61.4% pcp

[DeuceK]

First of all, I would like to introduce myself as a small bar/nightclub owner in Indiana.
We have a 2800 sq. ft., 140 seating capacity bar with a dance floor, DJ booth, pool table, etc.

When my co-owner and I first opened the doors to our 9 month building project (apparently that's how long it takes for us 2 guys to completely remodel a building from the basement up into a bar), we had no idea what to expect. Business was off the radar the first weekend we opened. Back then we knew nothing about pour costs, hell we were just happy to see our project doing so well and giving us an income.

But times changed. The bar turned into a place for people to look for fights, so obviously the local PD and excise were not happy. We hired 3 guys for security, but that didn't help. Fights still broke out and we became desperate. We changed the theme of the bar to a rock music only venue, and instantly saw a drop to almost 0 for sales. We are located in a small town, people don't take changes well here.

So, we decided to risk it and change the theme back. Over the course of about 3 months, we now have our old crowd back, but suprisingly without the trouble makers and the fights. Sales are back up, or so we thought. The past month or so, the amount of money that the bar would make barely covered the cost of the alcohol, the dj, and the employees. We have had to make some serious budget cuts and penny pinches to pay our bills. Overall, the bar can break even in this way.

I couldn't take it anymore though, no paycheck for almost 3 months has left me and the other co-owner scrounging for change for food. I had head the term "pour cost percentage" before but never looked to deep into it until now. After browsing this forum (which by the way I think you all have given me an opportunity to save this venue) I learned all about pour costs. So I averaged our pour costs for our bar, and our average pour cost on all of our stock is 26.6 %. So i figured in how much money we spent on alcohol just last week and was shocked by a pour cost of just 1 week of 59.8 %. So I checked back on a couple weeks ago and saw a pour cost of 61.4%. Wow ok something is horribly wrong here. Whether it be massive overpouring and free drinks for bigger tips, sloppy money and alcohol handling, or just straight theft, we don't know.

We sat down our employees, showed them these figures, and asked them if they knew anything about what was going on. Of course, they denied everything. So as our last resort, we told them these numbers WILL line up to a max of 30 % PCP or we will restaff next week. Sound too harsh?

We are open wednesday - saturday, so I had a chance to figure our PCP for last night (which was extremely slow for what we usually pull in), but there it was, a 22 % PCP for last night. But, that was on a slow night, who knows what will happen tonight or on the weekend where mass confusion of excuses, wasted product, or accidents could come into play.

We may have pinpointed our problem to 1 employee who seemed awfully distrought about our new-found PCP and inventory system, but catching someone in the act is hard to do, especially with 1 shared cash register (we could afford a 2nd one if the bar had extra money, but like stated above we can barely pay bills right now).

So my question for any experienced bar/nightclub owners/managers out there is do you think we have done the right thing and are on the right track?

Any advice or tips from the more experienced would be greatly appreciated here.

[Emerson]

Stand behind the bar and watch the flow of money is my recommendation. If you watch the transactions in more detail you will be more likely to see the defects in your business specifically relating to pour costs.

Sometimes just by being there and your staff realizing they cannot get away with anything they want is a good deterrent.

There are obviously many solutions to weed out this so called "spillage / leakage / theft!!" and by being on premise and involved in the transactional process you can get a handle on the operation in more detail.

You should watch the pour count (oz per drink) and the actual cash and whilst you are there you may notice a weaker bartender who is losing you sales?

All of this can be gathered through data analysis but given your time crunch first hand maybe a more expedited solution.

-emerson

[grpubboss]

To be honest, you have answered yourself by checking your pour cost.You have found theft, and l would fire all your barstaff because of it, no exceptions or excuses!! You have lost a tremendous amount of YOUR income because of them.
Also for a place of your size you should have at least two registers,and have some sort of control over your liquor pouring even if you use the posi pourers for measured control.l would also do a liquor check EVERY night for at least 2 weeks with your new bar staff and make sure they are aware of you doing this and you will see everything pull into line.

[owneroper]

I agree with grpubboss, fire them all, they all have a hand in your money. They are stealing money and overpouring. Get measured pourers and weigh liquor everynight. I would also get another register. You can get a cheap scale for 30-40 bucks, makes sure it does oz and kilograms. You can get a cheap register for about 100. I know your desperate for money but these would be well spent. Cant one of you sit at the bar and watch that will somewhat deter them until you get a handle on things.

[The Comedy Zone]

Get rid of them!!! Pour the drinks yourself if you have to until you find new staff...stop your losses now!

[DeuceK]

Thank you all for your help and replys. It seems like the agreeable thing to do would be to completely restaff, but in all honesty, they are good bartenders. Theyre friendly people, I like them and so do my customers. Of course, that is no reason to keep them on staff if they keep stealing, but I would much rather give them at least the opportunity to straighten out before just flat out firing them.

On another note, I made a mistake with the way I counted liquor inventory. I have been using the method of holding a ruler up to the bottle, but quickly found out that it is extremely hard to get an exact amount of the liquor that is in the bottle that way. I took your advice owneroper and bought a set of scales which makes things a hell of a lot better, thank you. I couldn't get an accurate PCP or inventory count for last night (which was at max capacity by around 11:00) because that ruler thing just really doesnt work with all the different shapes and sizes of bottles, but we've been keeping on the staff about those numbers and I guess we'll see what they look like after tonight. I am in fact prepared to pick up my bar towel and do the work myself if that is what it comes down to.

[owneroper]

deuce they are stealing. Of course they are friendly they are making a ton of money. Habits like that are hard to break, you will never cure them. The friendliest one is the biggest thief. Fire one and get the ball rolling. Every thief I fired the customers loved.


While the ruler is not exact it still tells you your missing way too much money. Bottom line is your not getting any money. It aint right, do the math 24 times how many ever cases you buy for beer and the math on the liquor, not sure of your shot size but there is a document in the doc box to tell you how many shots a bottle depending on your bottle and shot size its that simple thats how much you should be taking in.
Do the minimums, use use happy hour prices and the lowest liquor price you have. As a matter of fact dont because it will make you very angry when you see your not even making the bare minimums because of all the friendly people you have on staff.

A small bar will go under very fast with these practices as you can see. You have the business now wheres the money. Sorry for the rant but this really pi**es me off.

[BARTENDER 54]

DueceK,
BEFORE your fire everyone....Get a BUDDY that none of your BTs know and have him just watch from the bar...there is a VERY good chance that it is not ALL of your staff...And when you find out which one(s) are ripping you off stand him up in front of all the rest of your staff and castrate the bastard...not literally, but verbally...and embarass him in front of his peers.
Anyway good luck,
Rick

[originolsin]

STAND BEHIND THE BAR!!!
It sounds like you are attatched to your employees, that is a big mistake. It makes it hard to fire them, and you should never be dependant on them either. I have sent people home and have done their job, it proves to them that they are replaceable and if they want to work there they will follow the rules. These people are stealing from you. If you made money in the beginning and it seems as though you should be making money now, something is seriously wrong.
If you dont want to restaff, fire one or two that aren't doing what they are suppose to do and the others will straighten up for a little while. How ever, mixing good employees with bad ones will eventually hurt too. I would fire them all or all but one or two. If you don't take extreme measures now, you won't have to worry by summer time because you will be looking for a job yourself.

[bargirl23]

so you can have an accurate reading on your pour cost... on this forum go to the equipment, technology, and design area and click on inventory systems. in there i put two attachments, one is to track your inventory costs and then the second is to use the inventory costs to get to your pour cost. you can tweak them from monthly to daily and also from the point system that i use to the oz system with the scales. it is so easy to use. also, start making them save the empty bottles and use this to compare them to what you are actually using. some bartenders will bury them in the garbage can thinking that you won't know that they used it. if i were you i would fire everyone, however i see your point, so i agree that you should get a friend that no one knows to come in and scout the staff. have them look for overpouring, pocketing of money, hitting the no sale button when there should be a sale. if they are doing this one, then i can guarantee that all of them are in on it. because they are housing the stolen money in the drawer and then taking it out as they count their tips out. once you do that, then you need to stand behind the bar literally. you need to watch every transaction, every drink made. you can also make them start using a jigger or shot glass to measure every drink. if i think of anything else, i will let you know. good luck and let us know how it turns out.

[Joe]

I hope this doesn't seem ridiculous, BUT!
Do you mind sharing the formula that you are using to calculate your pour costs?
Also, are you writing down or ringing up all comps and spills? The reason that I ask about your formula is that it's possible that you are not taking into account Beginning and Ending Inventory. That is to say that you are simply adding up what you bought this week and dividing it by what you sold and thinking that the number is your pour cost....just a thought.

On top of your pour cost, once you get it under control you'll want to look into your shrinkage. Shrinkage being the difference between what was poured and what was SUPPOSED to have been poured. Have you asked your staff, or even told them what you pour SIZE is? How much liquor do you expect them to serve in a single? How bout a double, is it a real double? In which case you should charge twice as much as a single or is it 50% more liquor and then you charge 50% more?

Lastly, what is the size of your glassware for each drink, especially your shot glass if you are doing alot of shots?

Okay, really lastly, whats the shape of your ice cube and are the staff instructed to pack the glass full of ice?


Oh yeah, like Bargirl mentions, Jigger pouring will solve 90% of the problem immediately. But again, they must know what you are expecting your guest to served in terms of portion size. I could go on about this all day, but another big part of keeping your PC and shrinkage down is convincing your barstaff that the LESS they pour the MORE they make. Simple rule of tolerance for alcohol.

[Newbei]

What is everyone's ideal "Pour Costs" that you shoot for? I hear anywhere from 16% to 30% and even higher.

Another question is what is the ideal overall COGS percentage? I'm looking at a bar that is right near 60% and I beleive that is WAY high! This is in an establishment that is probably 45% Beer, 45% Liquor and only 10% food! With this sort of split I would think the COGS would be lower than most, rather than higher?!?! What do bars that sell mostly liquor run for COGS?

Drink prices seem to be fairly good in this bar also:

Wells $3.50
Calls $4.50-$5.50
Bottle Beer $3.00
Tap Beer 12oz $2.75 26oz $4.50

What would you guys/gals do to figure out what's going on? Appreciate the help!

[Newbei]

Also, what is the ideal ice cube shape to use? I can see where this is also important.

[Joe]

Newbei,

The 1st thing I'd want to figure out about that bar is their shrinkage as I mentioned previously. You can't know anything about how to control costs without understanding portion sizing.

As for your COGS question: If you are including bar supply and inventory in the number then I'd expect a total COGS to be in the mid 30's. Lower for Bars, higher for restaurants. Our lowest (bar) is 31.8% and our highest (restaurant) is 37.2% of our 5 locations.

The most ideal ice cube shape is lenticular (looks like a lens) sloped to a fine edge, the ice melts from those edges in so it takes longer to melt as well as the most lenticular cubes fit in a glass to limit how much liquor is necessary for appropriate taste.

[Newbei]

Admin,

Thanks for the very quick response. I think shrinkage is definately an issue at this establishment. I've witnessed times that every one of the bartenders (6) in the bar drinking, and I'm sure they were not paying for the drinks.

This is an establishment that has had an absent owner and I think things are simply out of control with the help. Their COGS averages 50% over the past 5 years and the theft is probably why. With Liquor being 90% of their sales, the COGS should be closer to that 30-35% range. (Maybe less!)

That said, this may be a golden opportunity to take something that is broke, fix it, and turn things profitable again, or, if the crowd is there because of the bartenders, getting rid of them might possibly be a kiss of death for the business. Might be death anyway if the shrinkage continues!

The bar needs to be able to support a mortgage, a modest owners salary and some sort of ROI on the initial investment. They are now operating with no mortgage, no owners salary and only about 9% operating income.

I'm having a hard time determining what to offer for the bar. The real estate is pretty simple, as well as the FF&E. The value of the business however is more difficult to determine.

If anyone has any good advice, I would REALLY appreciate it!!!

[DeuceK]

Yes I did get the number of 61.4% by dividing what we spent on alcohol last week to restock what we were missing by how much money the bar brought in from sales. We use a base system to make ordering easier, so we always spend just enough to restock to what we had the week before. I know that I cant really get an exact number from those numbers, but it shouldn't be that far off.

Our pour size is 1.5 oz for a drink and 1 oz for a shot. A double is a real double, 3 oz for a drink or 2 oz for a double shot, and customers are charged a full double amount. We have been clear on that with the bar staff, and they know what we are expecting as far as how much to put in a drink, shot, etc.

We use 12 oz plastic cups for every drink, ice is packed into the cup 3/4 full, and the ice is that lenticular shape stated above.

We have 3 different size shot glasses that we use. 1.5 oz glass shot glasses with a 1 oz line, 3 oz plastic shot glasses for when we run low on glass (can't afford 600 glass shot glasses at the moment), and 5 oz plastic shot glasses for jager bombs, cherry bombs, etc.

We don't use jiggers, but all of my bar staff should know what they're doing and how to pour 1.5 oz compared to 1 oz etc, we also do use measured 1 oz pourers to help out a bit.




I wrote my own spreadsheet to calculate all costs, usages, prices, and pour costs. I also bought a set of scales so that I can take an accurate reading on how much liquor is left in a bottle, and i weighed an empty bottle of everything that we have. The only thing that is not exact is the weight of 1 oz of liquor of everything, but I weighed a few common things and it turned out that 1 oz of all the things i weighed is, in fact, 1 oz in weight on the scales.

Since we sat our bartenders down and showed them our numbers and told them that they will change or we will restaff, our sales over the weekend averaged around $600-$700 more each night. Here are my numbers from my spreadsheet just from friday alone:

file:///C:/Users/Ken/AppData/Local/Temp/moz-screenshot.jpgfile:///C:/Users/Ken/AppData/Local/Temp/moz-screenshot-1.jpgTotal Money Spent: $591.42
Theoretical Money Made: $2021.46
Theoretical PCP: 29.26%
Actual Money Made from Z: $1941.75
Actual PCP: 30.46

Beers Sold: 282
Shots(at 1.5 oz) Sold: 432.69

If anyone is interested in where those numbers come from, I attached the spreadsheet that I used. Basically, we enter in the stock we had before and after the night, and it calculates how many were used, how much it costed us, and how much we should have brought in from it. I know there are probably some kinks to be worked out with this sheet, but for now it looks pretty good (the only thing i couldnt account for is when we are completely out of stock on an item that we had before, but entering in the bottle weight in oz in the after column does the trick - these items are highlighted in red on the sheet)

[owneroper]

what do the owners books show? annual sales, profit/loss. 90% liquor sales seems high to me, I wish mine were that high. When owners are absent things usually are out of control. How long has it been a bar? Where do the customers come from? Do you see the bartenders giving stuff away? or are they charging and pocketing the money. Last three bartenders I fired didnt give anything away, they just didnt ring up the money. The good news is I didnt lose cutomers over free drinks

[owneroper]

deuce k how did your night go and how did the weights come out?

[Newbei]

Owneroper

Beleive it or not, they do sell approximately 90% liquor! The bar has been there for well over 50 years. Good ol boys place. Lots of history.

I have seen the bartenders give stuff away, but you may be right, a lot of it may be going in the till, but not rung up, or simply going in the tip jar, right next to the till. Have noticed their friends just expecting it for nothing. Mostly always tap beer.

I don't know the till procedure, but some of them seem to be minusing the amount prior to adding the amount, thus the till having a no sale, but the last thing showing on the display is a sale. No POS system, just a cheap $100 electonic till. Not sure if the owner even looks at the tapes.

If they are just stealing from the bar, that can be remidied. (Fire them)

[HYDDYN MAVURIK]

deuce they are stealing. Of course they are friendly they are making a ton of money. Habits like that are hard to break, you will never cure them. The friendliest one is the biggest thief. Fire one and get the ball rolling. Every thief I fired the customers loved.


While the ruler is not exact it still tells you your missing way too much money. Bottom line is your not getting any money. It aint right, do the math 24 times how many ever cases you buy for beer and the math on the liquor, not sure of your shot size but there is a document in the doc box to tell you how many shots a bottle depending on your bottle and shot size its that simple thats how much you should be taking in. Do the minimums, use use happy hour prices and the lowest liquor price you have. As a matter of fact dont because it will make you very angry when you see your not even making the bare minimums because of all the friendly people you have on staff.

A small bar will go under very fast with these practices as you can see. You have the business now wheres the money. Sorry for the rant but this really pi**es me off.

That is right. Here is the document (http://www.nightclub-business.com/forum/attachment.php?attachmentid=530&d=1230430909).