Chapter 16 Monitoring Beverage Operations Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Learning Objectives 16.1 Identify the three general approaches to monitoring beverage operations. 16.2 Calculate monthly amounts for the cost of beverages sold, cost percentages, and beverage cost percentages for wines, spirits, and beers separately. 16.3 Calculate the value of liquor issued to a bar, bar inventory differential, and cost of liquor consumed, and beverage cost percent. 16.4 List possible reasons for differences between actual and standard beverage costs. 16.5 Calculate daily amounts for the cost of beverages sold, beverage cost percentages, and cost percentages for wines, spirits, and beers separately. 16.6 Determine standard beverage cost for a given period. 16.7 Calculate potential sales value per bottle for beverages sold by the straight drink. 16.8 Determine a mixed drink differential and use it to adjust potential sales values. 16.9 Calculate potential sales values using the average sales value method. 16.10 Identify the formulas used to calculate beverage inventory turnover and explain how the results of this calculation can be interpreted for maintaining appropriate inventory levels of spirits and beers. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Monitoring Beverage Operations Cost: determine the cost of beverages sold compared with either actual cost or standard cost Liquid measure: compare the number of ounces sold with the number of ounces consumed Sales values: compare the potential sales value of beverages consumed with the actual revenue recorded Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Cost Percent Formulas Opening beverage inventory + Beverage purchases this month = Total available for sale this month – Closing inventory this month = Value of beverages issued to the bar Bar inventory value at the beginning of the month – Bar inventory value at the end of the month = Bar inventory differential Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Cost Percent Formulas = Beverage cost Beverage cost percentage Value of beverages issued to the bar +/– Inventory differential = Cost of beverages consumed (beverage cost)   Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition Beverage cost percentage = Beverage cost Beverage sales

Adjustments to Beverage Cost These are added to beverage cost Transfers from kitchen to bar Food directs (not transfers) Storeroom issues Mixers These are subtracted from beverage cost Managers’ drinks Special promotions Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Monitoring Beverage Operations The Cost Approach Monthly calculations Using cost per dollar sale Inventory and F & B transfers Cost calculations by category Spirits Wine Beer (draught, import, domestic) Daily calculations Cumulative “to date” Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Monitoring Beverage Operations Standard Cost Method Compare actual costs and standard costs Most effective with POS Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Monitoring Beverage Operations The Liquid Measure Approach Ounce-control method Daily inventory and determine ounces sold Manual system takes labour Automated is effective Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Potential Sales Values Determine bottle size and drink size. Calculate drinks per bottle. Multiply drinks per bottle by drink price to get sales value per bottle. Example Bottle size: 1 litre (35.1 ounces) Drink size: 1 ¼ ounce 28 drinks per bottle 28 × $4.00 = $112.00 Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

The Sales Value Approach Determine potential sales value per bottle compared to revenue, can be complex. Actual sales record method Mixed drink differential Average sales value method Use values from a sample period Allow for some variance from actual Standard deviation method An acceptable range is established Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Opening inventory + Closing inventory Inventory Turnover To measure how often the inventory has been consumed and replenished during an accounting period: Average inventory = Opening inventory + Closing inventory 2 Inventory turnover = Cost of beverage sold Average inventory Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition Generally accepted turnover rates: Spirits—1.5 Beers—2.0

Key Terms Actual sales record method, p. 431 Average sales value method, p. 434 Beverage cost percent, p. 419 Cost percents, p. 417 Cost per dollar of sale, p. 416 Food and beverage transfers, p. 419 Inventory differential, p. 418 Mixed drink differential, p. 431 Ounce-control method, p. 429 Potential sales value, p. 430 Standard cost method, p. 428 Turnover rate, p. 438 Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Chapter Web Links Accubar: www.accubar.com/Products/banquet-inventory.asp BarVision: www.barvision.com/index.html Alcohol Controls: www.alcoholcontrols.com/liclinso.html Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

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