MONITORING BEVERAGE

OPERATIONS
Chapter 16

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 Ways to Monitor
Beverage Production
• 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 remote location

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 Approaches for Monitoring
Beverage Operations
1. The Cost Approach 3. The Sales Value
• Cost percent methods Approach
• Monthly calculations
• Actual sales record
• Cost calculations by
category method
• Daily calculations • Average sales value
method
2. The Liquid Measure
Approach • Standard deviation
• Ounce-control method method

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 Cost Percent Formulas
and Equations

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

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 Cost Percent Formulas
and Equations

Value of beverages issued to the bar

+/– Inventory differential
= Cost of beverages consumed

Beverage cost percentage = Beverage cost ÷ Beverage sales

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
Adjustments to Beverage Cost
Added to beverage cost
• Food to bar (directs)
• Storeroom issues
• Mixers
Subtracted from beverage cost
• Managers’ drinks
• Special promotions

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 How to Calculate Bottle
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 (page 466)

Bottle size: 1 liter; drink size: 1 ounce
33.8 drinks per bottle
33.8 × $3.00 = $101.40

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved
 Inventory Turnover
1. Average inventory = (Opening inventory
+ Closing inventory) ÷ 2
2. Turnover rate = Cost of beverages sold
for a period ÷ Average inventory for the
period
Generally accepted turnover rates
Spirits—1.5
Beers—2.0

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved