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What is it? Essentially variance is the difference between what was sold and what was depleted from inventory. Another way to define it, variance is the dollar difference between your bar’s current degree of profitability and where it potentially should be. It’s human nature to think that they’re one and the same. Unfortunately they rarely are and the amount of money separating the two often represents the additional revenue that businesses need to keep their doors open.
The time-tested method for measuring profitability at the bar is pour cost. It analyzes the ever-changing relationship between gross sales and cost of goods sold. A liquor pour cost of 18.3%, for example, means the business spent about 18 cents to generate a dollar in sales. Every percentage point pour cost increases or decreases will have an equal and opposite affect on gross profit.
Tracking pour cost is a means of keeping a finger on your bar’s financial pulse. Because liquor, beer, wine and non-alcoholic beverages sell at substantially different cost percentages each category must be calculated separately for the process to have significance.
According to Ian Foster, regional vice president of Bevinco, an international beverage auditing service, tracking pour cost closely is important. “Rising costs are often indicative of serious issues like theft or over-pouring. However, spikes in pour cost can also be caused by fluctuations in product mix, such as higher happy hour sales or increased premium drink sales. The challenge facing management is determining which it is.”
Another shortcoming to managing a bar relying solely on pour costs is having a reliable gauge by which to interpret the results. Most operators compare their bar’s current pour cost to previous 
performance. If in the past cost percentages ran between 21% and 23%, it’s natural then to interpret any number falling within that range as normative.
“The reality is that relying solely on historical trends fails to factor in the impact rising wholesale costs, a constantly shifting sales mix and seasonality have on a bar’s pour cost,” says Foster. “It’s a liquid business. Things change on a regular basis and your expectations regarding how the bar performs financially needs to change on a regular basis as well.”
While scrutinizing pour cost is an essential form of analysis, it does have serious shortcomings and can provide no better than half of the information necessary to be profitable on a sustainable basis.
ROOTING OUT VARIANCE
“DETERMINING YOUR BAR’S cost percentages isn’t nearly as important as knowing what those cost percentages actually should have been,” says Foster. “It’s referred to as the optimum pour cost. As far as I know, it’s the only unimpeachable standard by which to measure a bar’s financial performance. Narrow the gap between what’s rung-up as sales and what should have been rung-up in sales and you’re one step closer to long-term profitability.”
Optimum pour cost is derived by comparing the amount of product depleted from inventory to the amount of product reported as sold. Comparing units used to units sold is the only way to determine if product has gone missing and eliminate the variance. The retail industry relies on this method to control losses and their shrinkage averages less than 1.5% of sales—whereas the hospitality industry averages around 20%.
“When bartenders are shown hard evidence detailing brand-specific shortages, they often have little choice but to curtail their bad habits or look for employment elsewhere,” contends Foster. “In contrast, telling the staff that ‘pour cost is too high’ usually goes in one ear and out the other.”
One of the benchmarks of Bevinco’s auditing services is its Bar Variance Report. It details any and all shortages of inventory, the cost of the missing products and the revenue potential of the missing inventory. [See Illustration] The report then lists the cost percentages for all categories and compares them to their optimum pour costs.
The Variance Report compares the number of ounces reported as sold to the volume of product actually depleted from inventory. This type of scrutiny is applied to everything stocked behind the bar, in the liquor room and in the beer coolers.
BEVINCO EFFICIENCY RATING
ANOTHER SINGULAR ASPECT of their auditing service is a metric called the Bevinco Efficiency Rating. It measures the relationship between the bar’s actual cost percentages and it’s optimal pour cost. The smaller the difference between the two, the higher the efficiency rating.
“The Efficiency Rating gives our clients an unwavering standard by which to evaluate the financial performance of their bar,” states Foster. “The beautiful thing about the Bevinco Efficiency Rating is that it relegates something as complex as variance into an easily understood score out of 100.”
So how efficient is your bar? Are you losing out on a few dollars here and there or are losses threatening your ability to financially stay afloat? If you’re not rolling in dough, eliminating variance behind the bar may well bring it about.
Ultra-premium G’VINE FLORAISON GIN is a mold-breaking spirit made in the Cognac region of France. Stylish and complex, the brand is crafted using traditional distillation and infusion techniques with a few creative twists on conventional London dry gin.
G’Vine Floraison is produced by first distilling in a handmade copper pot Ugni Blanc grapes into a neutral spirit. Some of the spirit is re-distilled with a botanical mix that includes juniper berries, ginger root, licorice, green cardamom, cassia bark, coriander, cubeb berries, nutmeg, oranges and limes. At the same time, handpicked green grape flowers, which only bloom for two weeks in June, are macerated into the remaining spirits. The final step involves blending the two distillates and running them through the pot still a final time. The finished spirit is bottled at 80-proof.
G’Vine is a complex, delicately nuanced gin. It has a full, satiny textured body and a generous spicy, floral and citrusy bouquet with barely a trace of juniper aroma. As the gin rolls past the palate it imparts a broad array of well-integrated, long-lasting flavors—beginning with citrus and herbs before slowly transforming into a spicy warm finish.
The distillery also produces G’VINE NOUAISON GIN DE FRANCE. It is characteristically similar to a London dry gin with more pronounced juniper on the nose and palate and less of the vine flower infusion. Its bouquet is a bit more intense in terms of spice and juniper. Bottled at a more potent 87.9-proof, the Nouaison is tangy and exuberant with a juniper, spice and floral finish.
Both versions of G’Vine Gin are ideally suited for use in cocktails and marry beautifully with tonic.