Calculating Your Bar Stock Usage
Aug 30 2016
Managing a bar can be extremely hard work. Successful bar managers will tell you that efficient stock management is the key to maintaining a profitable bar. To do this, a simple, yet critical calculation to understand is stock usage, which tells a manager exactly how much of each product a bar has used over a defined period of time.
That may sound simple enough, but this report is the critical first step in almost every measurement of a bar’s performance: helping you calculate profit margins, detect over-pouring or theft, calculate pars, and determine which products are performing poorly.
Let’s start with the inventory usage formula:
Stock Usage = Starting Stock + Received Stock – Ending Stock
Step 1:Take a ‘Beginning-of-Period’ Stocktake
The first step for determining stock usage is recording your opening stock for every item at the bar.
For example, if there are 4 bottles of Jameson Whiskey in the lounge, 1 bottle in the storage closet, and 1.3 bottles at the bar, the total starting inventory for Jameson is 6.3 bottles.
Step 2: Take an ‘End-of-Period’ Stock
Based on a predetermined time period for your calculation (usually weekly or monthly), the next step is to record a closing stock for every item at the bar.
Let’s look at the example in step one and assume that we ended with 3 bottles of Jameson.
Step 3: Factor in Received Product During the Time Period
Finally, we add in any received stock. If 5 bottles of Jameson were ordered and received from your distributor in the time between your starting and ending inventory, then this would represent your received inventory.
So, Inventory Usage = 6.3 bottles (Opening Stock) + 5 bottles (received stock) – 3 bottles (Closing Stock) = 8.3 bottles
This can also be expressed in euros. If Jameson costs the bar €15/bottle, then stock usage in euros equals (€15 x 6.3) + (€15 x 5) – (€15 x 3) = €124.50.
In this basic example, it seems very straightforward, but factor in the big picture of stock usage and you’re looking at much more than just Jameson. Inventory usage will need to be broken down by category (spirits, wine, and beer), item type (vodka, whiskey, rum, etc.), and brand/supplier in order to get the best look at your bar’s performance.
That’s a lot of different calculations to be making on a regular basis!
And no matter how long you’ve been doing it and how much you understand the formula, without a good stocktaker using professional software, calculating your stock usage will always be a time-consuming and redundant task. Counting each bottle, recording it on paper, entering it into Excel, tracking and entering your received product from dozens of paper invoices and distributors, and keeping track of all of this on a weekly, monthly, quarterly basis…it’s never-ending!
Luckily, it doesn’t have to be so hard. [Shameless plug] Synergy Stocktaking can take the burden out of your stocktaking process and ensure you are update to date with your stock levels at all times.
Call Synergy Stocktaking today and find out how we can help keep the cash in your business!