Having a bar is great, but handling the logistics can be a challenging task, especially if you own more than one bar. Food and beverage cost control is one of the essential aspects of every bar because it allows you to control and monitor your operating budget. Keeping the aforementioned budget under control is crucial both for the success of your business and your financial stability.
If you’re not sure how to manage food and beverage costs, take a moment and check out some of the points we’ve made in this article.
Here are a few examples of how to control food costs:
Check the Profitability of Your Recipes
The first, and probably the most crucial step you should consider taking is to check the profitability of your recipes. Having great food on the menu is definitely a big advantage, but the pricing should be meticulously adjusted so that each meal yields a profit because otherwise, you’ll end up losing more and more of your operating budget.
On top of that, you should also keep the price fluctuation of ingredients in mind. Make sure you check out the prices of the ingredients somewhat frequently to avoid financial losses.
Large vendors will usually notify you, one way or another, when they change the price of a particular item. However, the vast majority of them won’t because it’s not practical for them to cater to every business they are dealing with.
Therefore, it is of utmost importance that you keep an eye on the vendor’s prices and account for any sudden changes. A $3 price increase on a gallon of beer might not seem as much, but if you sell dozens or hundreds of gallons on a monthly basis, it’s going to affect your profit.
Fight Against Overpouring
While excess pouring doesn’t immediately seem like bad practice, it can be quite damaging for the business, especially on a large scale. Overpouring a couple of cocktails won’t have a massively detrimental effect on your profits, but it adds up quickly and can become a serious issue.
In order to mitigate this predicament, you should incorporate jiggers or ball pourers. Both are very simple and easy to use tools, so you don’t have to worry about staff training.
Supervise and Control the Inventory
Even though you can easily hire a person to do the inventory management for you, having a good look at it from time to time will prevent unpleasant and unforeseen scenarios. A simple comparison of sales against the inventory will help you to identify any discrepancies, in case you have any suspicions.
If you stumble upon any irregularities, it’s probably a good idea to start an internal investigation and see how many members of your staff have access to the ledger reports.
Categorize Your Profits and Losses
Food and beverages cost control is much easier if you properly categorize profit and loss ledgers and mirror this breakdown to your point of sale product category breakdown. In other words, instead of calculating product sales and profit margins from food and beverages combined, divide your menu mix into multiple cost centers and product categories (e.g., food and beverage)
You can break down the categories further into, for example, alcoholic and non-alcoholic drinks for an even more detailed insight into the financial gains and losses.
Utilize Smart Technologies
Both modern bar equipment and the accompanying software are designed to be efficient, easy to use, and most importantly – they make cost management a piece of cake. Having older and somewhat obsolete equipment isn’t a disaster per se, but upgrading the infrastructure should be high on your to-do list.