Overall Beverage Costs

Beverage cost needs to be broken down into the following categories:

  • Wine Cost
  • Liquor Cost
  • Beer Cost
  • Beverage Cost

Formula: Net purchases/ Net Sales = Total Cost

It is equally imperative to cost out the beverage menus to ensure targeted goals are being met. Next, monitor the costs to make sure the restaurant is hitting acceptable percentages. The following are some suggestions to help control beverage costs:

  • Raise Prices.
  • Use spotters to help prevent theft at the bar.
  • Cost out the beverage menu.
  • Use pre-measured pours.
  • Install a keg counter. It will count the number of beers sold out of the keg. This is another good way to minimize theft.
  • Formalize a wine program.
  • Set up a purchase order system.
  • Negotiate prices with vendors for bulk buying. Take vendor discounts when offered.
  • Organize the storage room and keep inventory levels to a minimum.
  • Purchase based on a budget.
  • Link beverage managers√≠ bonuses to pre-set percentages.

Hopefully, these tips will help control the cost of goods percentages. However, do not lose sight over the contribution dollars. For example, which dish should an operator sell? Chicken with a $5.00 profit and a 25% food cost or steak with a $10.00 profit and a 35% food cost? Although the chicken sounds more appealing, the correct response is steak. Think about it, would you rather have $5.00 profits or $10.00 profits? The odds are that a customer will only order one entree, yet, the operatorís rent and payroll remain fixed, no matter what the customer orders. So opt for selling the steak and take the $10.00 gross profit over the $5.00 gross profit. The operator can make up the percentage by having a higher sales figure and a lower payroll percentage.

Another example is wine. A $50.00 bottle of wine may cost an operator $25.00. Even though the bottle of wine has a 50% cost, where else on the menu could the operator make a $25.00 gross profit?