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

Learning Objectives After reading this chapter, you should be able to: 16.1 Identify the three general approaches to monitoring beverage operations Calculate monthly amounts for the cost of beverages sold, for wines, spirits, and beers separately Calculate the value of liquor issued to a bar, bar inventory differential, and cost of liquor consumed List possible reasons for differences between actual and standard beverage costs Calculate daily amounts for the cost of beverages sold, beverage cost percentages, and cost percentages for wines, spirits, and beers separately Determine standard beverage cost for a given period Calculate potential sales value per bottle for beverages sold by the straight drink Determine a mixed drink differential and use it to adjust potential sales values Calculate potential sales values using the actual sales record method and the average sales value method 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.

Monitoring Beverage Operations Cost: determine the cost of beverages sold compare 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

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” Compare results to Standard and Actual Costs

Monitoring Beverage Operations The Liquid Measure Approach Ounce-control method Daily inventory and determine ounces sold Manually is labour intensive Automated is effective

The Sales Value Approach Determine potential sales value per bottle compared to revenue, can be complex. 1.Actual sales record method Mixed drink differential 2.Average sales value method Use values from a sample period Allow for some variance from actual 3.Standard deviation method An acceptable range is established

Potential Sales Values 1.Determine bottle size and drink size. 2.Calculate drinks per bottle. 3.Multiply drinks per bottle by drink price to get sales value per bottle. Example Bottle size: 1 litre; Drink size: 1 ounce 33.8 drinks per bottle 33.8 × $3.00 = $101.40

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

Cost Percent Formulas Value of beverages issued to the bar +/–Inventory differential =Cost of beverages consumed (beverage cost) 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

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 Generally accepted turnover rates: Spirits—1.5 Beers—2.0

Key Terms Actual sales record method, p. 428 Average sales value method, p. 430 Beverage cost percent, p. 415 Cost per dollar of sale, p. 412 Cost percents, p. 413 Food and beverage transfers, p. 415 Inventory differential, p. 414 Mixed drink differential, p. 428 Ounce-control method, p. 426 Potential sales value, p. 426 Standard cost method, p. 424 Turnover rate, p. 435

Chapter Web Links Accubar: inventory.aspwww.accubar.com/Products/banquet- inventory.asp BarVision: Liquid Control Solutions: Alcohol Controls:

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