of the order. Now is the time to work all this out.

Researching Your Product Options

To decide your type and quantity, you need to do a lot of research. The first step is to find the products you think are best for your recipes at local grocery stores. Then follow that up by speaking with commercial distributors to see who can supply you with those products at a reasonable price. Most major metropolitan areas have dozens of distributors who supply dry goods, meat, dairy, and other products to restaurants. Contact them, sample their products, and speak to sales reps to find the products that you think are best for you.

Tip

Don’t waste a lot of money going out and buying samples of different products for your truck, especially if you’re on a tight budget. Distributors want your business and will send you free samples of their products. They need you as much as you need them.

Make a list of all the items you’ll need to execute your menu on a weekly basis, including the beverages you’re selling to accompany your food. Create this list before you start researching suppliers and interviewing sales reps. Break things down into the same categories that distributors use: fish, meat, poultry, dairy, dry goods, baked goods, and so on. Use spreadsheet software such as Microsoft Excel so you can easily edit and update the list.

Be very specific about the items you’re looking to purchase. It may be hard in the beginning, but as you learn more about the products don’t leave any details to chance. Don’t just write down Cheddar cheese; write Millers White Cheddar Cheese Shredded 15-pound case. If you aren’t specific you’ll end up getting something you don’t want, which will affect both your bottom line and your end product.

Determining Preparation Time

Consumers want the best product available, not a frozen hamburger or fish filet. You can definitely save yourself time, energy, and money by using frozen or preprepared products, but you’ll probably lose money over the long run in lost customers. The key is quality: getting the best quality you can at the best price.

The food on your truck should be fresh and cooked as close as possible to when it’s going to be served. I also advocate using fresh herbs over dried or prechopped items because they greatly improve the flavor of your final product.

Beep! Beep!

Keep in mind that it’s very costly to butcher meat and prepare vegetables every day. Doing so may not be a realistic choice for a small business like a food truck.

It’s time for another list: breaking down all the tasks involved in your truck’s daily operations. It will help you identify which items have the highest impact on your bottom line and which tasks will most greatly affect the quality of your product.

Let’s say you serve a chopped salad on your truck. It will cost you $10 an hour to have a prep cook chop the vegetables by hand, and you need 30 pounds of salad per day. It takes four workers to chop five pounds of vegetables in an hour. That costs you $240 a day. It is possible that your local vegetable supplier has pre-chopped tomatoes, onions, and cucumbers that cost you half what it does to chop them in-house. Using the prechopped veggies will save you time and money, while giving your clients a high-quality product. To maintain the fresh flavors, however, you decide to chop fresh herbs and add them to the salad. By breaking down the process you are able to identify which prep you should do in-house and what you can outsource, while still maintaining the quality level of your product.

The most important thing you need to consider when using preprepared items is taste. Taste everything you serve to your customers, especially the things that are prepared by outside suppliers. You have less control over them and therefore need to monitor the end product more carefully. Your customers will know if you change an ingredient.

Truck Tales

One of the most famous restaurants in New York, Peter Luger Steakhouse, used to serve the most delicious onion rolls. I’d been eating there for years, and suddenly they started using a different bakery. From the minute I saw the rolls I knew they weren’t the same. They didn’t have the homemade goodness they did before, and that took a little of the magic of a meal at Peter Luger away for me. It’s important to realize that all the little decisions you make will effect how your customers enjoy their visits to your truck.

Locating Suppliers

After you’ve identified what you need to buy, it’s time to choose who you’re going to purchase it from.

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Establish a budget prior to reaching out to suppliers. You know your guidelines for profitability. Don’t let your eyes become bigger than your wallet, and don’t let a supplier sell you anything you don’t need.

The best way to find purveyors is to speak with other truck, restaurant, and commissary owners. Your peers will know the best people for you to work with and will be happy to share them with you. Locate a truck or restaurant that uses products similar to the ones you’re looking to serve. Ask them why they chose one supplier over another, and take notes on who’s better at what.

Choose at least three purveyors you can call on in every category, giving you backup if someone is out of an item. Having multiple suppliers also enables you to comparison shop. Don’t take anyone’s word for it when it comes to finding the best price. The best one for them may not be the best for you.

Set up accounts with each supplier. Call the purveyor’s office directly and fill out the paperwork to have a sales representative assigned to your business. All your dealings with the purveyor will go through this representative, so set up a meeting with him or her as soon as possible to establish a personal relationship and outline your needs.

Tip

Ask the sales rep to have her boss come along to the first meeting you have. Many times the boss has the only true negotiating power, so having a direct relationship with her will be helpful. It also gives you a second contact if you ever have issues with the supplier.

Also, get your sales representative’s cell and home phone number. Your relationship is all about service, and you don’t want to be stuck not being able to get a delivery to restock your truck on a weekend.

You should be very clear about the needs of your business with the sales rep. Explain how you plan to operate and give her a breakdown of how you’ll execute and serve your menu. Also provide her with a copy of the inventory list you created. You may be surprised at the breadth of the items distributors carry. They’ll often be able to help you with more items than you originally thought.

When you review your inventory list with your suppliers, explain what you’re looking for in terms of cut, flavor, packaging, and volume. Suppliers may or may not be able to service your needs, but you should always make your desires known. Tell them you’ll work with whichever organization can come closest to your preferences, and that you plan to place orders on a regular basis, with your money going to whomever can service your needs best. It’s a clear and simple way to show them that you’re serious and expect prompt and professional service.

Your suppliers should be eager to work with you and understand your business. They should bring you new ideas and products to help improve your business’s bottom line and your food’s quality. Your purveyors must understand the goals of your business, along with your cost expectations and delivery requirements. A great supplier will give you information about local food and business trends that will be invaluable to maintaining a thriving food truck.

Comparison Shopping

Once suppliers get back to you with their pricing, terms of service, delivery schedule, and credit terms, it’s time for you to start making decisions. It shouldn’t be necessary to get into a contractual agreement with specific order volumes and time periods at this point because you need to establish your business first. With that said, you still need to work out some logistical details, particularly your payment terms.

Will you pay on delivery or in 30, 60, or 90 days? The longer you take to make the payment, the more money it will cost you. It’s your job to balance your cash needs against your pricing needs and then make a decision that’s best for your business. Additionally, you need to let the supplier know when you need your deliveries and how often. Find out the process for placing orders and how much lead time the supplier needs to make a delivery.

Beep! Beep!

Always check the items you receive against what you actually paid for. If the products you ordered and paid for aren’t the ones you received, you’ve got an issue. This is a regular problem in the hospitality business. Additionally, the person who does the ordering should also be the person doing the receiving. And if they aren’t, the two of them should be in close contact with one another. If you paid for chopped shallots and received chopped onions, there’ll be a vast difference in the taste of your final product and, potentially, your bottom line.

Negotiating

Pricing is the next most important issue when dealing with suppliers. You won’t get the best price unless you’re able to negotiate. You need to identify the best product for your use and then push back with the supplier to get the best price. Don’t just take the price you’ve been given; look for an opportunity to get a better deal.

The key to negotiating is establishing volume. You want to purchase as much as you can from as few suppliers as possible. Your purveyor wants to sell as much volume as he can, so the more you’re able to purchase from him or her, the better price you’ll get.

See if you can enter into an agreement for a fixed price on certain items that you buy regularly. The cost of commodities is in constant flux these days, and such arrangements can add up to significant cost savings. With these types of agreements, your business agrees to purchase a particular item only from one supplier in exchange for fixed pricing and volume-based discounts. Many suppliers love to score consistent business like this and will do whatever they can to accommodate you, including discounts, special orders, and flexible delivery terms.

Inventory

Managing the inventory of your truck and commissary is critically important to your success. If you purchase too much of a perishable item it can go bad and literally “spoil” your profitability.

Your inventory is defined as the stock of supplies you have in your truck and commissary at any given time. Inventory is all potential revenue; you get nothing back from it until you sell it to customers. Therefore, you need to have a minimal amount of money tied up in it so it won’t negatively affect your business’s performance. Obviously, you don’t want to run out of menu items on a regular basis, but you also don’t want to have a year’s supply of tomato paste tying up your cash flow. You need that cash to run a healthy business.

Tip

Salespeople love to try to get you to buy in bulk with pricing incentives. Make sure you look at these offers closely, so that you can tell whether the cost savings are worth tying up your cash. You have limited storage space, so before you purchase a product make sure you have somewhere to put it. Sometimes suppliers offer bill and hold, storing the product for you until you need it; if they do, take advantage of it

You can manage and track your inventory in any number of ways. The most important thing is to have a system in place, and to keep it as simple as possible. I recommend the par system for food trucks because it’s so easy.

Definition

The par system refers to the level of stock you need to service your truck over a set period of time. If you use two cases of carrots a day, for example, then that’s your daily par.

Choose a particular employee to count food every day or every shift, updating a daily par sheet with the amount of prepped and nonprepped inventory you have. Compare your inventory with specified par levels and place orders when necessary. For example, if you need 3 pounds of carrots every day, the amount of carrots you enter on the par sheet is 3 pounds. At the beginning and end of the day, review the par sheet, check inventory, and then place orders for the following day to make sure you’re always at par levels.

Inventory Counts

You need to count your inventory for your monthly profit and loss statements (see Chapter 15). Whether you prepare the statements yourself or have your accountant do them, your counts determine the cash value of the inventory you have on hand. That means you have to count the items and then multiply them by the unit price you paid for them. For example, if you purchased 30 pounds of chicken for $200 and have 15 pounds left, the inventory is valued at $100. The total of everything you have on hand gives you your month’s ending and beginning inventory values, an important aspect of monitoring the profitability of your truck.

You’ll also want to utilize purchase orders to monitor purchases and requests for purchases. Have your prep cook check the par on vegetables so you can put in an order for additional quantities if necessary. That puts one more check and balance into the system. You should monitor your par sheets, purchase orders, and inventory regularly until you establish trust with your employees.

Preventing Theft

There’ll always be some theft in your kitchen; how much depends on what you consider theft. An employee eating a carrot or cooking a piece of chicken for lunch is different from taking a case of soda home. You need to clearly communicate what’s acceptable in your kitchen. I suggest focusing on theft deterrence and then matching it with random checks of inventory.

Here are some ways that you can deter theft:

Minimizing Waste

Waste is the food you throw out because you can’t serve it to customers for reasons such as spoilage. Waste is like giving away money. It comes from laziness and poor planning, and it influences your labor, food, and even transportation costs. Once you’ve been in operation for a month, analyze all aspects of your business to see where you can eliminate waste. The easiest way to limit it is to be watchful and methodical. Provide incentives that encourage your employees to limit waste in the kitchen and other areas by creating contests with rewards.

Tip

Being cheap and shortsighted can cost you as much as being wasteful. People often try to save money in the short term by purchasing inferior packaging or lower-quality food, which ends up costing them more over the long haul. Make the best decision for your business, not the cheap one.

You can take steps to prevent spoilage. Make it unacceptable in your kitchen from day one. You must become very knowledgeable about the shelf life of the items you’re selling. That means you need to know how long you can serve food items before they go bad, as well as how they should look and smell upon arrival. You have no one to blame other than yourself if you accept an item for delivery that isn’t fresh.

Investing in the proper means to store, handle, and extend the shelf life of food also helps prevent spoilage. Covering, labeling, and in some cases vacuum sealing food can vastly extend its usable shelf life. Finally, make sure your storage facilities are clean. It will not only help extend the life of perishable food, it will prevent food-borne illness.

Truck Maintenance

You’re spending thousands of dollars on your food truck, so it’s important that you maintain it in the best possible condition. That means maintaining the automobile part of the truck as well as the kitchen.

Have a mechanic you trust who’s familiar with servicing commercial vehicles look over your truck twice a year to check the engine, oil, brakes, etc. Doing so will not only improve the long-term value of your truck, it will ensure that you won’t lose days of business because it’s in the shop. And don’t be cheap; good work costs money. Try to arrange a payment or maintenance plan with your mechanic. It would be a shame to have spent all that money and then not keep the truck in good shape.

Tip

Some commissaries offer maintenance onsite as well as roadside assistance. Look into these options. Maintenance on the truck is crucial to a food truck business. A truck down is time lost on the road and money lost as well.

Here are some ways to identify a good mechanic:

The Least You Need to Know