Beverage Cost Control System and Analysis
Beverage Cost Control System and Analysis
Beverage Cost Control System and Analysis
Transparency 13-1
Fermentation: Natural, chemical
process by means of which sugars in
a liquid are converted to ethyl
alcohol and carbon dioxide
Distillation: Process by means of
which alcohol is evaporated from a
fermented liquid and then
condensed and collected as a liquid
Transparency 13-2
To maintain an appropriate supply of
ingredients for producing beverage
products
To ensure that the quality of
ingredients purchased is appropriate
to intended use
To insure that ingredients are
purchased at optimum prices
Transparency 13-3
Frequency with which management chooses to
place orders
Storage space available
Funds available for inventory purchases
Delivery schedules set by purveyors
Minimum order requirements set by purveyors
Price discounts for volume orders
Price specials available
Limited availability of some items
Transparency 13-4
License states: States in which
beverage wholesalers (and
sometimes manufacturers and
distributors) are allowed to sell
alcoholic beverages directly to
foodservice establishments
Control states: States in which the
state government actually sells
some or all alcoholic beverages
through its own network of stores,
thus exercising complete control
Transparency 13-5
Quantity of an item delivered must
equal the quantity ordered
Quality of an item delivered must be
the same as the quality ordered
Price on the invoice for each item
delivered should be the same as the
price quoted or listed when the order
was placed
Transparency 14-1
1. Maintain an up-to-date file of all
beverage orders placed
2. Remove the record of an order
from the file when a delivery arrives
and compare it to the invoice
presented by the delivery driver
3. Before the driver leaves, check
brands, dates, or both, and count or
weigh delivered goods
4. Compare the invoice to the order
Transparency 14-2
5.Call to the attention of management and the
delivery driver any broken or leaking containers
and any bottles with broken seals or missing
labels
6.Note all discrepancies between delivered goods
and the invoice on the invoice itself
7.Sign the original invoice and return it to the
driver.
8.Record the invoice on the beverage receiving
report
9.Notify the person responsible for storing
beverages that a delivery has been received
Transparency 14-2 (cont’d)
Prevent pilferage
Ensure accessibility when products
are needed
Preserve quality
Transparency 14-3
Assign the responsibility for the
stored items to a single employee
Keep the beverage-storage facility
locked at all times
Transparency 14-4
To ensure the timely release of
beverages from inventory in the
needed quantities
To prevent the misuse of alcoholic
beverages between release from
inventory and delivery to the bar
Transparency 14-5
Standards
Carefully set issue quantities
Issue beverages only to authorized
people
Standard Procedures
Establish par stocks for bars
Set up a requisition system
Transparency 14-6
To ensure that all drinks are
prepared according to
management’s specifications
To guard against excessive costs
that can develop in the production
process
Transparency 15-1
Shot glass (plain or lined)
Jigger
Pourer
Automated dispenser
Transparency 15-2
Method I
1.Total number of ounces in bottle ÷ Standard
portion size (ounces) = Number of drinks per
bottle
2.Cost of bottle ÷ Result from Step 1 = Standard
drink cost
Method II
1.Cost of bottle ÷ Total number of ounces in bottle
= Cost per ounce
2.Result from Step 1 × Standard portion size =
Standard drink cost
Transparency 15-3
Each card should include:
Name of drink
Drink sales price
Drink cost
Cost percent
Quantity and cost of Individual Ingredients
Total quantity and cost of mixed drink
Type of glassware
Recipe procedure
Transparency 15-4
Management observes bar
operations
Designated employee observes
others working at the bar and
reports back to management
Individuals unknown to the
bartender visit the bar, observe
employees, and report back to
management
Closed-circuit television systems
permit observation from some Transparency 15-5
1.The Cost Approach
Cost percent methods
Monthly calculations
Cost calculations by category
Daily calculations
2.The Liquid Measure Approach
Ounce-control method
3.The Sales Value Approach
Actual sales record method
Average sales value method
Standard deviation method
Transparency 16-1
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
Value of beverages issued to the bar
+/– Inventory differential
= Cost of beverages consumed
Beverage cost percentage = Beverage cost ÷ Beverage
sales
Transparency 16-2
Added to beverage cost
Food to bar (directs)
Storeroom issues
Mixers
Subtracted from beverage cost
Managers’ drinks
Special promotions
Transparency 16-3
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 liter; drink size: 1 ounce
33.8 drinks per bottle
33.8 × $3.00 = $101.40
Transparency 16-4
By comparing the price of the alcohol sold as straight drinks to the
price of the mixed drink, a more accurate picture of potential sales
values emerges
Transparency 16-5
To find the differential:
Sales value of bottle of alcohol ÷ Number of ounces in
bottle = sales value/ounce
Sales value/ounce x Number of ounces in mixed drink =
Sales value of alcohol sold as straight drinks
If sales value of alcohol sold as straight drinks > sales price
of mixed drink, then the difference between the two figures
is the negative mixed drink differential
If sales value of alcohol sold at straight drinks < sales price
of mixed drink, then the difference between the two figures
is the positive mixed drink differential
Finally, multiply the +/– differential by the number of
mixed drinks sold to determine the adjusted total bottle
sales value for spirits
Transparency 16-6
Optimize the number of sales
Maximize profit
Control revenue
Transparency 17-1
To socialize
To conduct business
To eat
To enjoy entertainment
To relax or kill time
Transparency 17-2
Establishing drink prices that will
maximize gross profit
Influencing customers’ selections
Transparency 17-3
Dram shop laws are state statutes
that hold the serving establishment
and the server financially liable for
damages to third parties resulting
from the serving of alcoholic
beverages to intoxicated customers
Given these laws and changing
social attitudes that encourage
responsible drinking, managers try
to optimize sales rather thanTransparency 17-4
Working with an open cash drawer
Under-ringing sales
Overcharging customers
Undercharging customers
Overpouring
Underpouring
Diluting bottle contents
Bringing one’s own bottle into the bar
Charging for drinks not served
Drinking on the job
Transparency 17-5
Current Compensation
o Direct: salaries, wages, tips, bonuses,
commissions
o Indirect: paid vacations, health benefits, life
insurance, free meals, free living
accommodations, use of employer-operated
recreational facilities, discounts on
accommodations at other properties within a
chain
Deferred Compensation
o Pension benefits
o Social Security
Transparency 18-1
Labor turnover rate Layout
Training Preparation
Labor legislation Service
Labor contracts Menu
Use of part-time staff
Outsourcing
Hours of operation
Sales volume
Weather
Location Competent
Equipment management
Transparency 18-2
Labor turnover rate = Number of
departing employees ÷ Total
number of employees on staff
Break-even for staying open an
additional hour = Fixed costs ÷ (1 –
Variable rate)
Transparency 18-3
With all full-time staff:
Transparency 18-4
With full-time and part-time staff:
Full-time dishwashers
Wages: 2 dishwashers × 35 hours × $7 per hour = $490
Part-time dishwashers
Wages: 10 shifts × 7 hours × $4.50 per hour = $315
Transparency 19-1
Interviews and observations are designed to
provide information about the following:
Job objectives
Specific tasks required to achieve
objectives
Performance standards
Knowledge and skills necessary
Education and experience required
Transparency 19-2
Answer three questions
What is to be done?
When is it done?
Where is it done?
Contain three parts
1.Heading that states the job title and the
department in which the job is located
2.Summary of the duties of the job (typically in
paragraph form)
3.List of the specific duties assigned to the job
Transparency 19-3
1.Determine the number of employees needed to
serve a specified number of covers in a certain
time period
Example: 8 servers for 500 covers in a three-
hour lunch period
2.Standard work hours = Number of servers ×
Number of hours
8 servers × 3 hours = 24 work hours
Transparency 19-4
Number of standard work hours × Hourly wage =
Standard cost
Example: 24 hours × $4.00 per hour = $96
standard cost
Transparency 19-5
Objectives
Approaches to training
Training methods
Instructional timetables
Location
Lesson plans
Trainer preparation
Trainee preparation
Training session(s)
Evaluation
Transparency 20-1
On-the-job versus off-the-job
Structured versus unstructured
Individual versus group
Transparency 20-2
Studies show that people tend to prefer
learning things in one of three ways:
By hearing information (oral)
By seeing information (visual)
By doing the skill (kinesthetic)
Transparency 20-3
Therefore, an effective training should use a variety of methods:
Lecture
Demonstration
Role playing
Individual assignments
Field trips
Seminars
Case studies
Panels
Programmed instruction
Transparency 20-4
1. General background
2. Specific duties of a job
3. Specific procedures for carrying
out the duties
4. Summary
Transparency 20-5
1. Customers
2. Employees
3. External
agencies/organizations/groups
4. Managers
Transparency 21-1
Government agencies
Chain organizations
Food critics
Rating organizations
Transparency 21-2
1.Meet with appropriate staff to point out the
problem and to determine its cause
2.Identify all appropriate corrective measures that
might be adopted
3.Select the best corrective measure from among
the alternatives
4.Institute the selected measure
5.Monitor performance to be sure that the
corrective measure has the desired effect
Transparency 21-3
Inadequate performance
Unsuitable standards
Inappropriate organization
Transparency 21-4
Improper materials provided to workers
Lack of required equipment or tools
Need for additional training
Inadequate management or supervision
Poor union/management relations
Personal problems away from the job
Difficulties with interpersonal relations on the job
Inadequate compensation
Illness
Poor working conditions
Improper work schedules
Transparency 21-5