control system for bar

Establish control system

Bar is one of the major revenue-generating areas fetching greater margin of profits. It tempts the dishonest staff to indulge in malpractices. If proper control system is not established, there will be huge pilferage of revenue and drinks. The objective of the control system is to monitor the actual and potential sales and costs for the bar or each bar if the establishment operates more than one and to take corrective action if the actual is deviating from the standards set. Control is a continuous process calling for close monitoring.

LOG BOOK SYSTEMS

Each Food & Beverage department will have its own Log Book.
The Log Book is an overnight communication tool from the previous day/evening events to the Senior Management Team.
Procedure
A Log Book will be assigned to each manager and each individual department of the Food and Beverage Division.  It will have a different page for each day of the year.
The outlet manager must fill in daily the highlights of the days activities.
It will include sections like:
1. Revenues of the day in comparison with the budget
2. Covers and average checks of different meal periods
3. Guest comments and problems/complaints with guest
4. Special sales activities and results
5. Bottle sales
6. Comments on Housekeeping and POMEC problems
The Log Book will be submitted to Room Service after closing of the last meal period of the day. Room Service will deposit all Log Books to F&B Office by 8 a.m. the following morning

The F&B Office is to review the Log Books the following morning, take action on comments, sign and return them to the outlets.

BAR RECORDS AND CONTROL

There are many method of beverage control and the method chosen must be cost effective and save the purpose. Control process involves many records that should be properly updated and maintained by the bar staff. Control system must cover all the areas of operation from purchasing, receiving, storing, issuing, preparation of drinks, standard yields, standard recipes, standard pouring, order taking and billing. Most bars use computerized system as it is easier to obtain performance report  quickly and reduces the labour and numerical error.
All receipts and sales should be supported with the documents to ensure strict control as ever, stock is accounted for. The absence of stock should mean that it is converted to revenue.
(Stock in hand in the beginning of the day) + (Receipts during the day) - (Stock at the end of the day) should be equivalent to (sales value of the drinks consumed)
Any shortage should be investigated. The bar must work out standard cost price for various portions for each drink on offer and its selling price. The percentage may vary from bar to bar. Gross profit is sales-beverage cost. It is advisable to work out the standard cost for sizes, such as 10 ml, 15 ml, etc. which are used chiefly in cocktail preparation.

Standard cost and Selling price

standard cost and selling price

Table shows standard cost and selling price to earn the gross profit of 70 %.
Following are the basic methods and procedure to be followed in beverage control

COMPARING ACTUAL STANDARD COST

In this method, the actual cost of a bar is compared with the standard cost for a set period of time which may be 1 week, 15 days, or 1 month. Before implementing this system, it is assumed that all the drinks are poured and made according to the standard established. The number of drinks sold during the period is multiplied by its recipe or standard cost and by its selling price. The actual cost for that period is calculated as follows.
(Opening stock + Requisition + Transfer in) - (Transfer out + Closing stock)
= Cost of beverage consumed
The difference between the 'standard' and 'actual' should not be more than 0.5 per cent. Any variance higher than this value should be investigated. The actual cost is normally more than the standard cost since the standard cost is calculated based on perfect bar tending/condition which may not be the same during the busy operations.
It should be remembered to adjust the cost and revenue of the full bottle sales before comparing the actual with standard cost as the full bottles are sold at less price than if its contents were sold individually.
It should also be noted that the sales mix will affect the standard cost and for each period the standard cost percentage may vary because of varying sales mix. It will remain the same if the sales mix remained the same, which is practically not possible.

standard cost control form

standard cost control format
Table illustrates the standard cost calculation and the comparison.
The difference between standard and actual is less than 0.05 % , hence it does not need investigation

ANALYSING THE CONSUMPTION AND THE COST

The consumption of various liquors should be analysed daily and at the end of a set period ,The daily consumption of all the liquors are monitored and recorded for effective control. Drinks are used in the making of cocktails and straight drinks. At the end of the day's operations, the sales record is analysed to see the consumption of liquors for cocktails and straight drinks and the balance is physically verified. If there is difference between the book record and physical stock, it should be thoroughly verified- For ex ample, according to the book record, the balance should be 4 full bottles but the physical verification shows five full bottles and vice versa. Both are serious problems which should be taken up for investigation. The requisition for supply is made for next day's operation to maintain the par stock level.

BEVERAGE CONTROL REPORT

The bar may prepare bar control report which records-daily requisition, transfer ins and outs, closing stock, sales, beverage cost, and cumulative cost percentage for monitoring the daily performance this helps the management to get into remedial action and investigation if the cost escalates or deviate more than the variance allowance permitted
Table illustrates the calculation of beverage cost, beverage cost percentage, sales and cumulative cost percentage.
Beverage control report

beverage control report

The explanation of columns (from left to right) in table
• Date
• Day
• Opening stock at the beginning of the day which is equivalent to closing stock of previous day
• Value of supply received from the cellar against the requisition
• It is the total of columns 3 and 4
• Transfer in-records the value of goods received from kitchen and other places against the  requisition
• Transfer outs value of goods sent out of bar to other places against requisition.
• Closing stock value of stock at the end of day which will be the opening balance for the next day.
It is the cost of beverages sold (5 + 6) - (7 + 8)
 Beverage sales of the day
Beverage cost percentage = cost per portion ÷ beverage sales x 100
Running total of beverage cost till date
Running total of beverage sales till date
                                                                  Cumulative cost of beverages
Beverage cost percentage as on date = ___________________________ x 100
                                                                   Cumulative beverages sales
Verification: (figures in thousands)
Opening stock: 40
Requisitions 497
Transfer in 64
Total: 601
Less:
Transfer out: 87
Closing stock: 40
Total: 127
Cost of beverages sold (601 - 127) = Rs    474
Beverage cost percentage at the end of the week = 29.63
It is within the pre-determined percentage.
Record of consumption of cocktails
The various kinds of cocktails and their quantities used for preparation of cocktails can be calculated from the sales record and the standard recipes.
Record of consumption of liquor for cocktails

Record of consumption of cocktails

The various kinds of cocktails and their quantities used for preparation of cocktails can be calculated from the sales record and the standard recipes.

record of consumption of liquor for cocktails

Daily consumption record

This record shows the daily consumption of liquors offered in the bar. The first column carries names of all the liquors. If the establishment procures bottles of different sizes, then the size must be mentioned against it. Second column shows the par stock level for each drink which is predetermined. Third column reveals consumption of drinks in the preparation of straight drinks and the fourth column shows the consumption in cocktail. Fifth column shows the total consumption of the liquors. Sixth column shows the stock in hand as per the record which is found out by deducting the consumption from the par stock. In the seventh column, the actual stock is recorded after physically verifying. If there is deviation between the stock as per record and the actual stock, investigation should be initiated.
Daily monitoring of stock consumption and verification controls the pilferage to a larger extent.
Record of daily consumption of liquor

record of daily consumption of liquor

POTENTIAL SALES VALUE

Fixing up potential sales value (PSV) for each spirit bottle makes the beverage control easier. Potential sales value of each bottle should be calculated so at to know if the bar has earned the revenue for the stock consumed. The rev ease value of each bottle is calculated based on

• The content of bottle
• Drink size
• Number of drinks per bottle
• The selling price for each drink

This sales value is termed as a potential sales value. As and when the bottle size or the drink size changes, new PSV should be found out for full spirit bottle and for spirits sold by measures.
PSV for full spirit bottles
It  is the selling price of a full bottle of spirit fixed by the management  to earn a certain amount of profit percentage which is predetermined. The value will be less than the PSV of spirit sold by measures  since the sale of bottles do not involve much of handling and service procedure.
PSV for spirits sold by measures
It is calculated as follows.
Potential sales value of a bottle of Scotch whisky sold by measures, keeping 25ml as a drink size, would be calculated as given in the following:
Size of a bottle        1 litre
Size of a straight drink 25ml
Selling price per drinks 180
Number of drinks per bottle   40
(1000ml/25ml)
PSV        = Number of drinks x selling price
                                               = 40x 180 = rs.7200
While fixing op the selling price, consider the cost of mixers per drink. Rs.180 includes the cost of mixers as soda, tonic wafer, cola, etc.
Let us sum up that the bar has sold 87 scotch drinks. It means the bar has used up 2 full bottles (87drinks/40 drinks per bottle) and taken 7 drinks from the third bottle.
The revenue should be equivalent to = (2 bottles x 7200) + (7 drinks x 180) = 14,400 + 1260 = rs.15,660. Anything less than this value either means pilferage or spillage which calls for investigation. If by accident a bottle is broken, rs.7200 goes into drain which is a huge loss.

Weighted Average Value

If all the drinks are sold straight, the calculations of PSV will be easy. In reality, bartenders will be making cocktails that call for two or more ingredients. The ingredients are used according to the standard recipe established beforehand. In this situation, a weighted average drink size and the sales price are determined.
The weighted average sales adjustment for Scotch would be calculated as given in the following.
Drinks   Qty required (ml) Numbers sold Total Qty (ml)
1 20               12 240
2 40               20 800
3 30               16 480
4 50                18 900
Total                 2420
2420ml divided by 66 drinks = 36.6ml average requirement/drink
Drinks          Price Numbers sold Total sales
1                   150 12 1,800
2            300 20 6.000
3            230 16 3,680
4            360 18 6,480
Total         66 17,960
Rs. 17,960 divided by 66 drinks = rs.272 average price/drink
1000 ml divided by 36.6ml average drink size = 27.3 average drink/1000ml bottle
Adjusted sales value of a bottle = rs.272 x 27.3 drinks = rs.7432 per bottle

Par Stock or Bottle Control

Par stock is a useful control device. Par stock is stock levels established by the management for various drinks in the bar. At any given point of time, the number of bottles present in the bar should neither be more nor less than the par stock. For example, if the par stock level of Johnnie Walker Black label is 15 bottles, anytime of the day's operation the bar should have only 15 bottles, out of which some bottles may be empty, few partly empty, and others full. The stock should be taken at the end of the day's operation for making requisition for next day. Suppose if the status of the stock of Johnnie Walker is 4 empty, 1 half full, and 10 full, the head bartender will make requisition for 4 Johnnie Walker bottles which will be collected next day from the cellar on returning those four empty bottles. Now the stock will be 14 full bottles and 1 half full. This system prevents sneaking the personal bottles in. Usually, par stock is 1 ½  times a normal day's consumption though it may cover several days consumption depending on the area available for storing the bottles in the bar and volume and frequency with which bars are to be restocked. Par stock will be established for all the bottled drinks. Especially alcoholic drinks offered in the bar.

Requisitions

Beverages should be collected from the cellar against the authorized requisition during the hours specified which is generally in the morning. The bartender should collect all empty bottles at the end of the day, sort, and keep them ready for returning next day morning. These empty bottles form the basis for requisitioning. For example, if there are 10 empty bottles of VAT 69, and 5 empty bottles of Remy Martin, then the requisition should be made for those empty bottles. All requisitions should be made in triplicate and signed by the head barman or the person in charge of the bar. Empty bottles must be returned to the cellar along with the requisition slip while collecting the full bottles.

Inter bar Transfer

In establishments, where there are more bars operating, sometimes the beverages may be transferred from one bar to another as and when required. Such transfers should be recorded and authorized so that the costs and revenues can be adjusted to arrive at a meaningful result of each bar. The cost of the transfer out must be deducted from the total cost of the bar transferring and added to the cost of the bar receiving the stock

inter bar transfer

Format of inter bar transfer


When transferring full bottles from one bar to another, the par stock of the issuing bar will be low since the bottles are sent out to some other bar and when this bar wants to collect fresh stock from the cellar it will not be able to return the empty bottles. To avoid this problem, the management may follow any of the following methods.
• The cellar will be using the tamper proof colour stickers at the back of the bottle while issuing the bottles. These stickers not only differentiate the bottles of various bars but also control the unauthorized or illegal movement of bottles from one bar to another. The colour may be decided by the cellar in charge. Let us assume there are three bars—Bar A, Bar B, and Bar C. Bar A bottles may have blue sticker, Bar B bottles red sticker, and Bar C bottles green sticker. In this case, whenever inter-bar transfer occurs, the bottles of the transferring bar can be returned to the bar after some period of time or directly to the cellar since the origin of bottles can be easily known.
• In the place where sticker method is not followed, the bar requesting full bottles from another bar, should request so against the empty bottles which will maintain the par stock of the bars.
Separating Full Bottle Sales
Sometimes, the guests want to order for full bottles from the bar, especially in room service and function catering. The price of the full bottles is normally less than the total price of the drinks of the bottle sold individually. In this case, it is better to separate the revenue generated through sale of full bottles as this will affect overall bar profit, beverage cost, etc. which will affect the performance analysis of the bar.

Spillage Allowance, Breakage, and Spoilage

Some percentage of allowance is permitted for spillage as it is not practical in a busy bar to expect every- drop of a bottle to be made into cash. Sometimes, the drinks are wrongly mixed and thrown away, over poured, etc. To compensate for such losses, a spillage allowance is declared officially. For every  bottle, a spillage allowance of 25ml may be given. If a generous spillage is allowed, this may tempt the bartenders to take advantage for personal benefit. However, whether or not the spillage allowance is permitted and if permitted how much is the quantity, should be determined by the management. In a place where electronic dispenser system is used, spillage allowance may not be necessary. The absence of spillage allowance makes the bartenders to be very careful.
If a bottle is broken, the bar in-charge or bar manager should return the neck of the broken bottle to the cellar man together with the authorized requisition with the word 'breakage' clearly marked for fresh supply. Same is the system followed for spoilage.