Shrink Your Shrinkage - 10 Tips to Reducing Beverage Cost of Sales

What is Beverage Cost of Sales? Beverage Cost of Sales is typically recorded as a percentage. The total cost of the items sold divided by the total sales (excluding tax) from beverage sales. There is always a battle between controlling costs and increasing sales and the flair that is usually the reason people are successful in hospitality is also usually the reason that they are not focused on cost management.

There are two ways to make more profit in a restaurant or bar, Increase your sales or reduce your costs.  Reducing beverage cost of sales is a never ending task of reducing wastage, shrinkage and variances. But it is extremely important. When industry specialists report that hospitality business with no stock management program can have wastage and shrinkage of 10% to 20% then for a $1,000,000 turnover business this can add up to $30,000 to $60,000 per year of profit washed down the sink or walking out the door.

Tip 1: It all starts with ordering. Ensure that all purchases are entered into your Point of Sale system’s purchase order module before goods are ordered. Don’t allow staff to ring up ad hoc and order what they want. Ordering should be done in a managed and controlled manner a couple of times a week.

Tip 2: Know how drinks are made up. Ensure that your Point of Sale system has a Stock Control module with recipes. Ensure that all items you sell have a recipe recorded in the system and are reducing the correct items in the correct portions.

Tip 3: Implement weekly or fortnight stock takes. Only by measuring, fixing, reviewing and measuring again will wastage and shrinkage start to reduce. If you don’t have time to implement your own stock management program then talk to your point of sale provider or to Menumate and use our Hospitality Performance Program.

Tip 4: Ensure your paper work is well managed. When stock arrives ensure the duty manager checks it off against the packing slip. Attached the packing slip to the Purchase Order. When the invoice arrives check the invoice against the Purchase Order and make sure the goods ordered are at the same price on the invoice as the purchase order.

Tip 5: Program as many regular cocktails into the Point of Sale with recipes. While bar staff always like to create their own cocktails program as many as possible into the Point of Sale to reduce variables.

Tip 6: Let staff see that stock management is taken seriously. When they know it is important then they will work to ensure variances are minimised.

Tip 7: Record everything. Record management drinks, record staff drinks, and record free drinks on your Point of Sale system so that stock is reducing. When stock is dropped or miss poured then use the Point of Sale system to record wastage. Record the stock going to the kitchen.

Tip 8: When you have stock under control implement minimum and maximum stock levels for all beverage items and work to reduce the stock on hand. There is no need to hold more stock than is required it is just tying up valuable cash.

Tip 9: Be consistent and dedicated to the cause. Stock Management does not happen over night. Ensure stock takes are done on a regular basis. Same Time, Same day every week or fortnight and over a sustained period. When the variance are down then it may be ok to move to less regular stock takes, but as soon as they drift out, move back to weekly stock takes immediately

Tip 10: Seek professional help. Getting stock under control is not easy. It is time consuming. It can be more cost effective to contract in a third party like Menumate to implement the control required, get everything under control and then hand the solution over the management team. Menumate’s Hospitality Performance Program delivers such a service.

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