This document discusses various methods for monitoring beverage operations in the food and beverage industry. It outlines calculating monthly beverage costs through inventory values and comparing actual costs to standards. It also describes calculating the value of liquor issued to bars and the cost of liquor consumed using inventory differentials. Finally, it summarizes several techniques for cost appropriation, including the standard cost method, ounce control method, and actual sales record method.

1. Monitoring Beverage
Operations
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2. Recap of the Previous session
• What are the 2 primary objectives of
beverage production control.
• Describe the use of standardized
glassware in beverage production control.
• Describe 2 approaches commonly used to
train bartenders to follow established
standards and procedures.
p
• List 4 techniques used in monitoring
performance of Bartenders.
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3. KCM of Monitoring Beverage
Operations
O i
• Identify the three general approaches to
monitoring beverage operations.
• Calculate the value of liquor issued to the
bar inventory differential and cost of liquor
consumed.
consumed
• Calculate daily, weekly and monthly costs
thru the inventory values and compare
th th i t l d
between actual and standard.
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4. Scope
• The Cost Percent Methods
Methods.
• Monthly Calculations.
• Th issues of Central Beverage Stores
The i fC t lB St
and Bars.
• Bar Inventory Differential.
• The Cost approach.
pp
• The Sales approach.
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5. The Cost Percent Methods
• Standard 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 ounces
sold against ounces consumed.
• Actual sales Record: Comparing Potential
sales value of beverages consumed with
actual sales value recorded.
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6. Basis of Calculations
• Based on Monthly Calculations
• C t calculations b C t
Cost l l ti by Category.
• Daily Calculations.
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7. Monthly Calculations
• A physical inventory of the storage area is
taken after the close of business on the
last day of the month
month.
• The number of bottles of each item in
stock is counted and the value of each
counted,
item is determined by means of one of
five methods for inventory valuation
valuation.
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8. Inventory Valuation methods
applied
li d
1.
1 Actual purchase price methodmethod.
2. First - in, first - out method.
3. Weighted
3 W i ht d - average purchase price
h i
method.
4. Latest purchase price method.
5. Last - in, first - out method.
,
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9. The issues of Central Beverage
Stores and B
S d Bars
• The Central stores issues beverages to all
satellite bars.
• Example:
Opening beverage inventory $3,201.80
+Beverage purchases this month $3,666.80
= Total available for sale this month $6,868.60
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10. Bar Inventory Differential
Total available for sale this month $6,868.60
— Closing inventory this month $3,875.40
= Value 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
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11. Using Bar Inventory differential
Value of beverages issued to the bar $2,993.20
g $ ,
+ Inventory differential $165.30
= Cost of beverages consumed
g $3,158.50
,
Beverage cost
• Beverage cost percentage = ——————
Beverage sales
• $3 1 8 0 = 26 44%
$3,158.50 26.44%
$ 11,945.60
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12. Adjustments to Beverage Cost
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13. Cost Calculation by Category
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14. Representing cost on daily basis
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15. Methods for cost appropriation
• The Standard cost method.
• The O
Th Ounce control method.
t l th d
• The sales value method.
• The Actual sales record method.
• The Average sales value method
method.
• The standard deviation method.
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16. The Standard Cost method
1. The Standard cost of every shot of spirit
is derived.
2. The standard cost of every shot is later
multiplied with # of units sold.
3. The total standard cost is derived.
4. The Total standard cost is compared to
actual cost derived from consumption thru
inventory.
5. The difference is potential savings.
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17. The Standard Cost method
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18. The Standard Cost method
• The Standard cost is compared with the
actual cost derived from the inventory:
Actual cost $4,098.90
— St d d cost
Standard t 3,947.85
3 947 85
= Difference $ 151.05
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19. The Ounce control Method
1. 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 of
ounces sold each day with number of
ounces consumed each day. y
3. Ideally the ounces consumed should be
ounces sold.
4. However variance i always th
4 H i is l there d t
due to
Evaporation, spillage, pilferage and
breakage unless malpractice is affirmed.
g p
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20. The Sales Value Method
1. The method involves first calculation of
sales revenue generated by each bottle of
spirit.
2.
2 The drink size by capacity is taken
taken.
3. Total # of drinks per bottle are appropriated
which 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
33 8 oz and th cost i $ 3 00
d the t is 3.00.
5. Then the sales value per bottle is $ 101.40
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21. The Sales Value Method
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22. The Sales Value Method
• Sales value of 1 liter of gin = $ 108 00
108.00
Number of ounces in 1 liter = 33.80
$ 108 00
108.00
• Sales value per ounce = ——— = $3.20
33.8
33 8
• Sales value of 1.25 ounces of gin = 1.25 x
$ 3.20 = $ 4.00
3 20 4 00
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23. Using the actual sales record
method
h d
• This method is largely applied to mixed
drinks.
• This method first involves calculating drink
differential.
• The primary ingredient of the drink is taken
into consideration.
• Mixed Drink differential is the monetary
difference between the primary ingredient
and the mixer.
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24. Calculating Potential sales value
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25. Using the actual sales record
method
h d
• Also defined as the difference between the
sales price of a given drink and the sales
value of the primary ingredient if sold as a
straight shot.
• In the representation on page 24 the
differential values for a mixed drinks is
drawn then totaled and finally removed
from the used sale of empty bottles.
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26. Analysis of actual sales of Gin
SNO 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 $ 1770.00
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27. Average Sales Value Method
• The method eliminates the need for daily
sales analysis and daily calculation of a
net mixed drink differential
differential.
• As illustrated on page 26 the potential
sales value of a bottle of Gin is $
1770.00/330 Ounces = $ 5.36 for one
ounce of Gin
Gin.
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28. ASV method use
Item Bottle Size Average Potential
Sales Value
Dover Gin 1 liter $ 95.99
Old Kentucky Rye 1 liter $ 97.38
Loch Ness Scotch
L hN S t h 750 ml
l $ 82.60
$ 82 60
Lenin Vodka 1 liter $ 92.57
Burble’s brandy 750 ml $ 85.75
Item Bottles Consumed x Sale Value per Total Sales Value
Bottle
Dover Gin
Dover Gin 3x $ 95.99
3x $ 95 99 $ 287.97
$ 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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29. Questions
Q ti
Comments
C t
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