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.)

How do I calculate pour cost?

In simple terms,

Pour cost = usage/sales

where

Usage = opening count + purchases (less returns) + transfers-in - transfers-out - closing count

Pour cost is expressed as a percentage of sales and as sales is reported in value terms, we must report usage in the same. Thus, the question, how do I value usage?

This might seem like a simple question but there is more to it than meets the eye. First, you need to decide how to value your stock-on-hand e.g. FiFo, LiFo, WAC. This in-turn requires you to have a detailed audit trail of quantities purchased and at what price point.

We will cover these topics in more detail in the next lesson, Lession 3 - Usage & COGS

For, we just note that the value of usage is called cost-of-goods-sold (COGS). Hence,

Pour cost % = (COGS/Sales)*100

What are typical pour cost?

The following pour costs can be used as a guide. It is recommended to benchmark versus peers in the same area/region to get a better sense of how well your Bar or Restaurant is performing.

Product type Pour cost%
Overall (total) 20%
Beer 20%
Spirits 15%
Wine 22%