Regardless of the size or type of your operation, the critical path to sustained profitability begins with ensuring your point of sales’ hardware and software are properly handling costs and revenues. Before scrutinizing any ongoing cost and sales issues, you may need to take a field trip behind the bar.
When I worked with Hyatt Hotels and Resorts, I often was sent to different Hyatt properties to straighten out existing cost variance issues that were eluding the best efforts of the resident management teams. In each instance, I started by focusing my efforts on cleaning up their point of sales systems.
Once I literally had to analyze every menu item in every outlet of the hotel. What I uncovered was startling. For example, each time one of the restaurants or room service sold a New York Steak or Eggs Benedict the sale proceeds were credited to beverage, while the cost of goods sold was being charged to food costs. These types of errors had enormous cumulative impact on the hotel's cost percentages and impeded the management teams ability to respond appropriately.
WHERE TO START
Whether you’re managing a freestanding independent establishment or a multi-complex operation, your
accounting procedures should permit to you to fully investigate any cost and revenue issue and find out where the problems may be occurring. Properly designed they should also help you better forecast trends and foresee potential problems before they arise.
While cost variances go with the territory, they need to be investigated and rectified as quickly as possible. The logical place to start is with your point of sales. When you purchase inventory for the bar, how are those products being coded and where are their costs being assigned? Are the costs in the system up-to-date? The same process applies to items such as paper goods, to-go cups, olives, cherries and the like. While you’re at it, you need to determine if your bartenders’ payroll, taxes and employee benefits are being properly expensed to the beverage department.
On the revenue side of the equation, every line item on every menu needs a revenue and cost center. When guests’ charges are inputted into the system, confirm exactly where those sales are being entered and that the cost of goods sold are accurate.
Okay, so maybe it’s not that racy of a subject after all. Fun or not, at the end of the process you can be assured that the information on which you rely is totally reliable. Now is no time to be guessing about what’s really happening behind your bar.
Mac Gregory is the Director of Food & Beverage at The Phoenician, a premier AAA Five Diamond luxury resort in Scottsdale, Arizona.
from the moment it comes through the back door until it’s depleted.
It’s referred to as “cradle to grave” accounting and it involves implementing a series of overlapping internal systems—e.g. purchase orders, requisitions, bar par, perpetual inventory, comp and spill sheets—that track every product through the inventory cycle. While uncomplicated, the key to the system is ensuring that all of the components are in place and being used properly.
Labor Pains —For food and beverage operations, payroll is a significant ongoing expense, the second largest after cost ofIt subjects employees to undue stress and robs guests of quality service. Spending a few extra labor dollars is better than losing potential sales and making good people wait for bad service.
A better approach is to begin scheduling a bartender and bar back to cover shifts too busy to be handled effectively by only one bartender, yet not busy enough to warrant scheduling two. The bartender gets the logistical support he or she needs behind the bar and gets to keep a larger share of the tips. The bar back gains invaluable experience, and since they’re paid less than bartenders, the business saves on payroll.
