Actual F&B Costs

1

CALCULATING ACTUAL FOOD &

BEVERAGE COST

Food & Beverage Management III YearPrepared By: Bhavin Parekh

2

Chapter Outline Actual Food & Beverage Costs:

Monthly Calculationsa) Cost of Salesb) Sources of Information for Basic Cost

of Salesc) Calculating the Value of Inventoryd) Adjustments to Basic Cost of Sales

3

Chapter Outline Actual Food Cost: Daily

Calculationsa) Components of Daily Food Costsb) Sources of Actual Daily Food Cost

Informationc) Calculating Actual Daily Food

Cost Information

4

Chapter Outline Computerized Pre / Post Costing

Software Actual Beverage Cost: Daily

Calculationsa) Principles for Calculating Actual Daily

Beverage Costsb) Procedures for Calculating Daily Beverage

Costs Averaging Shift Costs Bartender Performance Review

5

Objectives Calculate the Basic Monthly Cost

of Sales for Food & Beverage. Use the FIFO Method to calculate

the Inventory Value. Use the LIFO Method to calculate

the Inventory Value.

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Objectives Use the Weighted Average

Method to calculate Inventory Value. Identify Adjustments to calculate a

monthly Net Cost of Sales for F&B. Identify factors that affect daily

calculations of actual food and beverage costs.

7

Introduction Why do we calculate the Actual

Food & Beverage Costs?

We compute Actual F&B Costs so that we can compare them to Standard Costs (Obtained from Analyzing F&B Sales Report over a Period of Time) or Planned Costs (Obtained from Projections in the Budget).

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Introduction Rules relating to computation of

Actual Food & Beverage Costs:

Why do we require them?

In the computation of Actual F&B Costs we need to follow certain rules so that the Actual Costs are comparable to Standard Costs / Planned Costs.

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Introduction Rules relating to computation

of Actual Food & Beverage Costs:

RULE 1

The Actual Costs must be stated in the same manner as the Standard Costs / Planned Costs.

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Rule 1 – Example:

If the Standard Food Costs are expressed as a % of the Revenue, then the Actual Food Cost must also be expressed in the same terms. This allows ease of comparison between them.

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Rule 2

Actual Costs and Standard Costs must be computed for the same meal period. This will make the Costs truly comparable.

12



RULE 2 – Example:

If Standard Costs are expressed as a % of Revenue across all Meal Periods, then the Actual Costs should not be computed as a % of Revenue individually for Breakfast, Lunch and Dinner.

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RULE 3

Factors used in the Computation of Standard Food Costs must also be used in the computation of Actual Food Costs.

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RULE 3 – Example:

If you have not deducted the Cost of Employee Meals in the Calculation of Standard Costs, then the same must be followed for the computation of Actual Costs.

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Introduction The Computation of Actual Costs

must be on a timely basis. The Reason for this is because

Decision Makers must know as early as possible if and to what extent Actual Costs differ from Planned and Standard Costs.

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Introduction Accuracy Factor:

The Actual Cost computation must be accurate.

Why Accuracy is required?

Accuracy in Actual Cost Computation is important because good decisions cannot be based on inaccurate Cost information.

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Introduction How much time would you spend on

computing accurate Actual Costs?

Managers must be able to justify the time they spend on generating & collecting increasingly accurate Cost related information.

A decision must be made as to how much time they need to spend collecting Cost related information. You have to evaluate the above in terms of CBA – COST BENEFIT ANALYSIS.

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Actual F&B Costs – Monthly Calculations Computations of Actual F&B Costs

are based on the same set of information used to develop Financial Operating Statements.

Financial Operating Statements are developed periodically – mainly on a monthly basis or a Quarterly Basis.

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Actual F&B Costs – Monthly Calculations

Defining the Cost of Sales:

It is defined as the Cost of F&B incurred to produce all Food and Beverage sold during an accounting period.

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Generally the Income Statement will express Cost of Sales as Total Dollars.

The Cost of Sales is also represented as a % of the Total Revenue or Sales.

(Refer: Sample Income Statement in the format of Uniform System of Accounting {USA} approved by the NRA – National Restaurant Association).

6500 0.50

116610 9.06

OPERATING EXPENSES

GROSS PROFIT

COST of SALE

Repairs and MaintenanceRent

Administrative and General

SALE

Operating Income

Income Before I.T.

FoodBeverage

Total Sales

Other Operating ExpensesTotal Operating Expemses

Interest

Utility Services

123110

FoodBeverage

Total Gross Profit

77250735650

9020039000

Salaries and WagesEmployee Benefits

FoodBeverage

3860025800

257501300

669500

Music and EntertainmentMarketing

7.013.036.0057.14

0.102.003.002.00

67

30.004.00

20100

35

38625051500

189260858760

36050068240428740

73

2733

65

Sample Income StatementAmount %

9.56

Total Cost of Sale

1030000 80257500

1287500

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Actual F&B Costs – Monthly Calculations Inference from the Sample Income

Statement:

a) 35% of the Food Revenue was used to Purchase Food Products necessary to Generate Food Revenue.

b) 27% of the Beverage Revenue was used to Purchase Beverage Products necessary to Generate Beverage Revenue.

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The Uniform System of Accounting (USA) recommends a Format that a Food Department in a Lodging Property can use to gain relevant financial information. (Sample of the Format shown on MS - Excel)

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Actual F&B Costs – Monthly Calculations Cost of Sales: The Basic Calculations

The Basic Cost of Sales for F&B is computed as follows:

Cost of Sales = Beginning Inventory

+ Purchases – Closing Inventory

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Actual F&B Costs – Monthly Calculations Cost of Sales: The Basic CalculationsExample of computing 1) Cost of Food

Sales: Food BeverageBeginning Inventory = $ 124500$36800 Purchases = $ 85000 $29500Closing Inventory = $ 112250$27500Cost Of Sales = $ 97250 $ 38800

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Actual F&B Costs – Monthly Calculations Cost of Sales: The Basic

Calculations

Example of Computing 2) F&B Cost %

Cost of Sales x 100

Food / Beverage Cost % =

Total Revenue

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Example of Computing 2) Food Cost %

Food Cost % = Cost of Food Sales x 100Food Revenue

= $ 97250 x 100 $ 284500 = 34.18%

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Example of Computing 2) Beverage Cost %

Beverage Cost % = Cost of Beverage x 100 Beverage Revenue = $ 38800 x 100 $ 154500 = $ 25.11 %

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Sources Of Information for Basic Cost of Sales

Required Informatio

n

Cost Of Sales: Food

Cost of Sales: Beverage

Beginning Inventory

Physical Inventory Forms (Last Month)

Physical Inventory Forms (Last Month)

+ Purchases

Daily Receiving Report (DRR)

Daily Receiving Report (DRR)

- Closing Inventory

Physical Inventory Forms (End of Current Month)

Physical Inventory Forms (End of Current Month)

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Sources of Information for Basic Cost of Sales:

For Purchases

The Value of F&B Purchases for the month can

be obtained from the sum of the Daily Receiving Reports (DRR) for the corresponding period.

b) Delivery Invoices may be attached to these documents.

c) If all DRRs are completed correctly they will separate all Food and Beverage Purchases.

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For Purchases

If the DRRs are not used by a Food & Beverage Operation the Value of the Total Purchases over a certain period would be represented by the Sum of the Delivery Invoices during that period.

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Actual F&B Costs – Monthly Calculations Sources of Information for Basic

Cost of Sales:

For Closing Inventory

The Values of Ending Inventories / Closing Inventories can be directly taken from a Physical Inventory form.

Remember the Importance of Consistency in the following:

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Actual F&B Costs – Monthly Calculations Sources of Information for Basic Cost of

Sales: For Closing Inventory (Cont’d)…

a) The method used to compute the Cost of Inventory Items

b) Decisions such as how to treat the Value of Food Supplies in Workstations and the Value of Open Bottles behind the bar.

c) Whether items in Broken Cases, miscellaneous Storage Areas, or in the Process are to considered as a part of Inventory

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For Closing Inventory – Computation of Value

Since Closing Inventory is essential in the computation of Actual Costs, it’s computation must be consistent and accurate.

There are essentially 4 methods of Inventory Valuation.

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FIFO Method Basic Definition:

FIFO stands for First In First Out.

Approach to Inventory Valuation:

The FIFO approach assigns the first or least recent Product Costs to ISSUES – in other words, it values issues in the order in which the costs were incurred.

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FIFO Method


That is, since the least recent product costs were applied to the Products that were issued, the most recent Product Costs are applied to the Products left in the Inventory.

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FIFO Explained Diagrammatically

STORES

B$2.2

A$2.0

C$2.4

D$2.6

A$2.0

B$2.2

Receiving Issuing

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Numerical Example on FIFO:

At the end of August 2005, there were 28 cases of BBQ Sauce in the stores valued at $22.00/case. Hence, as on 1 September 2005, the Beginning Inventory of BBQ Sauce will be 28 cases.

During the month of September, the Stores Received 15 cases of BBQ Sauce valued at $ 23.80/case.

At the end of the month, the Physical Inventory Count reveals 20 cases available with the stores.

What will be the Value of the BBQ Sauce in our Inventory???

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Opening Stock =28 Cases Purchases =15 Cases + Total Stock =43 Cases Closing Stock =20 Cases -

Total Consumption =23 Cases

In order to compute Closing Inventory, we would have to find the valuation of the 20 cases available in the stores.

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STORES

28BBQ

$22.0

15BBQ

$23.8

23BBQ

$22.0Receiving Issuing

Opening Inventor

y

20BBQ

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As per the FIFO approach, least recent costs are assigned to the issues, therefore:

No. of cases with a unit value of $22.00/case= 5 Cost of Inventory = 5 x $ 22.00/case = $ 110.00

No. of cases with a unit value of $23.80/case=15 Cost of Inventory = 15 x $ 23.80 = $ 357.00

Hence, Closing Inventory Value = $110.00 + $ 357.00

= $ 467.00

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LIFO Method Basic Definition:

LIFO stands for Last In First Out.


The LIFO approach assigns the last or the most recent Product Costs to issues. Consequently, the most recent Product Costs were applied to the Products that were issued, hence the least recent Product Costs are applied to Products in the Inventory.

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LIFO Explained Diagrammatically

STORES

B$2.2

A$2.0

C$2.4

D$2.6

D$2.6

C$2.4

Receiving Issuing

44


Numerical Example on LIFO:

Using the same figures as in the above example we try to compute the Value of Closing Inventory by the LIFO Method:

Opening Stock =28 Cases Purchases =15 Cases + Total Stock =43 Cases Closing Stock =20 Cases -

Total Consumption =23 Cases

In order to compute Closing Inventory, we would have to find the valuation of the 20 cases available in the stores.

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STORES

28BBQ

$22.0

15BBQ

$23.8

15BBQ

$23.80+8

BBQ$22.0

Receiving Issuing

Opening Inventor

y

20BBQ

Balance

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Numerical Example on LIFO:

As per the LIFO approach, the most recent costs are assigned to the issues.

No. of cases with unit value $23.80/case = 0 No. of cases with unit value $22.00/case = 28 - 8

= 20 Hence Cost of Inventory = 20 x $ 22.00

= $ 440.00 Hence, Closing Inventory Value = $ 440.00

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Actual F&B Costs – Monthly Calculations Actual Cost Method

The Value of the Inventory is the Total Value represented by summing the Individual Unit Costs.

If the Actual Cost Method were used, then each case of BBQ Sauce would be dated and marked with it’s Actual Purchase Price and Receiving Date, before it is entered into storage.

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Actual Cost Method

In such a case, the Closing Inventory Value would be determined by physically counting the number of cases of BBQ Sauce at each Purchase Price.

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Issuing under Actual Cost Method

STORES

B$2.2

A$2.0

C$2.4

D$2.6

D$2.6

C$2.4

Receiving Issuing

A$2.0

B$2.2

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Numerical Example of Actual Cost Method:

Let us assume that, according to an actual count made at the end of the month, there are:

14 Cases of BBQ @ $ 22.00 /case 06 Cases of BBQ @ $ 23.80 /case Hence Value of Closing Inventory: = (14 x $ 22.00) + (06 x $23.80) = $ 446.48

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STORES

28BBQ

$22.0

15BBQ

$23.8

14BBQ

$22.00+9

BBQ$23.80

Receiving Issuing

Opening Inventor

y

20BBQ

Balance

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Weighted Average Method

This method determines the Value of Inventory by multiplying the number of cases remaining in the inventory at the end of the month by the Average Price paid per case paid during the month.

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Actual F&B Costs – Monthly Calculations Numerical Example of Weighted Average Method

Beginning Inventory = 28 Cases Purchases = 15 Cases Total Stock = 43 Cases Therefore, Beginning Inventory Value = 28 x $ 22.00/case =

$616.00 Purchase Value = 15 x $ 23.80/case =

$357.00 Total Stock Value = $973.00 Average Price/Case = $973.00 / 43 = $ 22.63

Hence, Value of Closing Inventory = 20 Cases x $ 22.63 = $452.56

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Comparison of Inventory Valuations by Different Methods:

FIFO Method: $467.00 LIFO Method: $440.00 Actual Cost Method: $465.00 Weighted Average Method: $452.60

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Actual F&B Costs – Monthly Calculations Inference:a) From the comparisons drawn between

the Inventory Valuation Methods, the Method employed has a significant impact on the Value of the Inventory.

b) Hence it is upon the Head of F&B Operations to determine the Method to employ for Inventory Valuation and then to follow the same CONSISTENTLY.

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Inventory Counting Procedures As a Control Measure Inventory

counting should be assigned to a personnel who is not responsible for Daily Inventory / Storage Practices.

In large properties, it is the F&B Manager with the Accountant who carry out this task.

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Adjustments to Basic Cost of Sales:

Computation of the Cost of Sales with reasonable accuracy, helps to tell us how much we have spent on Food & Beverage (Cost Incurred) in order to generate the Revenue.

Why are adjustments required? In order to make the Cost of Sales more meaningful,

as the Unadjusted Cost of Sales also includes Costs not directly related to generating Revenue.

Example: Employee Meals (Free / Subsidized)

Adjustments to Cost of SalesCost of Sales: Food Cost of Sales:

BeverageValue of Beginning Inventory+ Purchases- Value of Closing Inventory

Value of Beginning Inventory+Purchases-Value of Closing Inventory

Unadjusted Cost of Food Sales

Unadjusted Cost of Food Sales

-- Transfers from Kitchen+ Transfer to Kitchen-- Cost of Employee Meals-- Complimentary Meals

BeverageFood

Labor

Promos.

-- Transfers from Bar+ Transfer to Bar-- Complimentary Meals

FoodBeverage

Promos.

Net Cost of Food Sales

Net Cost of Beverage Sales

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Food Transfers: These are Transfers from the Kitchen to

the bar and will result in the decrease of Food Costs.

Example: Pineapples being transferred to the Bar to be used as a Garnish for Pina Colada. Since, the Pineapple aids in the generation of Beverage Revenue, it is charged to Beverage Cost.

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Beverage Transfers:

These are transfers from the Bar to the Kitchen. These help in reducing the Cost of Sales of Beverage.

Example:

Transfer of a Bottle of Wine from the Bar to the Kitchen in order to prepare a sauce. The Wine aids generate Food Revenue and hence must be charged to Cost of Food.

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Transfer Memos:

When adjustments are made for Cost of Transfers (Food or Beverage), a Food / Beverage Transfer Memo is used as the Source Document.

A Memo is completed each time products are transferred between the Food and Beverage Departments.

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Transfer Memos: (cont’d…)

Transfer Memos can be held till the end of the Accounting Period, when all Transfers are added and the Adjustments made in the Cost of Sales.

Effect:

Transfers made to the Food Department will increase the Cost of Food and decrease the Cost of Beverage by the same amount and vice versa.

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Sample Food & Beverage Transfer Memo

Name of EmployeeIssuing

Reveiving

666Beverage

Issued From: FoodBeverage

Date:Issued To: Food Memo No.

Unit Quantity Cost / Unit Total CostItem Name

House Wine - RedLondon Pilsner Beer

35035

Total Cost

Bottle 2 175Bottle 1 35

385

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Employee Meals:

Employee Meal Costs are usually calculated by Multiplying a Fixed Amount (representing the Average Food Cost per Meal) by the No. of Employee Meals served.

This Cost may be deducted from the Cost of Food Sales and charged to Labor or Employee Benefit Cost.

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Complimentary Food & Beverage:

Complimentary Food & Drinks provided to prospective Guests touring the operation or for other purposes might reasonably be considered a Marketing Cost.

In the above case, the Cost of F&B Sales can be reduced and the amount deducted can be Debited to Marketing Account.

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Actual Food Cost – Daily Calculation

Why do we require to compute Actual Food Costs on a Daily Basis?

Monthly computation of Actual F&B Costs is sufficient to yield information required for generating monthly Accounting Statements.

However, for the purpose of greater control, some F&B Operations want more timely information about Actual Costs against which they want to compare the Standard Costs / Planned Costs.

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Components of Daily Food Cost:

Daily Food Cost

Directs Stores

Highly Perishable Items – Meats / Dairy Produce

Inventory Items / Can be Stored for a

longer time

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Directs: Typical Characteristics:

Directs are typically inexpensive and highly perishable products.

They are purchased more or less daily and for immediate use.

Directs are charged to Food Cost on the day they are received even if they are not consumed on the same day. They are entered into the They are entered into the DRR and assessed daily.DRR and assessed daily.

Example: Dairy Products like Milk / Cream / Curd / Cheese.

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STORES: Typical Characteristics:

Stores are charged to Food Costs as they are issued. These items are also perishable, however, they can be stored for a longer period of time than Directs.

Since, these items are purchased on the basis of Anticipated Need rather than Immediate Need, they are purchased in effect for inventory.

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STORES: Typical Characteristics:

When received, these items are recorded in the DRR and then sent to the Stores. When required for Production, these items are withdrawn from Stores through the Issuing Process (By means of filling up a Requisition Form).

Example: Canned Products, Flour, Sugar, Lentils, Frozen Products etc.

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Direct Items Receiving Area

Entered into DRR

Issued To Production

Areas

Processed for Consumption

DRR EntriesSummed

Daily

1 Component of Food Cost

Cycle of Directs: Receiving to Consumption

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Store Items Receiving Area

Entered into DRR

Sent toStores

Segregated& Stored

Issued to Production AreaBy Requisitions

Requisitions Summed Monthly

2 Component of Food Cost

Cycle of Stores: Receiving to Consumption

Processed for Consumption

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1-Sep-2005 385.15 176.85 562.00 25.25 52.52 534.73 534.73 1500.00 1500.00 35.65 35.652-Sep-2005 370.80 110.15 480.95 75.57 57.57 498.95 1033.68 1525.00 3025.00 32.72 34.173-Sep-2005 355.60 125.75 481.35 77.00 18.00 540.35 1574.03 1675.00 4700.00 32.26 33.494-Sep-2005 395.70 115.25 510.95 65.25 56.52 519.68 2093.71 1475.00 6175.00 35.23 33.915-Sep-2005 400.04 88.58 488.62 55.35 35.55 508.42 2602.13 1577.00 7752.00 32.24 33.576-Sep-2005 415.16 96.25 511.41 33.53 53.33 491.61 3093.74 1652.00 9404.00 29.76 32.907-Sep-2005 365.75 165.85 531.60 22.52 52.22 501.90 3595.64 1578.00 10982.00 31.81 32.748-Sep-2005 395.28 128.75 524.03 100.12 12.10 612.05 4207.69 1654.00 12636.00 37.00 33.309-Sep-2005 377.73 177.37 555.10 33.25 20.25 568.10 4775.79 1522.00 14158.00 37.33 33.73

10-Sep-2005 337.37 133.73 471.10 45.65 65.45 451.30 5227.09 1457.00 15615.00 30.97 33.47

Less Adjustments

Daily Food Cost Food Cost %Storeroom

IssuesDirects

Total Food Cost

Add Adjustments

Today To - Date

Sample Daily Food Cost Worksheet

Today To - Date

Food Revenue

Today To - Date

DateCost of

Source:Monthly Summation of Requisitions

Source: Daily DRR

Summations

Adjustments to Cost of Sales

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Computer Applications to Calculating Actual Cost of

Sales

The existence of an Ingredient File, Recipe File and a Menu Item File enables the development of effective Pre-Cost (Prior to Service) and Post Cost (After Service) calculations.

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Computer Applications to Calculating Actual Cost of Sales

The Ingredient File contains a list of all Purchased Ingredients (Food Items) with their Purchase Costs.

The Recipe File holds the formulations of ingredients needed to produce the Operation’s Menu Items.

The Menu Item File contains Sales related information of Menu Items for a F&B Operation.

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Pre-Cost Analysis:- Pre-Costing as the name suggests is done

prior to a meal period.

- It helps the F&B Operator to accurately evaluate a meal plan in relation to the budgetary constraints before service.

- The Pre-Cost Analysis produces projected Cost Data based upon application of Ingredient Costs across Recipe offerings.

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Pre–Costing Analysis: An Example: Assume, Papa Mario’s Diner is making a new TDH

menu for the week. He plans to have a choice of 4 Entrées on the Menu in order to offer a greater choice to his clientele.

The Entrées are: Tenderloin Tips Steak Spaghetti Lobster Tail

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Pre–Costing Analysis: An Example: The Pre-Costing Software that Papa Mario’s Diner uses,

computes his Food Pre-Cost as $ 753.57 for a Sales Mix based upon Forecasted Servings.

Analysis: This could be beyond the Budgetary Constraints and Papa Mario’s could take corrective action in order to reduce his Meal Period Food Pre – Cost to stay in the limits of Budgetary Constraints in order to achieved Projected Profit Level.

Action: In this case, Papa Mario’s Diner could take up eliminate a High Food Cost Item from the Menu and substitute it with a Lower Food Cost Item / Higher Contribution Margin Item in order to achieve the Projected Profitability.

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Post-Cost Analysis:

There are two types of Post – Cost Analysis, each performed with Actual Counts but with differing Food (Recipe Costs).

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Post-Cost Analysis: Type 1:

Immediately after a Meal Period, the Actual Sales Counts are multiplied with the Standard Recipe Costs of Menu Items to produce an ideal Food Cost.

(Similar to Pre-Cost Analysis, only differing in the fact that the Sales Counts are not Forecasted but Actual).

Source of Sales Counts could be obtained from the POS Systems.

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Post-Cost Analysis: Type 2:

After the Meal Period, a Physical Inventory of the Food Store is taken. In this manner, Actual Consumption can be determined.

The Consumption Figures are then fed into the Recipe Management Software which would generate Actual Costs with the help of previously constructed data files (Ingredient File / Recipe File).

A$ 2.50

B$ 5.00

C$ 3.89

D$ 7.00

25

57

63

23

Forecasted Sales

753.57

Pre-Costing

If Food Pre – Cost is higher than Budgeted, then change

Menu Item to Low Food Cost ones

A$ 2.50

B$ 4.25

C$ 3.89

D$ 5.5

Items can be either

Substituted, Accompaniments can be reduced or made inexpensive,

Portion Size reduced

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Actual Beverage Costs – Daily Calculations

The Beverage Manager like the Food Manager has access to monthly Cost of Sales Information.

A more timely information about Beverage Cost of Sales would help in better Controls.

If a method can be designed to provide a reasonably accurate Beverage Cost on a day to day basis, which is not to time consuming, then it would aid in the Manager in better Bar Control and Beverage Management.

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Calculation of Daily Beverage Costs: Let us start by computing Beverage Costs per shift. Referring to the sample format in the next slide –

Step 1 The Bartender takes his Opening Inventory. This is a Physical Count of Bar Stock. This must tally with the Closing Inventory of the previous Bartender.

Step 2 The Bartender then adds on any Issues from the Stores during his Shift in order to meet his Par Stock requirements.

Step 3 The Total of Step 1 and Step 2 give the Bartender his Total Bar Stock for his shift.

Step 4 During the Shift, the Bartender may cater to several requests for Beverages – Spirits / Wines / Beers / Liqueurs etc. This constitutes to his Sales.

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Calculation of Daily Beverage Costs: Step 5 Total Item wise sale can be determined

by taking a Item Sale Report from the POS System or can be determined manually by recording each B.O.T. (Beverage Order Ticket).

Step 6 At the end of the Shift, the Bartender, computes the Ideal Consumption (Opening Stock – Sales) for his Shift.

Step 7 This Sale is then multiplied by the Unit Product Costs to obtain a Total Ideal Shift Cost.

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Step 8 The Bartender also take a Physical Inventory of his Stock and then computes the Actual Consumption (Opening Inventory – Closing Inventory).

Since, Sale is defined as Opening Inventory – Closing inventory, we are Computing Actual Sale and when multiplied by Unit Product Costs we arrive at Actual Cost of Beverage Sale.

Ideally, both must tally but they generally do not because there are always Spillages / Accidents / Orders Returned leading to Wastage etc.

This finally leads us to the Cost of Beverage per Shift.

Shift Sign Date:Morning BSPEvening

Night

JW Red Label 4.5 1 5.5 2.15 40 2.35 2200 3 2.5 2666.68JW Black Label JW Gold LabelJW Blue LabelJack Daniels J&B Jet 12 Yr. OldJ&B RareChivas Regal Jim BeamBallantine Famous GrouseRoyal Salute 21 Yr. Old

VODKAStolichnayaAbsolut Smirnoff

Note: One Full Bottle is represented by 1. Each Bottle has a Standard Capacity of 750 ml. A standard Measure is 30 ml. Hence each bottle must yield 25 Standard Measures. In case 3 Standard Measure Pegs are consumed from a Bottle of Ballantine's then it wo

Note: Total Cost of each Bottle is known to us. This is the Purchase Price of the Bottle. If the Bottle Yields 30 Standard Measures, then the Cost of each Measure can be computed. Example: If the Bottle of Ballantine's Cost INR. 1200/= then the Standard M

Name of ProductOpening

Stock

-466.68

Actual Costs

Remarks on Variance

Sales (Consumption)

Product Unit

Costs

Ideal Balance

Ideal Cost of

Beverage

Sample Inventory Sheet - Dispense Bar23-09-05

Actual Balance

RequistionsTotal Stock

Name of Bar TenderBhavin Parekh

Actual Consumption

Opening Stock

Requisitions

Total Stock

Sales

Ideal Closing Inventory

Unit Product CostsIdeal Cost of Sale

Standard Beverage Costs

Actual Closing Inventory

Actual Consumption

Unit Product

Cost

Actual Beverage Costs

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Averaging Shift Cost:

In large Multiple Beverage Outlet Operations, the Actual Beverage Costs for each bar are recorded on a consolidated summary along with the Revenue generated. This would give us the overall Actual Beverage Cost on a daily / weekly / monthly basis.

(Refer to the Consolidated Actual Cost of Beverage Sale Format in the next slide).

9/1/2005 82.15 410.75 125.15 585.75 88.00 465.00 295.30 295.30 1461.50 1461.50 20.219/2/2005 92.50 415.80 163.35 625.00 110.00 565.35 365.85 661.15 1606.15 3067.65 22.78

Cost Revenue Cost Revenue

Beverage Revenue Beverage Cost %

Today MTD Today

Sample Beverage Cost Worksheet for a Multiple Bar OperationsDate

Bar: Carousel Bar: Orient Bar: Boomerang Beverage Cost

Cost Revenue Today MTD

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Bartender Performance Review:

Computing Actual Cost of Beverage Sales on a Daily Basis and Shift wise would evaluate the Bartender’s Performance in terms of his technical skill knowledge of the Bar Operations.

The Shift wise Cost of Beverage Sales for a Bartender could be recorded for a week and the an Average Cost of Sales can be calculated.

This Average Cost of Sales for a particular Bartender is then compared against other Bartenders working in the same bar. This gives us a Quantitative Evaluation criteria during Performance Evaluation and can also help the Manager identify Training Needs and enforce better Control Techniques in case he suspects Theft and Misuse.

(Refer to Bartender Performance Review Format)

Date Bar % Date Bar % Date Bar % Date Bar %9/1/2005 Carousel 21.83 9/1/2005 Lounge 23.07 9/1/2005 Orient 22.75 9/1/2005 Pool Bar 20.999/2/2005 Orient 22.24 9/2/2005 Carousel 20.88 9/2/2005 Pool Bar 21.5 9/2/2005 Lounge 22.89

Sample Bartenders' Performace ReviewJoe Sam Sid Raj

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References Food & Beverage Controls – By Jack Ninemeier

(American Hotel and Lodging Association– AH&LA Publication)

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Linking to Next Chapter

Control Analysis, Corrective Action & Evaluation of Your Operations

Actual F&B Costs

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