Lesson 2 - Pour cost %
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
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%|