Regardless of what type of beverage you are selling, there are plenty of ways to gauge performance and profit margins. And knowing those figures will improve your bottom line.
Use these key performance indicators (KPI):
Sales per Head
Calculate separately sales per person for alcohol and sales per person for non-alcoholic beverages. That will tell you two things. First, you'll be able to measure how much the beverages you offer appeal to your customers. Second, you'll be able to measure how well your staff is selling what you offer. Then, start offering incentives for those who sell the most of a certain type of cocktail or the most bottles of wine.
Gross Profit on Individual Items
If a server sells two bottles for the same price, but one costs you $5 and the other $7, then put something in place to maximize the sales of the one with the highest profit margin. Look at margins on cans of Coke and compare those with margins on post-mix Coke. Examine everything. Consider how much post-mix gas 1,000 drinks require. Figure out the margins on mineral water poured by the glass compared to mineral water served by the bottle. Drill into your numbers and calculate the real profit on fresh-squeezed juice. Finally, ask which costs morefaster-serving bottled beer or tap beer.
Total Sales and Overall Gross Profit Percentage on Sales
This is the main number you will need to show whether beverage sales are holding steady, improving or declining. Ultimately, the actual gross profit will matter the most as you plan for the future.
Stock Value
Estimate the cash locked in the cellar. Are there more items that could be ordered, on an as-needed basis. As freight costs jump and minimum orders become more common, compare the benefits of keeping more in stock versus placing smaller orders. Getting caught up in the romance of extensive wine lists and special deals can lead to bulging shelves. Be strong!
Stock Turnover
Evaluate how fast what is held in stock sells. If a restaurateur carries wine stock worth $50,000 and the value (not sales) of what you sell each week is $10,000, then it is taking five weeks to turn over everything in stock. Is this too long? Next, look at the cost of financing that stock. Take the current interest rate for borrowing money, apply it to your stock value, and divide by 52 to get a weekly figure. If stock is valued at $50,000 and the interest rate is 8 percent, the annual cost of financing the stock is $4,000 or $77 per week.
Sales per Till
To find out who your best bartenders are, keep each staff member on his or her own till. Compare the results, and be willing to train or make tough decisions based on the results.
Sales and Stock Take Discrepancies
Alcohol always results in security issues, from handing out freebies to over-pouring, lots of revenue can get lost at the bar. Begin today by measuring the difference between what you used (from the stock takes) against what your POS system says was sold. If you are functioning at a high level, the variation should be below 1 percent.
These evaluations will improve your bottom line. It takes toughness, but it's well worth it.
Ken Burgin is CEO of Profitable Hospitality, which offers management and marketing resources and a free monthly. Visit www.profitablehospitality.com.
Current Issue - May 2024