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 Message 16126 of 22774 in Behind the Bar
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Subject: Re: Question about liquor costs....
From: Josh
Posted: Mon Sep 4. 2006, 00:13 UTC
Followup to: "Re: Question about liquor costs...."  by Robert Williamson  (Sun Sep 3. 2006, 21:34 UTC)
I'm with Dan here too, I think you're doing things in reverse of what is 
typically seen in most bars. You're not wrong, and the actual $ numbers will 
boil down the same, but it's definitely a bit akward for me to think in that 
manner. Not that I can claim to be a guru, however I have ran numbers for a 
large corporate joint, as well as a few small private bars and they have all 
compiled numbers as follows:

Cost Percentage = Cost of Goods / Actual Sales

So, for example, if you purchased your bottle of well vodka for $10, and that 
bottle contributed to $100 in sales you would have a 10% cost percentage for 
that bottle.


Cost Variance Percentage = Cost Variance ($) / Actual Sales

Let's say you end up having actual costs $550 and Theoretical costs of $500 
(what your POS says you should have spent based on what was rung in). This 
will give you a variance of $50 (variance being a negative factor) on $10,000 
in sales. This would you a Cost Variance percentage of 0.5% (1/2 of a percent 
- which is what many corporate joints set as their goal).

I think perhaps many bars compile their numbers in this fashion because 
overuse, overpouring, etc is a given, therefore variance means "less" by 
default, because it is very rare when you underuse. Also you'd be dealing with 
a double negative using your method, which can cause confusion - for example:

We overused -$50 (-.5%) in product

Or the other way:

We overused $50 (.5%) in product

-- 
Cheers! - Josh @ BarSim
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