We touched on usage in Lesson 2 on pour cost. Here we drill into it in more detail and how it relates to cost-of-goods-sold (cogs).
Usage & COGS Usage Usage is the amount of stock used from one period to the next. It is expressed in quantitiy terms (number-of-individual-units used) and tells you what was used during a particular period.
Usage is made up of the following:
We start with pour cost as this is perhaps the single most important metric with regards to tracking & assessing the performance of your beverage program. Most Bars & Restaurants will track (or calculate) pour cost at least once a month and will benchmark versus an internal target and/or their peers.
It is typical to keep track of total pour cost and pour cost per product type (e.g. Beer, Spirits, Wine, Beverage Other.
This is the first in a series of posts that will cover the basics of stock control and usage/cogs in the context of Beverage Management. Having worked with countless Bars & Restaurants over the past couple of years, it’s evident that things are often more complex than needs be and that some of the core principles are not that well otherstood.
Our goal is to distill stock control and usage/cogs down to their basics and to give you the knowledge & tools needed to run your venue like a pro.
Spreadsheets are great. Since their debut in the 1970s they have become an indispensable part of business and a ubiquitous tool for analysing data, informing decisions, and getting work done.
First impressions count. And for a Bar or Restaurant, this can mean anything from aesthetics to general ambiance to the friendliness of wait staff. It also likely includes your menu. The menu is the first insight a customer has into your products and speaks to the style & personality of your venue.
We all know we shouldn’t judge a book by it’s cover yet it happens. Menu design is important!
Purchase products can have multiple prices and their prices can change often. Tracking these price changes and the actual price paid for a product is important for a number of reasons. If prices increase, you would want to know this as soon as possible and assess the impact.
Can I bear the higher cost? Do I need to increases sales prices? Should negotiate with the current supplier or seek out new ones?
Keeping track of Bar & Restaurant stock is easier said that than done. Frequent deliveries, lots of storage areas, transfers to/from the kitchen and other venues and inevitable shrinkage (e.g. breakage and comps) makes for many moving parts!
It’s important that you have processes in place to track all of this and take stock on a regular basis. Stock Control Workflow
Here, at Barsumo, we have thought about all this in great detail and recommend the following simple yet effective workflow.
There are many ways to digitise your invoices and the best, in our opinion, is to start with the original purchase order(s) related to each invoice. Why’s that? Well, for starters, by comparing the original purchase order with the actual invoice you can easily identify
Errorenous quantities or missing products Substitutes that perhaps weren’t communicated Price changes Discounts & promos Unexpected charges e.g. case breakage fees and delivery charges because your order was below minimum This does, of course, require you to keep a live record of what was ordered.
What are PARs and how should I set them? PAR stands for Periodic Automatic Replenishment. PAR levels (PARs) are essentially a safety stock level intended to ensure you don’t go stock-out and have to call an 86 (i.e. “off menu!”)
PARs are useful for a number of reasons and are best calculated based on historical usage, taking seasonal variations into account.
PARs help to Take the guesswork out of ordering Remove the dependency on staff intuition (which might be on vacation!
