Bar Inventory

Photographer:Mitch Rosen via stocksnap.io
Photographer: Mitch Rosen via stocksnap.io

How to track inventory costs for craft cocktails.

In an article written many years ago Jeffrey Morgenthaler wrote about how to calculate Pour Cost.

In the broadest sense this number gives you the ending value of your change in inventory, or how much money you took in vs how much booze actually went out the door.  Pour cost can reasonably be considered a kind of gross return on inventory.  While I’m sure that comparing this number month to month will tell you a bit about how your drinks are selling in aggregate they don’t tell you the whole story about your inventory use.

The reasons for this are due to the varied ways in which inventory can be taken.  You are probably shaking your head right now asking, “Isn’t there only one way to count?”  If accounting classes have taught me anything it is that there are as many ways to count as there are types of business.

For instance, in some states the price of a given bottle of liquor isn’t going to change much month to month.  In others the cost of a bottle can be based almost entirely on the volume of liquor you are buying.  So a bottle purchased on the 1st of the month doesn’t exactly have the same value as one purchased on the 20th even if your own prices don’t change.  This can be especially important in a bar where the price of a shot can vary drastically based on label or age.

In some other places I have seen distributors make deals where a case will be purchased at full price, a second at half and a third is given free as a purchase incentive.  Keep in mind I have no idea if that is even legal in the places where it happens but it does happen somewhere.  How do you price a bottle from one of those cases?

Counting Bottles

The answer has to do with how you handle your inventory.  There are three main methods recognized in accounting.  First In/First Out (FIFO), First In/Last Out (FILO), and Weighted Average.

Take the second example above and enter the cases into inventory as they are purchased.  A bottle from case 1 costs $20, case 2 costs $10 and case 3 is $0.  Under FIFO the bottles from case 1 are used up first which means that the drinks made from those bottles will have a normal cost but as you use up that first case the value of your inventory will decline more quickly.  Say you use 1.5 cases a month, Month 1’s ending inventory will be a lot lower.   Then in month 2 you will see very little decline at all as that third case doesn’t change your inventory values at all.  This isn’t a bad thing it simply means you’re loading all the savings into the first case and taking a hit on the third.

Under FILO the reverse happens.  The newest bottles are always the first ones to go so if they are the least expensive then your inventory numbers will always be high compared to your sales giving you a high pour cost.  If the new bottles are always more expensive than the old it will drive you pour cost down.  This can have a bigger impact on items that have a variable price but aren’t totally used up before restocking.

Weighted average is possibly the best option overall.  The numbers it provides are more even and representative of the general cost of a product regardless of how much of a swing in price it has.  The downside is that it requires a little more math to figure out.  In our example above the three cases are added together and averaged.  So each bottle is $10 ($30/3).  This means that you have a more regular number to use when figuring out individual drink costing and that you aren’t going to get wild swings every time an older bottle is used that throws a kink in your numbers.

Putting it together

Why is this important?  It becomes important because the per ounce cost of a given bottle is going to vary every time you restock.  Seldom will the price of a bottle or case remain static for a long period of time.  Before you can accurately count your pour cost/profit margin you need to now if the value of that inventory changed because of a change in the cost of the bottles themselves.

What does pour cost tell you?

Pour cost is an after action number.  Meaning that it doesn’t really help you to plan your purchasing, your menu, or your staffing.  It tells you if you were making money on the stuff you bought since the last time you did inventory.  A lot of factors can impact this number.  Some bottles may be initially expensive but lack a demand at the time of purchase.  This is going to drive up your starting inventory numbers and your ending inventory numbers without really impacting your sales.  Similarly a cocktail that has very little actual alcohol in it but has a high cost because of time intensive craft ingredients and preparation may drive up your sales without impacting your inventory in a big way.  In most cases pour cost is simply a quick way to tell if you’re making money or not.  It might also be a lead in to finding shrinkage from over-pours and unrecorded “comped” drinks.

Pulling from the shelf

It is important to note that one bottle of a given brand of booze is much like another.  If you have 10 bottles of the same Grey Goose expression on the shelf and each one cost you a different amount it doesn’t really matter which one is which.  As any bottle is used the inventory method determines in what order they are deducted from your spreadsheet.  I have run into people who get really anal about pulling the oldest bottle first when they’re using FIFO but unless your product expires in some way this isn’t really necessary.  If the expressions are different then there is a difference and the bottles should be inventoried as separate items, this might be true of a specific barrel number, bottling year or blend.

Next up: How this relates to menu creation and drink costing.

New Drinking Gadgets Overview

gear

The following is a listing of drinking gadgets, hardware and tech that I am presently too poor to review personally.  I wish I had the cash for these but time will tell.  If you personally have one, please feel free to comment with your own take on their actual application.

Fizzics beer dispenser:  Looks like a 1 bottle keg replacement.  Having had to clean beer lines before I can only imagine how hard it would be to clean and sanitize this bastard without a slew of bottle brushes and a gallon bucket of iodine wash.  Retail at $200.  On sale for $150 last time I checked.

Jevo Jello Shot Machine: Really intended for the bar itself rather than the home, this machine appear to still be in the pre-order process.  Pricing isn’t listed unless you fill out a contact form.  It also appears to use “flavor pods” which sounds like a K-cups scheme to try to lock you into their supply of basic ingredients when you can get 12 pounds of unflavored gelatin for about $150.  I have some friends who regularly make trays of these shots but I don’t think the countertop unit would save that much time.

Somabar: Robotic Bartender: A completed kickstarter that is still in the production process.  You can pre-order one of these for $429.  It holds up to 6 ingredients in the “pods” on either side.  I’m sure there is an optimal load for one of these things to make the maximum number of drinks but I can think of 6 base sprits to put in the thing right off the bat so if you’re really into craft this isn’t going to last very long.  Additionally I’m betting that carbonation isn’t going to fly which removes anything with coke, ginger ale, club soda or tonic without adding an extra step.  The size of this thing in photos says it will fit in any kitchen, but I’m betting someone in a loft apartment with an efficiency kitchen isn’t going to have the counter space for something this size.  This is certainly one of the best looking units I’ve seen recently but I don’t think it’s ready for anything more complicated than a good highball.  I can make a lot of screwdrivers with four-hundred dollars.

Picobrew Zymatic: Countertop beer brewing appliances are hardly new but this one clocks in at a whopping $2000.  Brewing 2.5 gallons of beer in about 4 hours is an amazing accomplishment when you take a lot of the hands on aspects of the process into account.  I’m not as into home brewing as some other people I know but most of them don’t have the scratch to plonk down on something this big.  Carboys are cheap and so is most of the associated equipment.  If you have the time but not the money you can do bigger and better things cheaper.  If you have the money but not the time, maybe go support one of the many fine craft brewers who are working to break into distribution in markets dominated by the likes of AB-inbev and Millercoors.

ALCHEMA: Cider is the new beer.  Fruit juice is cheap and plentiful and you barely have to do anything to it for fermentation to start.  The process can be finicky, having one batch of accidental cider some out tasting like old shoes is more than enough incentive to look for better options.  Clocking in at somewhere around $500 depending on when you backed it or pre-ordered this is not a consumer grade piece of tech.  Unlike the Picobrew, this process appears to take a bit longer.  1-2 weeks for cider and longer for some other things like mead or wine.  Having just gotten off of a cider making binge this somewhat irks me.  Primary fermentation, or the simple transfer of sugar into alcohol is pretty quick, but the resulting output is often cloudy, full of yeast and has a lot of odd flavors that can be removed if you remove the solids and let it sit and rest for a bit before drinking/bottling.  This machine seems to want to accelerate that process by taking the finished product out as soon as possible.  The self sterilizing carafe is a nice touch and does remove a lot of the messier aspects of the cider process but again, $500 buys a lot of craft cider and you don’t have to wait 2 weeks to see if it’s good.

How Do I Ship Alcohol?

Every Christmas season shoppers the country over are buying presents for relatives in the form of bottles of wine, beer and spirits.  They’re thinking of stuffy in-laws who like their single malt and brothers who just want a taste of the local craft distillate. When they get the whole thing wrapped they get a severe shock at the post office when they try to ship it.

USPS

The USPS publication 52 on Hazardous, Restricted, and Perishable Mail lists liquor with a ABV of 0.5% or higher as prohibited.  That means the US mail is a no-go for anything even remotely drinkable.

Big Shippers

The two other major delivery services UPS and FedEx have the following to say.

UPS does not accept shipments of beer or alcohol for delivery to consumers.

And

Only licensed entities holding a state and federal license or retailers holding a state license may ship alcohol with FedEx. Consumers may not ship alcohol.

Several of these companies will ship to a licensed receiver if you are also licensed.  It took some digging to find, but the license they are talking about is a state permit to produce or sell alcohol.  In most cases this would be the same one you would have as a brewery, distillery, bar or winery.  It is possible that the shipping portion is an add-on to the basic license but this kind of thing varies from state to state so it’s impossible to say what the local regulations are for sure without a lot more digging.

What I can tell you is that the costs of a license vary all over from a $0 permit in Missouri to  South Carolina’s $650 fee.  Since each state would require a separate license and it appears you would need a license in both the state you are shipping from and the state you are shipping to, the costs add up quite quickly and the application lead times make last minute shopping impossible for such a simple purchase.  The need for 50+ license with appropriate rolling fees also means most breweries, wineries and distillers are not going to hold the requisite approvals to ship your purchase out of state.

Others

On the Grey Market side of shipping there are websites like Uship.com where one can proffer shipments to be taken by private services from here to there.  Since the jobs are bid on by the various haulers there isn’t a fixed price but the estimate tool on their site does allow you to select alcohol as your product.  I punched in two zip codes on either side of town, a trip of about 40 minutes in the right traffic and was presented with a bid of just over $200 for a 5 lb bottle of liquor.

Hand Delivery

If you have the desire, you can take the bottle to your loved one yourself.  According to the TSA you can take ,any quantity of alcohol (in checked bags) at less than 24% ABV as it isn’t regulated.  You may also take up to 5 Liters (a little over 6 normal bottles) of alcohol in you checked luggage so long as none of it exceeds 70% ABV.  Anything above 140 proof is right out.  For some more long winded and detailed info about taking alcohol into and out of the country see this post.

Carry-on still has the dumb limits on bringing liquids on board unless you managed to buy an overpriced bottle at the duty free shop.

One serious exception to the shipping rules are for wineries.  Several states, many of them big wine producers have joined a common cause pact.  Under this pact people may visit a winery, buy a bottle and have it shipped to their home.  The purchase is treated as if it occurred in their home state and the winery takes care of all the necessary paperwork.  This is a nice benefit if you’re taking a trip through Napa or seeing the sights of the Oregon Wine country, but not so great for beer drinkers or whiskey lovers.

Yeast Cultures

For years beer brewers have been shipping homebrew suds by calling the product live yeast cultures as a gentle fiction for shipping purposes.  If you absolutely must ship your product for the love of god don’t use the USPS.  It is actually a crime to do so where for UPS and Fedex it’s simply against company policy.  When using an alternate shipper ensure your bottles are packed in boxes without a lot of dead space.  Ensure adequate packing material to prevent impact damage.  Bubble wrap is preferred but inflatable pillows are also excellent if you can get them.  Lastly, don’t ship more than one bottle at a time.  If you have appropriate packaging you can risk it but the bottles are more likely to break each other than they are to fall to something outside.

Why can’t I take Everclear on the plane?

IMG_20131206_092742One of the more unusual restrictions I found when researching what alcohol you can take on a plane is the limit on proof.  For airlines the limit is 140 proof or about 70% ABV.  This limit applies to checked luggage only from what I can tell.  Bottles in your carry-on don’t seem to get the same treatment.  This led to two possible answers.  First is the fact that high-proof spirits are actually illegal to sell in at least 15 States and transporting them could lead to significant liability.

Second is the possibility for damage to the aircraft and cargo.

For legality purposes it is illegal to sell alcohol at 190 proof in California, Florida, Hawaii, Iowa, Maine, Maryland, Michigan, Minnesota, Nevada, New Hampshire, North Carolina, Ohio, New York, Virginia, and Pennsylvania.  It’s totally legal to own so far as I’ve been able to tell but as with many other things the devil is in the details.

My college chemistry courses taught us about a concept called vapor pressure.  Essentially the boiling point of a liquid is decreased depending on the amount of atmospheric pressure applied to it.  This is the reason that people who live at high altitude or who go hiking in the mountains have to take care when cooking.  Water will boil at a much lower temperature leading to inaccurate cooking times.  As you can see below the boiling point drops significantly as the pressure decreases.   Standard cruising altitude for most aircraft is 30,000 feet at which point the pressure would be around 226 torr outside.  Given the chart below that puts the boiling point somewhere between 40 and 65 C.  The closer to 200 proof you get the lower the boiling point.

When alcohol boils it turns into a gas which rapidly increases the pressure inside the bottle and causes either the cap to fail or the bottle itself to shatter, at which point you have a quantity of highly flammable gas loose inside the hold of an aircraft.

Not to mention that the exploding liquor bottle and flying glass could do a bit of damage on their own.

Depending on the aircraft most cargo holds are generally pressurized and heated.  Some aren’t heated but regardless the changes in pressure and temperature shouldn’t impact a bottle while in flight.

So in the end this amounts to an overabundance of caution from the airlines.  I’ve reached out to some airlines in an effort to better understand this restriction but have not yet heard back from any.

Gojee Drinks

gojeeI stumbled across this on another bloggers site. Gojee is a food and drink site that helps bloggers.

The basic idea is that they aggregate recipes from various contributing bloggers and display them in an easily searchable format.

Some initial impressions.  I couldn’t get the sign up using facebook or google to work and had to create a new login.  Not a great first impression as I hate creating new logins for things when existing ones will do.

The drinks side of the site is very pretty.  The whole screen is devoted to the photos of the drink with minimal controls around the top and sides to let you delve into things more fully.  Since many bloggers do their own photography you can see some very lovely shots of drinks just scrolling through.

The controls are responsive but somewhat poorly laid out.  If you open the ingredients list you lose the ability to scroll to the right via mouse.  Keyboard scrolling still works using arrow keys but that isn’t really stated, so I had to spend a minute figuring it out.

Once you find a drink you like you can click on the ingredients and get a very scrubbed list of what is in the drink.  It appears that unless you list something by name it will substitute the generic option.  So suggesting Buffalo Trace as your favored bourbon for a cocktail might not carry over but listing Hendrick’s Gin would carry over.  This could result in some AND/NOT OR search problems where looking for one filters out the other entirely.

The lack of some ingredients may have more to do with the source of the recipes than anything else.  Each of these is contributed by individual bloggers and not from some kind of central drink database.  So there could be a plethora of martinis and daquiris but some rarer drinks may fall by the wayside.

Once you have a look at what the drink has in general, you can add missing ingredients to a shopping list, or click on the full recipe at which point you are directed to the original blog post.  This is a nice touch and a neat way to drive traffic to bloggers with good ideas and good photos.

The site also allows you to make a list of things you already have, and things you would like to avoid so that it can actively filter things.  They even let you dislike alcohol which lets you see kid friendly cocktails and sodas.

There is a favorite items list on the site and it has a full range of social media sharing buttons which makes it easy to compile your own cocktail menu.

I applied to be one of their contributors but their submission process didn’t leave me with a lot of information.  I will update if I hear back from them later.

I see a lot of duplication on the site, Just poking around in gin cocktails I found “The Income Tax Cocktail” and “Income Tax”.  A classic from “Vintage Spirits and Forgotten Cocktails”, having it show up twice under slightly different names means that a lot of the recipes here could simply be variants on each other.  I’m not sure how many super glossy photos of a basic martini we need but I know there aren’t that many ways to make it differently.

Final thought, Come for the photos, leave for the blogs themselves.

Understanding the Tequila NOM

sparkledonkeyNow a lot of the internet might be thinking that I’ve somehow come up with a great new baked treat that incorporates tasty tequila, this is sadly not the case.  (But would make for another great post).  The NOM or Norma Oficial Mexicana is the standard that regulates the production of tequila in Mexico.  By law and tradition Tequila is a distilled agave spirit made in the city of Tequila in the Mexican state of Jalisco, pronounced (Hal-is-co).  The law was eventually expanded to allow any distiller in the state of Jalisco to call their spirit tequlia, and even after that some parts of the neighboring states of  Guanajuato, Michoacán, Nayarit, and Tamaulipas.

As you can see it’s an oddly shaped little state with protrusions and that kinda pitchfork looking section on top.

Much like the French  appellation d’origine contrôlée restricts what you can call Champagne, Bordeaux and Roquefort, the NOM limits tequlia’s to this region and imposes other standards on the production.  It isn’t a mark of quality it simply assures that you’ve bought something that was actually produced in mexico and is what you could consider “legit” tequila as opposed to a knockoff.  If you check a bottle of tequlia you’ll usually find the NOM as a 4 digit number on the back.

Much like any distillery the ones in mexico aren’t always brand specific.  The distillery can manufacture tequila for a number of different labels at different times of year.  You can actually look up the distillery online via http://www.tequila.net/nom-database.html This handy database lists all of the official NOM distilleries and which labels they bottle.  Handy in an argument if you’re trying to prove that 1800 is better than Jose Cuervo. (Fun fact if you look up NOM 1122 you’ll find that they both come out of the same still.)

There are a lot of other agave spirits from Mezcal to Bacanora each with their own regional history.

My own personal favorite Sparkle Donkey comes from a distillery called Destiladora del Valle de Tequila NOM 1438.  Some other brands from that same still include apocalypto tequila , Uno Mas and Verde Green an Organic Kosher tequila.  I’m not entirely sure what you’d need to do to have a Kosher Tequila but I applaud them for trying.

Blue Amazon

You may not have been aware, but you used to be able to buy alcohol through amazon.  To be clear, you couldn’t buy it *From* amazon.com but you could at the very least search for, tag, review, list, and add things to your wishlist via the many amazon affiliates who had connected with the site and offered links to their products.

As of mid June the entire category of Beer & Spirits normally a subset of the Grocery and Gourmet area is off the main site.  The category still exists and if you search for products in it you can still find a few.  It is impossible to browse to it from anywhere on the site.

I had a very well tended wishlist for bar tools, liquor and books that I wanted to buy for this site.  Things that I might not find locally or that I wanted to link to other people in some way.  My amazon wishlist was a good way to do that.   To an extent it still is, you can use the amazon browser button to add things from other websites.  This works if you’re just wanting a list.  But if you’re price checking, or looking for availability it can be a headache to update the links manually when something changes.

In addition, I make some of my money back on this site from affiliate links.  If I find a product I like, or even one I despise that I want you to try out yourself I will tag it with the best price I can find and let you decide for yourself.  Now that there isn’t a single bottle of anything to be found on amazon most of my links are going to be books, tools and other items but none of the various liquors that I try.

If you’re looking to curate a wishlist Drink Up NY offers a wishlist as part of their site.  They’re not comprehensive but they are very well stocked and I was able to find about 99% of what I was looking for within their pages.  I’ll do up another article about them another time but I’m quite happy with them so far.

Amazon hasn’t really released any kind of statement about the removal of their liquor affiliates or even sent an email to the people affected.  Searching their site turns up nary a reference to the change except that alcohol other than wine is now a prohibited listing.  The only reference I could find was from an off site advertising blog.

It could be part of amazon’s new attempt to sell wine directly.  Which is not the first time they’ve dabbled in the wine merchant trade.  They started something similar in 2008, tried a partnership with wine.com and invested in wineshopper.com at one point.

Another possibility is the many and varied difficulties surrounding taxes and alcohol regulations at the state level.  Online retailers often have to manage 50+ different sets of regulations and collect sales taxes from all of them just to ensure shipping.  Others simply require local delivery or in store pickup which makes finding an online retailer difficult and maintaining an online store costly.

I had thought that amazon had sidestepped this hurdle by only linking to off-site affiliates and not offering anything for sale directly through the amazon.com site.  I’m personally hoping that they bring the affiliates back, or at the very least explain what happened to change their policy.

Tech: Mr. Bartender App

Nobody can remember the exact amounts that go into a Harvey Wallbanger.  Not all the time anyway.  The secret most bartenders hold dear in their hearts is that they know how to make a very small list of drinks by heart and the rest they will either take a stab at or look up.  What they consider a small list might put the novice into fits of catalepsy. In return they often have to mix very few things outside of their comfort zone.  People are shockingly comfortable with rum & coke, screwdriver and gin & tonic.  None of which require even the slightest effort to remember.  Doing them well, is another story entirely, and relies on the quality of components as well as having a steady pouring hand.

For those of us who want to keep something in your pocket a little smaller than The Savoy Cocktail Book, I use Mr. Bartender. As far as free apps go this one does about 99% of what you could want.  It keeps a Kitchen of what you’ve got in stock.  Lets you search by name, ingredient or even combinations of ingredients.  And once you’ve gotten your bar loaded up you can just shake the phone and have it generate something random from what you’ve got on hand.

It also provides pictures of what the drink looks like, which can help a lot for layered shots.  If there isn’t a picture you can make the drink and submit your own shot.

And should you get a little creative you can submit your own creations including photos.