Beverage Cost Control

INTRODUCTION

The key to a successful restaurant, as anyone could probably tell you is good food, excellent service,
and a great location. These factors contribute to high sales numbers. However, restaurants operate
on tight margins. The sale of your restaurants must be enough to cover all your other expenses, plus
generate you a decent profit. Thus arises a need for Food and Beverage Control in restaurants.

Cost control is the practice of identifying and reducing business expenses to increase profits, and it
starts with the budgeting process.

Food and beverage control essentially means controlling the behavior of the people and the processes
responsible for the expenses. Control is a process by which a manager attempts to direct, regulate and
restrain the action of people to achieve the desired goal.

Beverage Cost- Beverage cost is the cost related to alcoholic beverages served in restaurants and
bars.
Beverage Control- can be defined as a process used by managers to direct, regulate, and restrain the
actions of people so that the established goals of an enterprise may be achieved.

BODY

Beverages Cost Control

The process of controlling Beverage costs is pretty much similar to Food Cost control. Keeping a check on
the Beverage Costs can be more tedious as overpouring, and spilling is quite common and leads to
inflated costs. You can track and control your beverage cost using this formula:-

Cost of beverage sold/ Beverage sold= Beverage Cost percentage

The key to a successful restaurant, as anyone could probably tell you is good food, excellent service, and
a great location. These factors contribute to high sales numbers. However, restaurants operate on tight
margins. The sale of your restaurants must be enough to cover all your other expenses, plus generate
you a decent profit. Thus arises a need for Food and Beverage Control in restaurants. Learn how to
control your overall restaurant costs here.

Even a slight imbalance in food serving could lead to a severe dip in your margins. Thus it is necessary
that you keep your costs in check to gain a reasonable profit.
Forecasting Beverage Sales

When you predict the number of guests you will serve and the revenues they will generate in a given
future period, you have created a Beverage Sales forecast. Doing so will provide you a clear picture of
the costs that you are looking at so that you can take definite steps to ensure there is no wastage or
theft, and the beverage cost is controlled.

Standardized Drinks and Recipe Portions

The most important aspect of controlling Beverage Costs is setting up a Standardized drink recipe. You
should also have a pouring policy through which you can regulate the drink size. Standardized portions
are essential, and tools must be ensured to maintain the quality and quantity of the drink. Train your
staff to use measuring cups or jiggers to avoid overpouring.

 EXAMPLE Cost control is an important factor in maintaining and growing profitability.

 EXAMPLE Outsourcing is a common method to control costs because many businesses find it
cheaper to pay a third party to perform a task than to take on the work within the
company.TAB3
 EXAMPLE As an example, a company can obtain bids from different vendors that provide the
same product or service, which can lower costs. Cost control is an important factor in
maintaining and growing profitability.

DISCUSSION MAIN INTRODUCTION (liza- eto yung di ko natapos)

(MAYSUSUSNOD NA TOPIC --- BODY)

Sales = Cost of Sales + Cost of Labor + Cost of Overhead Expenses+ Profit

which essentially means,

Profit= Sales – Cost of Sales – Cost of Labor – Cost of Overhead Expenses

According to this formula increasing sales is not the only way to increase profits. You can increase your
profit margin by decreasing your costs as well, especially your food and beverage costs. That is where
Food and Beverage Control comes into play. To understand how to control your restaurant expenses,
you must first know what control in food and beverage costs is.
Food and beverage control essentially means controlling the behavior of the people and the processes
responsible for the expenses. Control is a process by which a manager attempts to direct, regulate and
restrain the action of people to achieve the desired goal.

(iii) Inventory Management

Stocking up the inventory is the first thing that restaurant owners do to get the operations going.
However, managing the inventory is arguably the most important part of Food and Beverage Control.
Before you go and start stocking up your inventory, you first need to define what inventory levels are
needed in your restaurant. That is, you need to have a clear understanding of how much stock of which
items would be needed in your restaurant kitchen, and for how long would those items last. This comes
from menu forecasting and yield management. When you forecast your menu, you determine how
much of a dish will be required. When you manage yield per dish, you estimate how much raw material
will be necessary to avoid wastage. Both of them together will work towards your food and beverage
cost control by determining exactly how much inventory would be needed.

You need to consider the storage capacity of your inventory and shelf life and perishability of each item
in mind before purchasing. This article will tell you more about inventory management in your
restaurant.

(iv) Purchasing

Much care needs to be given while purchasing inventory items or your food costs might escalate. You
need to have a list of all the items that need to be purchased and how many to be purchased. You
should also order enough to maintain a steady supply so that you don’t run out of an item. Inventory
Management Software comes extremely handy in such cases. You can mark levels for each item in the
inventory, and set reminders in the POS software that would alert you when the items run low, thus
giving you ample time to order more. It is also advised to order items in a ‘Purchase Group.’ Purchase
Groups because of the increased number of buyers gives you an edge over the supplier and so you can
bargain for the price better.

You must also adhere to the Product Specifications while purchasing Stock Items. Product specifications
primarily consist of the Product Name, Pricing Unit, Standard Grade, Weight/Size, Desired Packaging,
Container Size, etc.

Another factor that is crucial to Purchasing while keeping food and beverage cost control in mind is the
Product Yield. Product yield essentially gives the amount of the item ordered that can be used for
preparing the dish, that is, the Edible Portion. You must also consider the Waste Percentage of the item.
Few items can be utilized whole while cooking; a significant portion is often lost while chopping,
trimming, and cooking. Fortunately, you can calculate this loss, and thus order accordingly.

Waste Percentage is given by,

Waste Percentage= Product Loss/ Total Weight of the item when purchased.

(v) Vendor Management

Before you choose a vendor to supply the raw ingredients to your kitchen, you need to have the
Purchase Order. It is essential to have a Purchase Order (PO) for all orders, no matter how trivial they
are, and their records should be maintained.

Once you have the Purchase Order prepared, you need to decide a b vendor for supplying the stock to
your restaurant kitchen. It is better to purchase from the same vendor to maintain the quality and taste
of your food. Buying from the same vendor at the same price also helps in keeping the Fixed Cost of
your menu. Also, to lower your purchasing costs order on credit instead of cash. That way you can order
more for a considerably lower price. You can easily manage all your vendors through your restaurant
POS.

(vi) Receiving

Receiving is one aspect of Food and Beverage control that is often overlooked, but it is just as important.
The maximum discrepancy in stock happens while receiving the order. A not so honest employee may
be tempted to steal from the inventory while receiving the order. Dishonest employees are also known
to often strike an agreement with the Vendor and receive only half the amount of the ordered items
while pocketing the money of the entire order.

To reduce the possibility of thefts, you should ensure that the purchasing agent and receiving clerk are
two different individuals and that the entire purchasing and receiving procedure is carefully monitored.

Receiving clerks should be adequately trained to verify the weight, quantity, quality, and price of the
products while collecting the stock items. They should be adequately equipped with the necessary tools
for weighing and measurement of the stock.

(vii) Storage
All Food Costing and Control methods can go in vain if the stock items purchased are not stored
properly, as food items are highly perishable. You must follow proper stocking practices to ensure
longevity to the stocked goods. There should be separate areas for storing dry, refrigerated, and frozen
products. Storage can be done in the following ways-

First In First Out: In this method, the items that are purchased first and consumed first. The items that
are purchased first are more likely to spoil than the items purchased later. This method is preferred in
cases of grocery, dairy, etc., and is the most popular method of storage utilization.

Last In First Out: In this method, the items that are purchased last are consumed first. The idea behind
this storage is that certain items such as baked goods are best consumed when fresh. Last in First Out
method helps to maintain quality and deliver high customer service.

The best way to store your inventory items is to ensure that the items are kept in a cool, dry, and sterile
place. The items should also be appropriately rotated.

CONCLUSION Staying on top of your expenses is key to your business success. One of the biggest
reasons bars fail is not being able to manage their costs. They end up suffering huge losses when they
can’t keep their drink and food costs in check.

When you take the time to look closely at your cost management strategy, you’ll be able to identify each
of your costs, taking both preventative and corrective action to maintain a healthy profit. Utilizing the
guidelines here can help you control beverage and food costs so you can increase your bottom line and
enjoy the personal and financial rewards of running a successful bar. 1TAB

BEV COST CYCLE

PURCHASE CONTROL • The primary purposes of beverage purchasing controls are: 1. To maintain an
appropriate supply of ingredients for producing beverage products 2. To ensure that the quality of
ingredients purchased is appropriate for their intended use. 3. To ensure that ingredients are purchased
at optimum prices As always, the key to successful control is to establish suitable standards and
standard procedures.

RECEIVING The primary goal of receiving control is to ensure that deliveries received conform exactly to
orders placed. In practice, this means that beverage deliveries must be compared with beverage orders
in regard to quantity, quality, and price.
STORING CONTROL Establishing Standards Storing control is established in beverage operations to
achieve three important objectives: 1. To prevent pilferage 2. To ensure accessibility when needed 3. To
preserve quality

ISSUING CONTROL Establishing Standards Issuing control is established in hotel and restaurant beverage
operations to achieve two important objectives: 1. To ensure the timely release of beverages from
inventory in the needed quantities 2. To prevent the misuse of alcoholic beverages between release
from inventory and delivery to the bar

PRODUCTION CONTROL Objectives of beverage production control Control over beverage production is
established to achieve two primary objectives: 1. To ensure that all drinks are prepared according to
management’s specifications 2. To guard against excessive costs that can develop in the production
process

References:

https://www.slideshare.net/RaviDandotiya/beverage-control-56294505

https://www.posist.com/restaurant-times/resources/beginners-guide-food-beverage-control-
restaurants.html