Vernon Downs Gaming, Racing and Entertainment

Vernon Downs Gaming, Racing & Entertainment used the MMS Inventory Control system (also known as the SWS Inventory Control System) to track its inventory. This system tracks purchases from when they are requisitioned by the Chef and approved by management to delivery, receipt, storage, and subsequent issuance to the kitchen.

One of the selling points of the MMS system is that inventory need only be counted when it is in the Food Warehouse, thus saving a lot of time counting product and inputting the counts into the system. Once product is issued from the warehouse to the kitchen, it is considered to be consumed.

Vernon Downs had several venues that were tracked on the MMS system. The largest was the Buffet, located in the Casino. However, it also had a Snack Bar next to the buffet, a Hotel Restaurant, a Race Track Dining Room, a Race Track Snack Bar, and a Club House Dining Room. The Food Warehouse was located at the Race Track Grandstand, but it carried only staples with fairly long shelf lives.

Each month, the General Manager held a meeting with the department managers to review the Profit and Loss Statements for the concluded month. Food Cost would always be an issue. One month it was much too high, the next month it was too low. Sometimes the Food Cost would be good for two or three months and then it would spike again.

The General Manager was concerned about the fluctuating Food Cost and told us that if we didn’t solve the issues, he would require us to conduct weekly inventories and calculate Food Cost weekly. Weekly inventories would involve a lot of extra work that no one was anxious to undertake.

As Controller, it was my responsibility to determine why Food Cost fluctuated so much from one month to the next. I met with the Director of Food and Beverage to discuss the issue. We were convinced that the problem was not in waste or theft, but our failure to conduct a complete inventory of the kitchens each month. While the Food Cost from one month to another often fluctuated considerably, the Year to Date Food Cost was reasonably close to Plan.

We theorized that the proponents of MMS might be correct that inventory did not need to be counted once it was issued to the kitchen where the kitchens had little storage capability. However, Vernon’s kitchens had large storage facilities and they were fully utilized. As there was no walk in freezer or walk in cooler in the Food Warehouse, perishable goods were not stored there, but were delivered directly to the kitchens where there were walk in coolers and walk in freezers. In addition, the dry goods rooms were large, and often contained a lot of product, too.

Inventories fluctuated considerable from one month to the next due to special events that occurred some months, but not others. In addition, inventories might be built up for a coming week end one month but not the next because month end fell in the middle of the week. While other companies accounted for these differences when they inventoried the Food Warehouse, at Vernon, these differences were absorbed into the kitchens. Our conclusion was that we had to inventory each kitchen every month in addition to the Food Warehouse.

Once we adopted the policy of inventorying each kitchen every month, the Food Cost fluctuations stopped. Food Cost became consistent from one month to the next and the General Manager was happy. With the General Manager happy, everyone else was happy, too.

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