beverage purchase, receiving storage & issuing licensing types types of alcoholic beverages...
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Beverage Purchase, ReceivingStorage & Issuing
• Licensing Types• Types of Alcoholic Beverages• Purchasing Standards• Receiving Standards & Techniques• Storage Principles• Issuing Practices• Non-Alcoholic Beverages
BEVERAGE COST CONTROL
Alcoholic beverages are one of the highest margin, highest theft items in the foodservice business. They can either make or break a business depending on the level of control you have in place.
TYPES OF LICENSING
LICENSED STATE CONTROLLED STATES (i.e. Nebraska) (i.e. Iowa)
Licensed liquor distribution State controlled distribution points; both wholesale & retail
Taxed at distribution level & State controlled pricingend user level
Competitive pricing Cash only
Credit terms availablePick-up only
Delivery available
Liquor cannot legally be transported across state line for purposes of sale. Franchise states: Brands are sold by one dealer only. Franchising limits competition and
competitive pricing for that brand.
CLASSIFICATION OF ALCOHOLIC BEVERAGESBeer
Beer: Fermented grain and hops
-Lager Most popular beer in the U.S.
-AlesEuropean and Microbreweries
Styles of Beer
Sweet
Ales Lagers
Fruity MaltyBitter
John Palmer, “How to Brew”, www.howtobrew.com
WINE
Flavor profiles depend on varietal, season, terroir and blend.
Terminology:
Appellation The unit of a classification system based on geography.
Terroir wine Terroir refers to the site-specific differences in wines that are caused by factors such as soil types, drainage, local microclimate and sun exposure that has some sort of link to geography – where the grapes were grown and also local cultural influences.
Commodity wine An inexpensive wine purchased in most cases not for its intrinsic qualities but because it serves a purpose, like milk, flour, sugar or instant coffee.
Branded wine A wine that doesn’t come from a strictly defined patch of ground, but is instead marketed
by a brand name or ‘make’. Branded wines are typically made from either brought-in grapes, or grapes from several disparate sources which may include many vineyards owned by the same company.
Estate wine A wine that is made from grapes from a fairly narrowly defined patch of ground, such as a single vineyard, or sometimes several neighboring vineyards.
Wine ParingsChardonnay, Sauvignon Blanc: seafood, rich soup, vegetables,
goat and other strongly flavored cheeses, cream sauces Gewürztraminer, Riesling: ham, pork, mild cheese, Indian, Thai
and Chinese, chicken and turkey Merlot, Cabernet Sauvignon: roast beef or roast fowl, venison,
cheddar, blue cheese
Pinot Noir, Zinfandel: roast beef, turkeyPort, Sauternes: chocolate, pastry, foie gras Shiraz: stew, casserole, ratatouille Sparkling: fancy hors d’oeuvres, sushi, omelets.
www.tasting-wine.com
SPIRITS
Fermented beverages, distilled (heated to steaming point so alcohol separates and is then cooled to condense to liquid), aged in wood to develop character, and diluted with distilled water to reach desired alcohol level.
Proof: Two times the alcohol content of the spirit. (Originally a beverage was “proofed” by setting it on fire. If it would burn, it was said to be 100 proof, which was later found to be 50% alcohol.)
Both proof and aging change the flavor profile of the beverage.
Product can be categorized by brand loyalty/awareness:
Well Brands--less expensive brands used to mix drinks when the customers does not call for a specific brand
Call Brands--nationally recognized, more expensive brands that are ordered by brand name
ALCOHOL PURCHASING STANDARDS
The same three standards that apply to food, apply to beverages. 1. Quality
Brands/LabelsProofVarietals/Vintages
2. Quantity
Case vs. Broken CaseBottle sizePerpetual vs. Periodic Ordering
3. CostMay or may not be negotiable depending on the
situation in your area
RECEIVING STANDARDS
CHECK EVERYTHING WHILE THE DRIVER IS
STILL THERE. ONCE HE LEAVES, IT’S TOO LATE!!
IMMEDIATELY MOVE PRODUCT TO IT’S DESIGNATED, SECURE STORAGE AREA!!
Receiving Standards
QualityCheck every bottle in every case vs. purchase orderCheck name, label, vintage and proofCheck corks on wine to make sure they are moistCheck seals on liquorCheck kegs to make sure they are cold (kegs are not pasteurized)Check expiration dates on kegs and some premium bottle beers
Quantity
Weigh all kegsCount every bottle in every caseQuantities on the Purchase Order and Invoice MUST match
Cost standard
Prices on the purchase order MUST match the invoiceAlert the driver and the adjustment the invoice
If alternates have been shipped, check before accepting.
STORAGE STANDARDS
1. Protect the Quality of the Product
Kegs must be kept refrigerated (shelf life of 1 month)Bottles stored at room temperature (shelf life 3 mos.)
Wines must be stored at an angle with the cork downMaintain a constant cool temperatureHumidity levels should be between 70% and 95%Protect your wine from vibrationProtect from ultraviolet lightProtect from odors such as chemicals and paints
Distilled spirits are shelf stable—no refrigeration needed
2. Accessibility
Organize by type, brand, etc
3. SafetyLimit accessMonitor or establish securityEstablish and maintain a stringent issuing policy/system
TURNOVER
Turnover will tell whether Quantity Standards are correct Too Slow Too FastTies up cash Purchasing costs are highIncreased storage costs Out-of-stocks increase customer dissatisfactionEncourages theftProduct spoilage and waste
INVENTORY FORMULAS
$Average Inventory = $OI + $CI 2
Average Turnover = $COGS $Avg. Inv.
Rule of Thumb: Industry Average Turnover, Beer & Spirits 18-24 timesWine varies greatly by location, restaurant concept, wine list (wines kept for aging on site
—only about 5% of wine produced)
BEVERAGE COSTS, AVERAGEINVENTORY AND TURNOVER• .
$SALES OI CI PURCH. $COG %COG AI IT
$180,250 15,000 14,280 16,200
$179,330 16,390 16,300 18,300
$391,000 20,120 18,200 17,200
ISSUING STANDARDS
1. Control from Abuse
-Limit the number of people with authority to requisition -Never have same person requisition and stock their own
bar -Each bar should have their own requisition form and pars
2. Cost Accountability
-Each bottle charged to a service area when requisitioned -Bottle-for-Bottle (one full for one empty)
-Visually inspect requisitions as they leave storage
NON-ALCOHOLIC BEVERAGES
Much simpler part of the beverage business.
More competitive pricingLower in priceEasier to order and handle (more like dry grocery than beverage)
Forms
Pre-mixed vs post-mixedPost-mixed is less expensive because you aren’t paying for waterRequires less storage spaceMany companies provide mixing/dispensing equipment for brand loyalty
Various sizes available
Size purchased will be dictated by use (i.e. liters used for catering or service bar)“Guns” are becoming the most common form in many bars
CONTROLS IN BEVERAGE PRODUCTION
• Value of Beverage Production• Types of Bars• Production Controls• Inventory• Governmental Controls• Well vs. Call Brands• Inventory Valuation• Wine Service
BEVERAGE PRODUCTION
Because of their high markup and low COG, beverages are key to increasing the profitability of an operation.
Par Levels, Product Mix and Product Form will be determined by the
concept/target audience. Patrons are more loyal to beverages than to food. Most establishments will have more than one type of bar.
Front Bar Service BarClientele can see the entire operation Caters to wait staff serving foodMay or may not be visible to clientele May not be visible to customers
Types of BarsCatering Bars can be Permanent vs. PortableCatering Bars can Vary by type of event
Open Bar: Guest receive drinks gratis; limited brands
Cash Bar: Guests buy drinks; broader product line
Host Bar: Product is agreed on in advance
Club Bar: Concept driven
CONTROLS
Bottle-for-Bottle policy for every bar Standardized Recipes
Consistent product=customer satisfactionAbility to forecast --COGS projections and correct ordering
Automated beverage dispensing machines that produce exact recipe every time Generally not used for Front Bar, although increasing (i.e. frozen margarita machines,
etc.) Service Gun for Alcoholic Beverages
Sits BOH and works in conjunction with POS systemBecoming more common in large operationsHelps in inventory and sales reconciliation
Shot glasses, Jiggers, Free Pour
BAR INVENTORY
Typically done more frequently than food inventory Both stockroom and bar must be inventoried. Stockroom—Physical Count Bar Stock—Visual estimates of stock, by bottle Usually by 1/10ths.
GOVERNMENT CONTROLS
Drinking age
Type of outlet—wine & beer only, full license, BYO wine
Dry counties/StatesBlue laws—time/day restrictionsPackage sales in licensed barsLimited # of licenses by area
NOTE: Understand the regulations before you proceed.
DRAM LAWS
Third party liability. If an intoxicated customer hurts or kills someone after leaving your establishment, the owners, bartender and servers can be held liable.
Impact:
Insurance rates have climbedNegative publicity for establishments involvedFinancial liability
Training & Support:
Alcohol Control Boards or State Patrol offer trainingSome major distributors offer trainingOffer training & set standards that are enforced
TRANSFERS
State and Federal regulations place strict controls on the transfer of
alcoholic beverages between locations, even within the same group.
Monthly reports must be submitted to prove that the amount sold does not exceed the amount purchased.
-Sales tax issues-No purchases at retail level
Transfers internally should be documented
-Wine transferred to the kitchen-Liqueurs used in desserts/sauces -All beverages for catering or room service
MONITORING BEVERAGE OPERATIONS
Three methods of cost control: 1. Cost Approach—COGS usually reveal
deviations when compared to the Operating Budget
$COGS = O.I. + Purchases + Transfers In – Transfers Out –C.I.
Methods of Beverage Cost Control
2. Ounce Control Method—daily revenue/ inventory by ounce compared to ounces sold
-Time consuming and tedious
-Used in large establishments where POS systems are tied to automatic dispensers
Methods of Beverage Cost Control
3. Sales Value Approach—the value of each bottle is calculated based on standardized pour/recipes and retail prices
Liter = 33 1oz. drinks
Complicated by mixed drinks where 1 oz. is not the
measure
Historic data can be used to develop a “beverage differential”that identifies how much actual sales differ from the “per oz. sale”
BEVERAGE MIXPOPULARITY &PROFITABILITY
• ,
UNIT UNIT TOTAL UNIT TOTAL TOTAL POPWINE SALES COST $COGS PRICE %COGS SALES CR CM INDEX
1 500 $1.50 $5.002 140 $4.00 $13.503 120 $5.50 $22.004 100 $7.00 $28.005 100 $10.75 $13.756 85 $12.00 $48.007 32 $15.00 $75.00
TOTAL/AVG.
BEVERAGE MIXPOPULARITY &PROFITABILITY
•
UNIT UNIT TOTAL UNIT TOTAL TOTAL POPWINE SALES COST $COGS PRICE %COGS SALES CR CM INDEX
1 500 $1.50 750 $5.00 30% $2,500.00 70% $1,750.00 13%2 140 $4.00 560 $13.50 30% $1,890.00 70% $1,330.00 10%3 120 $5.50 660 $22.00 25% $2,640.00 75% $1,980.00 14%4 100 $7.00 700 $28.00 25% $2,800.00 75% $2,100.00 14%5 100 $10.75 1,075 $30.75 35% $3,075.00 65% $2,000.00 16%6 85 $12.00 1,020 $48.00 25% $4,080.00 75% $3,060.00 21%7 32 $15.00 480 $75.00 20% $2,400.00 80% $1,920.00 12%
TOTAL/AVG. 5,245 27% ####### 73% $14,140.00
Popularity Index = 1/7 * .7 10 10%