Looking ahead to restaurant costs in 2012

Posted by ianmara on Dec 29, 2011 in Bar Cost Control | 0 comments

One of the major concerns for the bar and restaurant industry this past year was a dramatic increase in food and beverage costs. A five percent (or more) hike with some areas hindered what some feel was a year of recovery.

An article this month from Nation’s Restaurant News paints a not-so-rosy picture of what to expect in terms of cost in 2012. NRN cites one study that expects a “year-over-year cost” increase of between three and five percent, while another predicted a jump in U.S. food and beverage costs to jump five percent or more.

This will obviously create a problem in an environment where customers remain concerned with menu prices. Drew Madsen, who is CEO of Darden Restaurants, Inc. (Olive Garden, Red Lobster, LongHorn Steakhouse) put it this way:

“The fundamental strategic challenge we face this year is how to address the growing need for affordability that’s demanded by our guests, while also protecting our margins, given significant commodity cost inflation.”

Darden said his company’s plan is to look at ways it can trim costs in order to limit the need for price increases on the menu.

(NRN)

Operations Tip: Comparing Ideal, Actual and Purchased Costs to Sales

Posted by ianmara on Dec 19, 2011 in Bar Management | 1 comment

Guest Post by Chuck Deibel, Senior Partner at BEVINCO

Often Bar operators will calculate what their costs should be by dividing their purchases by their sales.  This is a flawed method.  This paper provides the actual numbers for purchases, sales and costs used for 3 weeks to show how this doesn’t provide accurate information.

As you might recall the calculation for each is as follows”

Actual Pour Cost percentage (APC) is arrived at by dividing the cost of the inventory used by the sales.  The cost of the inventory used is arrived at by adding the purchases to the previous inventory and then subtracting the ending inventory from that sum.  So it’s Beginning Inventory, plus purchases subtract ending inventory.

Ideal Pour Cost percentage (IPC) is arrived at by dividing the cost of the inventory sold by the sales.  The cost of the inventory sold is arrived at by adding the cost of the inventory sold, plus the cost of any comps or spills.

Read more..

Operations Tip: Profit Analysis Simplified

Posted by ianmara on Dec 12, 2011 in Bar Management | 1 comment

Guest Post by Chuck Deibel, Senior Partner at BEVINCO

Is looking at just the change in your Pour Cost percentage enough to determine how much more profitable it is to reduce your lost sales and missing inventory?

Look at the following simple example.  Whether it’s bottles of beer, shots of liquor, glasses of wine or pints of draft beer, the use of the analysis method and interpretation on profit is the same.

Bottles of domestic beer are used at a cost of 65 cents each.  They are to be sold for $3.00 each.  The ideal cost percentage is .65/3.00 = 21.67%

WEEK ONE

10 bottles of beer are used, which results in costs of $6.50.
8 bottles of beer are sold, which results in sales of $24.00.
The actual cost percentage is 27.1%
The ideal cost percentage is 21.67%
The efficiency rating is 80%
The loss at cost is $1.30
The loss of revenue is $6.00.  Profit is $17.50

Read more..

The 10 Myths That Can Cost You 20% of Your Profits

Posted by barblog on May 19, 2010 in Bar Management | 1 comment

I had a great conversation with the legendary Bevinco Partner in Columbus, Ohio, Charles Deibel last week.

He was telling me a number of myths that he hears every day when working with Bar Owners assisting with their inventory control.

It never ceases to amaze him or me just how many different ways, ideas and myths exist around the calculation of selling prices, calculation of profit margins and the identification of theft. These are expensive myths. As much as 20% of profits is being lost because of an incorrectly held belief in a system!

As our conversation deepened we agreed that we had to share these myths, ideas and strategies on a webinar so that everyone could join in and find out for themselves if they are employing some of these tactics in their business and don’t realise it.

What would it mean to you to increase profits by 20%?

What would it mean knowing that you were getting the maximum profit from each drink served and that you could leave your bar in the hands of your managers knowing that you had a system to check their accuracy later?

We’ll cover all of this and more on our Webinar on Wednesday May 26th.

I think some of the Myths we’ve encountered are going to really surprise you.

In any case, we’ll have a solution to each myth on the webinar and you will leave the webinar armed with informaiton to increase your profits!

You will need to register to attend this online presentation which we promise to keep brief and informative!

Reserve your Webinar seat now at:
https://www1.gotomeeting.com/register/718101264

I look forward to welcoming you to our presentation.

Title:           The Top 10 Myths That Cost Bar Owners 20% of Their Profits

Date:          Wednesday, May 26, 2010

Time:         4:00 PM EST

Video: How To Manage Your Bar Between Inventories

Posted by barblog on Mar 23, 2010 in Bar Cost Control, Bar Management, bar owner | 1 comment

In another in my series of videos from the Nightclub & Bar Show in Las Vegas, I am bringing you my interview with Brian Pohl, a Bevinco partner from Dayton, Ohio who has some unique suggestions for bar owners on how to drive their profits.

For example, what a Top 10 Drinks List can do for your bottom line, how to manage your stock between inventories and what the effect can be on your business if you don’t know the cost of your ingredients. Read more..