Controlling Beverage Costs For Your Restaurant

Restaurants that serve just about any type of beverage can usually benefit from beverage costing, but restaurants that serve alcoholic beverages are the best candidates for beverage costing analysis for increased profitability.

Beverages are one of the easier ways to maximize profits for your restaurant due to the lower costs and far greater profit margins than with food.

How To Calculate Beverage Costs

Similar to calculating food costs, you need to designate a time frame where you will analyze the beverage costs for your restaurant. This can be one week, one month or several months. Typically, the longer time you allow for analysis, the better and more accurate the information you will gain from the report. Usually, non alcoholic beverages like soda, coffee, juice, water etc, are not included in your beverage costing calculations, instead these should be included in your food costing analysis.

After the reporting period, you’ll then need to total the beverage sales for each variety of beverage, such as beer, wine, mixed drinks, etc. You’ll then need to figure out your total beverage purchases from that same time period, which will be your cost of beverage sales. You’ll then need to determine your inventory adjustment. This means you compare the inventory at the end of your reporting period to the inventory at the very beginning of the reporting period. For instance, if the beginning inventory level for whiskey is $250, and at the end of the reporting period, the inventory level is valued at $170, then the inventory adjustment is the $80 difference.

You then apply this difference to the total purchases for the reporting period, thus giving you your total cost for beverage sales. Then you can figure out your beverage cost percentage by using the National Restaurant Association’s calculation method, which is “Beverage Cost = Cost of Beverage Sales/Beverage Sales”. Once you have this information, you can analyze your total sales and costs and make adjustments for increasing profit and efficiency. Typical figures for a restaurant’s beverage cost percentage are 30% – 32%. You can then compare the performance during the reporting period to previous performances and this will allow you to identify any problems or trends, thus allowing you to tightly control and decrease beverage costs.

Further Controlling Beverage Costs

There are some additional ways to control beverage costs, however, including restocking only as needed bottle by bottle, keeping tight control of inventory with proper theft controls, implementing a consistent method for your bartenders to complete sales and update tabs swiftly, utilizing accurate pouring methods and using consistent drink recipes.

In addition, beverage costing can be done in conjunction with proper food costing, excellent software available for this task includes Cost Genie, available at CostGenie.com.

Lydia Quinn writes for R & I Solutions, makers of Cost Genie restaurant costing software. Get a free demo at: http://www.costgenie.com