Jeremy Wilson Inventory Analysis

BS209
Unit 4 Assignment
Matt Lichlyter
Business: Chick
-
Fil
-
A
Owner/Operator: Jeremy Wilson
Interview: January 26, 2015
Chick
- fil -
A is a chicken sandwich fast - food restaurant. Jeremy
Wilson
is the Owner/Operator of the
Riverside unit
,
located in Centennial, Colorado. Jeremy agreed to discuss the inventory systems that he uses, as well as the equipment that Chick
-
fil
-
A puts in place to help him analyze inventory costs and controls.
Chick
- fil -
A
has had a steady growth of units throughout the United States in the past ten years and it continues to grow. Jeremy has been working in the fast food chain as a team member, manager, and ( currently ) owner/operator for over 20 years.
Chick
- fil -
A uses a periodic inventory analysis

Jeremy explained that each item is placed in its proper location and
,
since the inventory (food) is perishable, the team members ensure proper rotation (also called FIFO)
.
Once a month, Jeremy and his management team count the inventory on hand manually . Jeremy remembers when it was done by paper and pencil
; however,
Chick
- fil -
A has integrated a n iPad app which allow s the inventory to be entered into a spreadsheet as they work , streamlining the calculations of food cost
.
T he basic analysis of food cost is strictly the basic formula:
Last
I nventory Value + Purchases
–
Current Inventory Value = Costs of Goods Sold
Cost of Goods Sold / Actual Net Sales = Food Cost percentage
Jeremy states that the improvements to the inventory system over the last few years have helped him run his business better.
We discussed the idea of a perpetual inventory system. Jeremy says that Chick
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fil
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A has not implemented anything nationwide yet, but that some stores are testing something similar to a more perpetual inventory. Jeremy likes the idea of having things tracked from the time they are received to the time they are sold, always knowing what i s on

Jeremy explained that in the old days
,
managers had to guess how much chicken to cook, how many salads to make, etc.
Such
guess work often increase d food costs and impact ed customer service times.
Kitchens
now have computer systems connected to iPads that tell the cooks how much chicken to cook or how many salads to prepare at what time, based on the sales projections, tracking, and current business volume. This has dropped Jeremy’s waste by over 75%
, something
Jeremy is very excited about.
A similar system is in place when ordering. The iPad program is set up so that a physical count of perishable items on hand is entered into the iPad app
;
based on projected s ales and current inventory , the iPad calculates the order numbers. This has helped Jeremy mak e sure that items are ordered properly and that he has the correct amount of inventory for his sales. However, Jeremy stated , both systems
–
while they are much better
–
cannot replace a smart, educated
,
experienced manager who can recognize that the projection on the apps may not include all variables and must sometimes overrides the direction of the iPad numbers
.
We discussed how Jeremy handles product costs
. The inventory method uses a straight cost