Monitoring beverage operations

Monitoring Beverage Operations

Tuesday, July 05, 2011 BAC-5132 Food and Beverage Management-II-Monitoring Beverage Operations Slide 1 / 29

Recap of the Previous sessionRecap of the Previous session

• What are the 2 primary objectives ofWhat are the 2 primary objectives of beverage production control.

• Describe the use of standardizedDescribe the use of standardized glassware in beverage production control.

• Describe 2 approaches commonly used toDescribe 2 approaches commonly used to train bartenders to follow established standards and procedures.p

• List 4 techniques used in monitoring performance of Bartenders.


KCM of Monitoring Beverage O iOperations

• Identify the three general approaches toIdentify the three general approaches to monitoring beverage operations.

• Calculate the value of liquor issued to the• Calculate the value of liquor issued to the bar inventory differential and cost of liquor consumedconsumed.

• Calculate daily, weekly and monthly costs th th i t l dthru the inventory values and compare between actual and standard.


ScopeScope

• The Cost Percent MethodsThe Cost Percent Methods.• Monthly Calculations.

Th i f C t l B St• The issues of Central Beverage Stores and Bars.

• Bar Inventory Differential.• The Cost approach.pp• The Sales approach.


The Cost Percent MethodsThe Cost Percent Methods

• Standard Cost Method: Determining cost ofStandard Cost Method: Determining cost of Beverages sold and comparing with actual or standard beverage cost.g

• Ounce Control Method: Liquid measure converting to ounces and comparing ouncesconverting to ounces and comparing ounces sold against ounces consumed.

• Actual sales Record: Comparing PotentialActual sales Record: Comparing Potential sales value of beverages consumed with actual sales value recorded.


Basis of CalculationsBasis of Calculations

• Based on Monthly CalculationsBased on Monthly Calculations

C t l l ti b C t• Cost calculations by Category.

• Daily Calculations.


Monthly CalculationsMonthly Calculations

• A physical inventory of the storage area isA physical inventory of the storage area is taken after the close of business on the last day of the monthlast day of the month.

• The number of bottles of each item in stock is counted and the value of eachstock is counted, and the value of each item is determined by means of one of five methods for inventory valuationfive methods for inventory valuation.


Inventory Valuation methods li dapplied

1 Actual purchase price method1. Actual purchase price method.2. First - in, first - out method.3 W i ht d h i3. Weighted - average purchase price

method.4. Latest purchase price method.5. Last - in, first - out method.,


The issues of Central Beverage S d BStores and Bars

• The Central stores issues beverages to allThe Central stores issues beverages to all satellite bars.

• Example:• Example:Opening beverage inventory $3,201.80

+Beverage purchases this month $3,666.80= Total available for sale this month $6,868.60


Bar Inventory DifferentialBar Inventory DifferentialTotal available for sale this month $6,868.60Total available for sale this month $6,868.60— Closing inventory this month $3,875.40= Value of beverages issued to the bar $2,993.20Value of beverages issued to the bar $2,993.20

Bar inventory value at the beginning of the month y g g$1,041.50

— Bar inventory value at the end of the month$ 876.20

= Bar inventory differential $ 165.30


Using Bar Inventory differentialUsing Bar Inventory differentialValue of beverages issued to the bar $2,993.20g $ ,+ Inventory differential $165.30= Cost of beverages consumed $3,158.50g ,

Beverage cost• Beverage cost percentage = ——————

Beverage sales$3 1 8 0 26 44%• $3,158.50 = 26.44%$ 11,945.60


Adjustments to Beverage CostAdjustments to Beverage Cost


Cost Calculation by CategoryCost Calculation by Category


Representing cost on daily basisRepresenting cost on daily basis


Methods for cost appropriationMethods for cost appropriation

• The Standard cost method.Th O t l th d• The Ounce control method.

• The sales value method.• The Actual sales record method.• The Average sales value methodThe Average sales value method.• The standard deviation method.


The Standard Cost methodThe Standard Cost method

1. The Standard cost of every shot of spirit1. The Standard cost of every shot of spirit is derived.

2. The standard cost of every shot is later2. The standard cost of every shot is later multiplied with # of units sold.

3. The total standard cost is derived.3. The total standard cost is derived.4. The Total standard cost is compared to

actual cost derived from consumption thruactual cost derived from consumption thru inventory.

5. The difference is potential savings.5. The difference is potential savings.Tuesday, July 05, 2011 BAC-5132 Food and Beverage Management-II-Monitoring Beverage Operations Slide 16 / 29


• The Standard cost is compared with theThe Standard cost is compared with the actual cost derived from the inventory:

Actual cost $4,098.90St d d t 3 947 85— Standard cost 3,947.85

= Difference $ 151.05


The Ounce control MethodThe Ounce control Method1. The method is applied to only where straight pp y g

drinks are served.2. Involves taking physical inventory of bar

stock and comparing with the number ofstock and comparing with the number of ounces sold each day with number of ounces consumed each day.y

3. Ideally the ounces consumed should be ounces sold.

4 H i i l th d t4. However variance is always there due to Evaporation, spillage, pilferage and breakage unless malpractice is affirmed.g p


The Sales Value MethodThe Sales Value Method1. The method involves first calculation of

sales revenue generated by each bottle of spirit.

2 The drink size by capacity is taken2. The drink size by capacity is taken.3. Total # of drinks per bottle are appropriated

which means 1 liter bottle yields 33.8 oz andwhich means 1 liter bottle yields 33.8 oz and a 750 ml bottle yields 25.4 oz.

4. Suppose the standard drink size is 1 oz then 33 8 d th t i $ 3 0033.8 oz and the cost is $ 3.00.

5. Then the sales value per bottle is $ 101.40


The Sales Value MethodThe Sales Value Method


The Sales Value MethodThe Sales Value Method

• Sales value of 1 liter of gin = $ 108 00Sales value of 1 liter of gin = $ 108.00 Number of ounces in 1 liter = 33.80

$ 108 00$ 108.00• Sales value per ounce = ——— = $3.20

33 833.8• Sales value of 1.25 ounces of gin = 1.25 x

$ 3 20 $ 4 00$ 3.20 = $ 4.00


Using the actual sales record h dmethod

• This method is largely applied to mixedThis method is largely applied to mixed drinks.

• This method first involves calculating drinkThis method first involves calculating drink differential.

• The primary ingredient of the drink is takenThe primary ingredient of the drink is taken into consideration.

• Mixed Drink differential is the monetaryMixed Drink differential is the monetary difference between the primary ingredient and the mixer.


Calculating Potential sales value


Using the actual sales record h dmethod

• Also defined as the difference between theAlso defined as the difference between the sales price of a given drink and the sales value of the primary ingredient if sold as avalue of the primary ingredient if sold as a straight shot.

• In the representation on page 24 the• In the representation on page 24 the differential values for a mixed drinks is drawn then totaled and finally removeddrawn then totaled and finally removed from the used sale of empty bottles.


Analysis of actual sales of GinAnalysis of actual sales of GinSNO Drinks # Sold Ounces Total Drink Total

Drinks Ounces Price $ Sales $

1 Martini 90 2 180 $ 4.50 810.00

2 Straight Shots 150 1 150 $ 6.40 960.00

Totals 330 $ 1770.00Totals 330 $ 1770.00


Average Sales Value MethodAverage Sales Value Method

• The method eliminates the need for dailyThe method eliminates the need for daily sales analysis and daily calculation of a net mixed drink differentialnet mixed drink differential.

• As illustrated on page 26 the potential sales value of a bottle of Gin is $sales value of a bottle of Gin is $ 1770.00/330 Ounces = $ 5.36 for one ounce of Ginounce of Gin.


ASV method useASV method useItem Bottle Size Average Potential

Sales ValueDover Gin 1 liter $ 95.99

Old Kentucky Rye 1 liter $ 97.38

L h N S t h 750 l $ 82 60Loch Ness Scotch 750 ml $ 82.60

Lenin Vodka 1 liter $ 92.57

Burble’s brandy 750 ml $ 85.75

Item Bottles Consumed x Sale Value per Bottle

Total Sales Value

Dover Gin 3x $ 95 99 $ 287 97Dover Gin 3x $ 95.99 $ 287.97

Old Kentucky Rye 2x $ 97.38 $ 194.76

Lenin Vodka 2 x $ 92.57 $ 185.14

Total $ 667.87


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Monitoring beverage operations

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