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

2. Learning Objectives
16.1 Identify the three general approaches to monitoring beverage operations.
16.2 Calculate monthly amounts for the cost of beverages sold, cost percentages, and beverage cost percentages for wines, spirits, and beers separately.
16.3 Calculate the value of liquor issued to a bar, bar inventory differential, and cost of liquor consumed, and beverage cost percent.
16.4 List possible reasons for differences between actual and standard beverage costs.
16.5 Calculate daily amounts for the cost of beverages sold, beverage cost percentages, and cost percentages for wines, spirits, and beers separately.
16.6 Determine standard beverage cost for a given period.
16.7 Calculate potential sales value per bottle for beverages sold by the straight drink.
16.8 Determine a mixed drink differential and use it to adjust potential sales values.
16.9 Calculate potential sales values using the average sales value method.
16.10 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.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

3. Monitoring Beverage Operations
Cost:
determine the cost of beverages sold compared 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
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

4. 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
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

5. Cost Percent Formulas = Beverage cost Beverage cost percentage
Value of beverages issued to the bar
+/– Inventory differential
= Cost of beverages consumed (beverage cost)
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition
Beverage cost percentage =
Beverage cost
Beverage sales

6. 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
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

7. 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”
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

8. Monitoring Beverage Operations
Standard Cost Method
Compare actual costs and standard costs
Most effective with POS
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

9. Monitoring Beverage Operations
The Liquid Measure Approach
Ounce-control method
Daily inventory and determine ounces sold
Manual system takes labour
Automated is effective
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

10. Potential Sales Values
Determine bottle size and drink size.
Calculate drinks per bottle.
Multiply drinks per bottle by drink price to get sales value per bottle.
Example
Bottle size: 1 litre (35.1 ounces)
Drink size: 1 ¼ ounce
28 drinks per bottle
28 × $4.00 = $112.00
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

11. The Sales Value Approach
Determine potential sales value per bottle compared to revenue, can be complex.
Actual sales record method
Mixed drink differential
Average sales value method
Use values from a sample period
Allow for some variance from actual
Standard deviation method
An acceptable range is established
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

12. Opening inventory + Closing inventory
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
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition
Generally accepted turnover rates:
Spirits—1.5
Beers—2.0

13. Key Terms Actual sales record method, p. 431
Average sales value method, p. 434
Beverage cost percent, p. 419
Cost percents, p. 417
Cost per dollar of sale, p. 416
Food and beverage transfers, p. 419
Inventory differential, p. 418
Mixed drink differential, p. 431
Ounce-control method, p. 429
Potential sales value, p. 430
Standard cost method, p. 428
Turnover rate, p. 438
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

14. Chapter Web Links Accubar:
BarVision:
Alcohol Controls:
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

15. Copyright
Copyright © 2014 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition