🎯 Analyze the Cost of Goods Sold (CoGs)
📌 What is the Cost of Goods Sold (CoGs)?
📌 Recommendations for efficient use of CoGs
📌 Frequently asked questions about CoGs
With Cost of Goods Sold (CoGs), you can know exactly how much of each product you have consumed over a given period, and compare it with what you have sold according to your POS.
You will be able to spot your variance, helping you improve your restaurant's profitability.
What is the Cost of Goods Sold (CoGs)?
CoGS (Cost of Goods Sold) is a feature that shows you the actual consumption of your products over a period, based on:
- The opening inventory (actual or estimated)
- The purchases made during the period
- The closing inventory (actual or estimated)
Based on this information, haddock calculates how much product has actually been consumed during that period. It then compares that consumption with the sales recorded in your POS, using the recipe costings linked to each product.
This comparison makes it possible to detect variances between what you sold and what you actually used
Key points for using CoGS
1. Opening inventory
Opening inventory is the actual quantity of product you have at the beginning of the period you want to analyze.
🔍 This data is obtained directly from the last physical inventory you recorded on that date.
It is essential that you do a real physical count when you start the analysis, because this will be the starting point for calculating the product's consumption correctly.
📌 Example:
On February 1, you did a physical inventory of olive oil and recorded 100 liters in your warehouse.
That will be the opening inventory if you select the period from February 1 to February 28.
‼️ If you do not carry out physical inventories, the calculations will be based on estimates and you will lose accuracy.
2. Purchases
In this step, haddock adds up all recorded purchases between the start and end of the period you are analyzing. This includes:
- Invoices
- Delivery notes
- Tickets
- Manual expenses (if they are classified as purchases)
📌 Keep in mind:
- Purchases are calculated based on the document type configured by supplier (invoices or delivery notes).
- The associated cost can be: last price, weighted average price, or custom amount, depending on how you have configured it.
- Only documents containing products linked to your inventory are taken into account.
👉🏼 Make sure you upload all documents correctly and review your suppliers' price settings.
3. Closing inventory
Closing inventory is the actual quantity of product you have at the end of the period.
🔍 This data is also obtained from a physical inventory that you should have completed on the last day of the analyzed period.
📌 Example:
If you are analyzing the period from February 1 to February 28, you should have done a physical inventory on February 28, where, for example, you have 80 liters of olive oil left.
➡️ With these three data points (opening inventory, purchases, closing inventory), haddock automatically calculates how much product you have consumed in that period.
‼️ If you do not perform this closing inventory, the system will not be able to detect real variances between what was consumed and what was sold. We always recommend closing the period with a physical inventory.
4. Calculating actual consumption (CoGS)
Once these three values are defined (opening inventory, purchases, closing inventory), haddock automatically calculates actual consumption with the following formula:
Opening inventory + Purchases - Closing inventory = Consumed amount
📌 This result shows how many units of the product you have actually consumed during the analyzed period. From there, the system compares it with what you sold according to the POS to detect whether there are losses, errors, or differences.
Real case | Example
📍 Let us suppose you want to analyze the consumption of olive oil during the month of February, from the 1st to the 28th.
To do this, you have followed the recommended best practices:
✅ You did a physical inventory on February 1 (start of the period)
✅ You did a physical inventory on February 28 (end of the period)
✅ You uploaded all the month's purchases to haddock.
✅ You have the recipe costings that include this product correctly connected to your POS.
🧾 Data recorded in haddock:
- Initial inventory (February 1): 100 liters
- Purchases made from the 1st to the 28th: 50 liters
- Closing inventory (February 28): 60 liters
- POS sales (olive oil consumed according to recipe costings): 85 liters
📊 What does haddock calculate?
- Actual consumption (CoGs):
100 (start) + 50 (purchases) - 60 (end) = 90 liters consumed
- Theoretical consumption (POS sales):
85 liters sold according to recipe costings
- Variance:
85 (POS sales) - 90 (actual consumption) = -5 liters
🔎 Interpretation
📉 You have a variance of -5 liters, which means you have consumed more product than appears as sold. This may indicate:
- Unrecorded waste
- Recipe costings with quantities lower than the real ones
- Products used outside the POS (e.g. staff, complimentary items)
- Errors when entering inventories or purchases
Recommendations for efficient use of CoGs
- Do physical inventories at the beginning and end of the month
The key to getting accurate data is having a real starting point and a real closing point. Without physical inventories, the calculations will be estimates and could hide errors.
- Plan your analysis periods around your inventories
When you choose a date range, make sure there is a physical inventory right at the beginning and another at the end. This will allow you to get an exact consumption calculation and detect real variances.
- Digitize all your purchases
Upload invoices or delivery notes without leaving any out. Remember that you can do this as a PDF, in bulk, from your phone, or even by email. Every purchase adds to stock and affects CoGs.
- Keep your recipe costings connected to the POS
If you sell a dish without a recipe costing, that consumption is not deducted from stock. Check that each product is correctly linked to its POS item.
- Review your product price settings
Make sure each supplier has the correct criterion: last price, weighted average price. This directly affects the financial calculation of consumption.
- Filter and sort by variance so you can act quickly
Use the option to sort by largest variance to identify which products are causing losses or irregular consumption. That way you can act quickly.
❓ Frequently asked questions about CoGs
Q: What do I need for CoGs to work correctly?
A: You need to have physical inventories at the start and end of the period you are analyzing, register all your purchases in haddock, and have the recipe costings connected to the POS properly configured.
Q: Does CoGs show the current stock of my products?
A: No. CoGs analyzes closed periods (for example, from February 1 to February 28). To see stock in real time, check the Theoretical tab
Q: What is variance and why is it important?
A: It is the difference between actual consumption and what was sold according to the POS. If it is high, there may be errors, waste, or products that are misconfigured.
Q: Can I see variances if I did not do a physical inventory?
A: Not accurately. If there is no physical inventory at the start or end of the period, the system will estimate the data, but the results will be less reliable.
Q: How do I know which dates to choose to analyze a period?
A: We recommend checking the history of your physical inventories so you can select a date range that starts and ends with a closed inventory.
Q: Why are there products with warnings or missing data in the theoretical inventory?
A: It may be that the product does not have a physical inventory, is not connected to the POS, or is missing purchase or sales data.
Updated on: 23/04/2026
Thank you!