Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition

 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

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

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

Added to beverage cost  Food to bar (directs)  Storeroom issues  Mixers Subtracted from beverage cost  Managers’ drinks  Special promotions

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

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 © John Wiley & Sons, Inc. 2009