Many hospitality operators want to know what their liquor cost is. Many times, we simply divide the cost of goods sold by the revenues to come up with a liquor cost percentage. Often, this number is inaccurate or to late in the cycle to take corrective actions.
Here are the steps and key elements needed for a proper liquor cost percentage.
- What is the opening liquor inventory value of full and partial bottles throughout the period?
- What is the closing liquor inventory value of full and partial bottles throughout the period?
- What are the registered liquor sales for the specific period
- We then divide the cost of goods sold by the sales to come up to a percentage.
The variables you must consider:
- Are the costs of my liquor products updated?
- Is the actual physical inventory of my liquor bottles accurate?
- Are my sales strictly liquor; no wine or beer
If you answered yes to all three, then this will be your actual liquor cost.
How does this liquor cost compare to where you actually should be?
Please read our blog on Alcohol Inventory Cost vs Pricing