You Can Conquer the Challenges of Cinema Inventory Management
Doing an inventory can have four different purposes:
- Calculate your P&L and balance sheet: By knowing the month-end value of your inventory as well as other assets, such as cash in the bank and accounts receivables, you’ll be able to calculate the balance sheet and P&L. This is best done weekly.
- Generate purchase orders: Knowing your product on-hand and sales figures will allow your inventory program to calculate the orders for the next week. Or for smaller theaters, do a simple head-count of the products in your storeroom.
- Calculate your yield per item: This compares inventory ingredient items to the sales of finished items using that ingredient. For example, soda syrup used divided by the dollar amount of soda sales, yields cost per dollar. This will help keep track of overpours, under-icing, etc., a cost control measure for large chains but not necessarily for smaller theaters.
- Calculate “shrink”: The term for product loss due to employee register operator errors and theft. Let’s take a look at that.
The verification of inventory vs. register totals should be done Friday to Thursday. Monthly inventory figures don’t spot a potential problem until as many as 30 days have passed, too long to be effectively isolated. Also, monthly inventory counts can’t be done on Thursday night/Friday morning because weeks don’t fit neatly into months. So comparing the concession sales week to the box office sales week is useful for a variety of reasons.
The majors all check their inventory on Thursday nights. This requires the efforts of two employees for one or two hours a week. The wage expense is a good investment. Let’s see why.
On Thursday night after the last movies or Friday morning before the first ones you’ll need:
- Whatever you’ve been doing thus far, throw it out and start over
- Two yellow pads and a pencil with eraser or…
- …A laptop or tablet loaded with the inventory software that came with your POS system or…
- …A blank page of a custom Excel spreadsheet you’ve created for your theater
- Two detail-oriented employees
- No distractions for at least an hour
Here’s How You do it
Input all stand-alone items for sale that go directly through the register into an excel spreadsheet or yellow pad – candy, bottled drinks, popcorn (each unit=1 bag), soda (each unit = 1 cup), and so on. It’s tricky because all combo purchases are only a one-key transaction. More about that later.
One employee should count and the other write down the figures. The latter should also be watching that the counter doesn’t make any gross errors. The key is no distractions.
The recorder needs to be careful to put the counts in the right place on the sheets. You should also have a category for the retail prices of each item.
Spoiled or Damaged Items
Purchase a box of broad-tipped permanent markers. Find a large box, put it behind the concession counter and label it “Big Box.” All spoiled or damaged items are placed in it. All supplies that are damaged go into the box as well.
Create some laminated sheets for the concessionaires with categories to account for messy spills such as nacho cheese chips, bad hot dogs or product thrown in the trash.
End of Part 1
Please watch for Part 2 of “You Can Conquer the Challenges of Cinema Inventory Management” brought to you by Exhibitor Benefits.