Chapter 13

 Beers (lagers and ales)

 Wines (red, white, rose)
 Spirits

Transparency 13-1
 Fermentation: Natural, chemical
process by means of which sugars in
a liquid are converted to ethyl
alcohol and carbon dioxide
 Distillation: Process by means of
which alcohol is evaporated from a
fermented liquid and then
condensed and collected as a liquid

Transparency 13-2
 To maintain an appropriate supply of
ingredients for producing beverage
products
 To ensure that the quality of
ingredients purchased is appropriate
to intended use
 To insure that ingredients are
purchased at optimum prices

Transparency 13-3
 Frequency with which management chooses to
place orders
 Storage space available
 Funds available for inventory purchases
 Delivery schedules set by purveyors
 Minimum order requirements set by purveyors
 Price discounts for volume orders
 Price specials available
 Limited availability of some items

Transparency 13-4
 License states: States in which
beverage wholesalers (and
sometimes manufacturers and
distributors) are allowed to sell
alcoholic beverages directly to
foodservice establishments
 Control states: States in which the
state government actually sells
some or all alcoholic beverages
through its own network of stores,
thus exercising complete control
Transparency 13-5
 Quantity of an item delivered must
equal the quantity ordered
 Quality of an item delivered must be
the same as the quality ordered
 Price on the invoice for each item
delivered should be the same as the
price quoted or listed when the order
was placed

Transparency 14-1
1. Maintain an up-to-date file of all
beverage orders placed
2. Remove the record of an order
from the file when a delivery arrives
and compare it to the invoice
presented by the delivery driver
3. Before the driver leaves, check
brands, dates, or both, and count or
weigh delivered goods
4. Compare the invoice to the order
Transparency 14-2
5.Call to the attention of management and the
delivery driver any broken or leaking containers
and any bottles with broken seals or missing
labels
6.Note all discrepancies between delivered goods
and the invoice on the invoice itself
7.Sign the original invoice and return it to the
driver.
8.Record the invoice on the beverage receiving
report
9.Notify the person responsible for storing
beverages that a delivery has been received
Transparency 14-2 (cont’d)
 Prevent pilferage
 Ensure accessibility when products
are needed
 Preserve quality

Transparency 14-3
 Assign the responsibility for the
stored items to a single employee
 Keep the beverage-storage facility
locked at all times

Transparency 14-4
 To ensure the timely release of
beverages from inventory in the
needed quantities
 To prevent the misuse of alcoholic
beverages between release from
inventory and delivery to the bar

Transparency 14-5
Standards
 Carefully set issue quantities
 Issue beverages only to authorized
people

Standard Procedures
 Establish par stocks for bars
 Set up a requisition system

Transparency 14-6
 To ensure that all drinks are
prepared according to
management’s specifications
 To guard against excessive costs
that can develop in the production
process

Transparency 15-1
 Shot glass (plain or lined)
 Jigger
 Pourer
 Automated dispenser

Transparency 15-2
Method I
1.Total number of ounces in bottle ÷ Standard
portion size (ounces) = Number of drinks per
bottle
2.Cost of bottle ÷ Result from Step 1 = Standard
drink cost
Method II
1.Cost of bottle ÷ Total number of ounces in bottle
= Cost per ounce
2.Result from Step 1 × Standard portion size =
Standard drink cost

Transparency 15-3
Each card should include:
 Name of drink
 Drink sales price
 Drink cost
 Cost percent
 Quantity and cost of Individual Ingredients
 Total quantity and cost of mixed drink
 Type of glassware
 Recipe procedure

Transparency 15-4
 Management observes bar
operations
 Designated employee observes
others working at the bar and
reports back to management
 Individuals unknown to the
bartender visit the bar, observe
employees, and report back to
management
 Closed-circuit television systems
permit observation from some Transparency 15-5
1.The Cost Approach
 Cost percent methods
 Monthly calculations
 Cost calculations by category
 Daily calculations
2.The Liquid Measure Approach
 Ounce-control method
3.The Sales Value Approach
 Actual sales record method
 Average sales value method
 Standard deviation method

Transparency 16-1
 Opening beverage inventory
+ Beverage purchases this month
= Total available for sale this month
– Closing inventory this month
= Value of beverages issued to the bar
 
Bar inventory value at the beginning of the month
– Bar inventory value at the end of the month
= Bar inventory differential
 
Value of beverages issued to the bar
+/– Inventory differential
= Cost of beverages consumed
Beverage cost percentage = Beverage cost ÷ Beverage
sales

Transparency 16-2
Added to beverage cost
 Food to bar (directs)
 Storeroom issues
 Mixers
Subtracted from beverage cost
 Managers’ drinks
 Special promotions

Transparency 16-3
1.Determine bottle size and drink size
2.Calculate drinks per bottle
3.Multiply drinks per bottle by drink price to get
sales value per bottle
 
Example
Bottle size: 1 liter; drink size: 1 ounce
33.8 drinks per bottle
33.8 × $3.00 = $101.40

Transparency 16-4
By comparing the price of the alcohol sold as straight drinks to the
price of the mixed drink, a more accurate picture of potential sales
values emerges

Transparency 16-5
To find the differential: 
 Sales value of bottle of alcohol ÷ Number of ounces in
bottle = sales value/ounce
 Sales value/ounce x Number of ounces in mixed drink =
Sales value of alcohol sold as straight drinks
 If sales value of alcohol sold as straight drinks > sales price
of mixed drink, then the difference between the two figures
is the negative mixed drink differential
 If sales value of alcohol sold at straight drinks < sales price
of mixed drink, then the difference between the two figures
is the positive mixed drink differential
 Finally, multiply the +/– differential by the number of
mixed drinks sold to determine the adjusted total bottle
sales value for spirits

Transparency 16-5 (cont’d)

Calculations
1. Average inventory = (Opening
inventory + Closing inventory) ÷ 2
2. Turnover rate = Cost of beverages
sold for a period ÷ Average
inventory for the period
Generally accepted turnover rates
Spirits—1.5
Beers—2.0

Transparency 16-6
 Optimize the number of sales
 Maximize profit
 Control revenue

Transparency 17-1
 To socialize
 To conduct business
 To eat
 To enjoy entertainment
 To relax or kill time

Transparency 17-2
 Establishing drink prices that will
maximize gross profit
 Influencing customers’ selections

Transparency 17-3
 Dram shop laws are state statutes
that hold the serving establishment
and the server financially liable for
damages to third parties resulting
from the serving of alcoholic
beverages to intoxicated customers
 Given these laws and changing
social attitudes that encourage
responsible drinking, managers try
to optimize sales rather thanTransparency 17-4
 Working with an open cash drawer
 Under-ringing sales
 Overcharging customers
 Undercharging customers
 Overpouring
 Underpouring
 Diluting bottle contents
 Bringing one’s own bottle into the bar
 Charging for drinks not served
 Drinking on the job

Transparency 17-5
 Current Compensation
o Direct: salaries, wages, tips, bonuses,
commissions
o Indirect: paid vacations, health benefits, life
insurance, free meals, free living
accommodations, use of employer-operated
recreational facilities, discounts on
accommodations at other properties within a
chain
 Deferred Compensation
o Pension benefits
o Social Security

Transparency 18-1
 Labor turnover rate  Layout
 Training  Preparation
 Labor legislation  Service
 Labor contracts  Menu
 Use of part-time staff
 Outsourcing
 Hours of operation
 Sales volume
 Weather
 Location  Competent
 Equipment management

Transparency 18-2
Labor turnover rate = Number of
departing employees ÷ Total
number of employees on staff
 
Break-even for staying open an
additional hour = Fixed costs ÷ (1 –
Variable rate)

Transparency 18-3
With all full-time staff:

Wages: 4 dishwashers × 35 hours × $7 per hour = $980

Benefits: $980 × 20% = $196
Total labor cost: $1,176

Transparency 18-4
With full-time and part-time staff:
Full-time dishwashers
Wages: 2 dishwashers × 35 hours × $7 per hour = $490

Benefits: $490 × 20% = $98

Part-time dishwashers
Wages: 10 shifts × 7 hours × $4.50 per hour = $315

Benefits: $315 × 10% = $31.50

Total labor cost: $934.50

Transparency 18-4 (cont’d)

1. Organize the enterprise
2. Prepare job descriptions
3. Schedule employees

Transparency 19-1
Interviews and observations are designed to
provide information about the following:
 Job objectives
 Specific tasks required to achieve
objectives
 Performance standards
 Knowledge and skills necessary
 Education and experience required
Transparency 19-2
Answer three questions
 What is to be done?
 When is it done?
 Where is it done?
Contain three parts
1.Heading that states the job title and the
department in which the job is located
2.Summary of the duties of the job (typically in
paragraph form)
3.List of the specific duties assigned to the job

Transparency 19-3
1.Determine the number of employees needed to
serve a specified number of covers in a certain
time period
Example: 8 servers for 500 covers in a three-
hour lunch period
2.Standard work hours = Number of servers ×
Number of hours
8 servers × 3 hours = 24 work hours

Transparency 19-4
Number of standard work hours × Hourly wage =
Standard cost
Example: 24 hours × $4.00 per hour = $96
standard cost

Transparency 19-5
 Objectives
 Approaches to training
 Training methods
 Instructional timetables
 Location
 Lesson plans
 Trainer preparation
 Trainee preparation
 Training session(s)
 Evaluation

Transparency 20-1
  On-the-job versus off-the-job
 Structured versus unstructured
 Individual versus group

In general, trainers first select a training

approach; then they employ a variety of
training methods that compliment the
approach

Transparency 20-2
Studies show that people tend to prefer
learning things in one of three ways:
 By hearing information (oral)
 By seeing information (visual)
 By doing the skill (kinesthetic)

Transparency 20-3
Therefore, an effective training should use a variety of methods:

 Lecture
 Demonstration
 Role playing
 Individual assignments
 Field trips
 Seminars
 Case studies
 Panels
 Programmed instruction

Transparency 20-3 (cont’d)

Since people learn better when they
understand the need for learning, an
introduction to any training should always
include:
 Objectives of the training
 Instructional method being used
 Skills trainees will learn

Transparency 20-4
1. General background
2. Specific duties of a job
3. Specific procedures for carrying
out the duties
4. Summary

Transparency 20-5
1. Customers
2. Employees
3. External
agencies/organizations/groups
4. Managers

Transparency 21-1
 Government agencies
 Chain organizations
 Food critics
 Rating organizations

Transparency 21-2
1.Meet with appropriate staff to point out the
problem and to determine its cause
2.Identify all appropriate corrective measures that
might be adopted
3.Select the best corrective measure from among
the alternatives
4.Institute the selected measure
5.Monitor performance to be sure that the
corrective measure has the desired effect

Transparency 21-3
 Inadequate performance
 Unsuitable standards
 Inappropriate organization

Transparency 21-4
 Improper materials provided to workers
 Lack of required equipment or tools
 Need for additional training
 Inadequate management or supervision
 Poor union/management relations
 Personal problems away from the job
 Difficulties with interpersonal relations on the job
 Inadequate compensation
 Illness
 Poor working conditions
 Improper work schedules

Transparency 21-5