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.

Glaser Butterscotch Liqueur

glaserbutterWhen your biggest competition are Dekuyper and Bols chances are pretty good that you’ve got a product worth looking at more than once.  It has been some time since my first visit to the Glaser tasting room and I’m still licking my lips over some of their offerings.  As a craft distillery it can be hard to compete on the more simple spirits.  White rum, vodka, tequila and even dark rum have numerous big names making excellent products.  With the much higher overheads that craft distillers face they can’t compete on price on those kinds of products.  Enter the flavors and liqueurs.  I have seldom found a major label that does liqueurs with any kind of aplomb.  Be it limoncello, creme de Cassis, or even just a simple flavored whiskey craft usually has the time and the attention to make a product worth drinking.    Such is definitely the case at Glaser Distilling.  This little offshoot of a Roseburg winery has 4 different liqueurs currently on offer and each of them is excellent.

In particular I want to focus on their butterscotch liqueur.  Limoncello is becoming a fad and can be found in a lot of new places, you can’t swing a growler without knocking over a display of a dozen local coffee liqueurs and chocolate is equally ubiquitous.  Butterscotch is something I have seldom seen outside of a college shot party.

What makes the difference here is Glaser’s attention to detail.  Your typical bottom shelf butterscotch “schnapps” is a wad of fake sugar, fake flavor and sometimes fake color.  A gut bomb of artificial ingredients at less than $10 a bottle.  Glaser distilling makes their own butterscotch which gives this liqueur an even brown sugar flavor and an inviting brown color that can only come from a real caramelization process.  The flavors are rich with the deep molasses tones and bright buttery notes.

If you’re planning a college party and someone wants to make buttery nipples a bottle of bols will do, if you need something classy to sweeten up a cocktail you can’t do any better than Glaser’s Butterscotch Liqueur.

New Bar Spoon Design

standardspoonsexylogo_1024x1024One of the more overlooked pieces of barware is the simple and functional barspoon.  If it’s a well stirred cocktail, a pousse cafe or even just a simple float there is no good replacement for a barspoon.  The design is simply too unique.  An extra long handle, a well curved but narrow head and a well weighted end for proper stirring all contribute.  The folks over at Standard Spoon appear to have added a simple feature to this classic design that improves at least the stirring portion of that functionality.  After a successful kickstarter the spoon started shipping in August of 2015, at present the Wingman spinning spoon sells for $45.  The addition of a simple unattached tube to the handle of the spoon allows the bowl of the spoon to spin freely inside the mixing glass.  This isn’t quite the same as a swizzle stick but it does allow for stirring without quite so much effort and with a lot less ice chipping.

Admittedly this isn’t going to be a “must have” for a majority of your home cocktail making needs but if you value a well made stirred cocktail and haven’t ever had to stand there for 3-5 mins spoon in hand you don’t know what this is worth.

I would also like to give some respect to the idea that Standard Spoon had of selling spoons that don’t measure up to 100% of their QA checks. Their Runner up spoons are a knock down in price coming in at only $22.  This is still over $20 for a spoon, which does put it beyond my own impulse buy range for bar gadgets but I think the utility here is more than worth the price for a well made device.

 

Stone Barn Apricot Liqueur

apricot liquorQuite possibly one of the furthest flung points on the Portland Distillery Row, Stone Barn Brandyworks has a lot to offer.  Many of their products are seasonal, using fruit and grains from around the NW when they are at their freshest.  This can lead to a bit of a scarcity problem with some of their more popular bottles.

While looking for a good flavored brandy for use in some tiki cocktails I remembered their selection and made the trip over.  After an hour of samples in everything from Ouzo to quince liqueur I wrapped and bought my favorites.

Among them was this gem.  Using an Oat Whiskey base this liqueur pulls all the tart, sweet and tangy notes of fresh apricots into that earthy, bright base.  Far better choice than an artificially flavored apricot brandy.  This carries all of the color, weight and scent you could need for anything between spring and fall.  At $25 for a 375ml and $35 for a 750ml this is a bargain for anyone who needs apricot flavor in a cocktail.

The only downside is that Stone Barn doesn’t distribute very widely and production is often a limitation.  I checked listings and found bottles at only around 10 stores in Oregon, and only 1 outside of the Portland Metro area.  Some online sales are possible but appear complicated by state limitations.

Absolut Oak, or Absolutely Unnecessary?

aboakMajor brands are always looking for the next big thing.  In some cases it’s a novel flavor or a new expression of the latest barrel proof.  With the monstrous rise of popularity in whiskey, bourbon and other brown spirits clear spirits have started a decline.  Vodka in particular has started to slump (-0.3%) even in the face of an overall rise in the sale of hard liquor (1.3%).

This has hit the brand Absolut by Pernod Ricard particularly hard as they rely on vodka sales for a large portion of their portfolio.

It doesn’t take a rocket scientist to see the graph lines snaking both directions.  So what can you do?  Whiskey takes time to produce and the marketing turn from vodka to whiskey can likewise be a shift if you’re not already doing something similar.  Most of the major labels aren’t willing to sell in the face of such a boom so you can’t buy your way into popularity.

So someone, somewhere thought, “What if we made a whiskey flavored vodka?”.  Flavored vodkas have been a thing for a while now, and while they too are on the decline the idea isn’t without merit.

It runs into a number of difficulties at the outset.  You can’t make an *aged* vodka.  The regulations in the US and likely any number of other countries simply don’t allow for vodka to have an age statement.  Which is why you’ll often see non-whiskey products spending time “Resting” in a barrel.  Rested or Infused are the non-regulatory buzzwords that basically mean barrel aged without all the red tape.  Next, if you’re making a spirit from grain then putting it into a barrel, it’s really just whiskey.  Calling it a vodka means you spent the time on the still to take it all the way up to high proof before cutting it down with water.  You lose the “flavor, odor and character of whiskey” that you need for it to qualify under US regulations but you get a lot more mileage out of your spirit.

Something gets lost in the translation here.  People like whiskey for more reasons than just the smell of leather and the taste of cinnamon and vanilla.  There are subtle differences between vodka and whiskey that can’t really be explained by base ingredients.  It may be as simple as time and the x-factor present in a true barrel as opposed to a bag of toasted oak chips.  What you get with Oak by Absolut is really just what it says on the label.  Oak flavored vodka.

Whiskey snobs won’t be tempted, vodka drinkers won’t see the appeal, whiskey lovers won’t get anything out of this that they can’t get from a similarly priced bottle of whiskey.  At $27 a bottle here in Oregon this is way more than I’d pay for vodka and far less than I want to pay for bad whiskey.

 

Morgenthaler wrong on spirits buying?

I want to state unequivocally that I have a lot of respect for Jeffery Morgenthaler.  The man is a Portland icon, bartender of the year, and has been at the bleeding edge of cocktail innovation for years.  I bought his book, I visit his site, and you can occasionally see me in the comments there talking about accounting and cocktail costing.

Last year he wrote this article for Food Republic.  It’s taken me some time to get back to writing my own blog but I want to respond to a couple of his points.

The core of his article is when buying spirits: “Liquor made from grain is better from large distilleries, while liquor made from fruit is better from small producers.”

He breaks it down into a couple of points but I think you will find more in the exception to his rule than in the observance.  A lot of grains are commodities.  They are big bulk things that don’t differ very much from one place to another, there isn’t a sense of terroir like you get in wine because you’re generally not getting single small farm lots when you get your grain to the distiller.  You’re getting giant truck load lots that have been mixed and blended and homogenized.  This is not true all over the world.  A lot of craft distillers are now using estate grains, grown on the property of the distillery.  Or single farm batches where they know exactly where the grain is coming from and what kind of conditions shaped it.  Distilleries in Washington, Idaho, Montana and elsewhere are all doing this and others are trying to where they can.  In these cases the grain can make a great deal of difference in the finished product, good or bad.

Another point he makes is that liquor is in general a big industrial process.  For producers like Jack Daniels, Heaven Hill and Bacardi this is often true.  For craft producers it is almost never true.  Even the largest craft producers are still doing a huge amount of their work by hand, and using equipment that doesn’t have anything like the level of control that you are likely to see elsewhere.  The upside to that, is they are using equipment that would be impossible for larger producers to use and still make a profit.  Alembic stills and pot stills are only two of the types of stills that are far more common in craft than they are in major corporate producers.  These stills often make much more complex and flavorful spirits, and are consequently more common among producers of brandy and other fruit liquors than they would be otherwise.  Trying to make flavorful brandy on a column still is hard.  Like P = NP hard.

Lastly I want to cover something that Mr. Morgenthaler doesn’t.  Just because something is “craft” doesn’t mean it was made using base ingredients.  The untold story on a lot of craft products, (as well as some major labels *cough*bulleitrye*cough*) is that they source their spirits from major producers like MGP.  Which means unless you do a lot of research, the juice in your bottle of craft, could be exactly the same as the juice in your bottle of top shelf corporate.  What happens after the still strips out all the fluff can have as great an impact as where the grain came from first.

Some of the best made gins in the world right now aren’t starting from wheat.  They start with neutral grain spirit made in the same plant that cranks out Bulleit Rye, Angel’s Envy Rye, and hundreds of other producers.

Craft producers are more likely to take chances on products that won’t find an audience globally.  They’re also far more likely to use seasonal fruits, nuts or herbs.  They cycle their products frequently, make mistakes into products and make things that you won’t find on the back bar at a dive.  They are making some of the best products out there from Balcones Single malt, to Oola Gin.

I think my own rule of thumb would be, “For risk and adventure try Craft.  For consistency and price, stay with corporate.”
In the end really Mr. Morgenthaler’s first point is his best.  “when it comes down to it, it’s all about what’s in the glass, right?”

Sorel by Jack from Brooklyn

27147_hrI recently found the website Gear Patrol and they turned me on to a number of new liqueurs via this article.  One of the more interesting was Sorel by Jack from Brooklyn.  The only current product of this Brooklyn producer the Sorel liqueur is a 30 proof blend of hibiscus and spice in a neutral base.  At 29.90 for a 750ml bottle this seems a little expensive for a liqueur.  The article hit the nail on head that this is a bottle that screams Fall Cocktail.  A combination of cassia, ginger, clove, and hibiscus makes for a very mulled wine extraction and the dark color does nothing to dispel that intention.

Solo, I think this is best taken at room temperature or higher.  Citrus notes can be found more easily at that point and the chill brings a bit too much of the clove forward giving it a musty off-putting flavor.  Vodka and gin drinks spring to mind with any number of other ideas involving fortified wines like port or sherry coming along after.  I want to see some cocktails with orange bitters, dark rum or a crisp wheat vodka.

If there was a smaller bottle I might have bought that instead and powered through it, as it stands the 750ml just seems to intimidate me into switching back to bourbon.

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.

Make Your Own: Irish Cream Liqueur

irishcreamI’m going to save you a lot of time.  The post on making your own Irish Cream on The Modern Proper has some beautiful photos, the recipe itself is solid, but skip the post itself.  It’s long winded and kind of pompous.  I don’t know what else you would expect from something called The Modern Proper so give it a +1 for meeting expectations.

The basic elements here are actually frighteningly similar to the crema limoncello I made for Christmas 2013.

The core of the idea is that milk can be made semi-stable if you add enough sugar to the process.  In the case of Irish cream you can save some time by buying a can of sweetened condensed milk or you can have some control over the sugar/fat content by making your own.  Additionally the fat content of the cream will help to prevent the mixture from curdling.

Condensed milk is really just simple syrup where you have substituted milk for the water. You do want to make sure that you don’t over-heat the milk or it will scorch.  Additionally once you add the sugar you’ll want to keep the heat low or you’ll start to caramelize and again ruin the flavor.

200 g sugar
200 ml 1% milk
1 tsp dutch process cocoa powder
1 Tbsp vanilla extract
1 tsp cold press coffee concentrate (or 1 Tbsp bottled cold press)
1 cup Irish Whisky
1 cup heavy cream
1 Tbsp cream of coconut

This is slightly more complicated than Modern Proper’s version.  For one thing I’m going slightly less off the shelf and with a bit more than just a blender.

Place milk in a small saucepan and bring it up to boil using a medium heat.  Immediately reduce heat and slowly combine sugar and cocoa powder until they are fully dissolved.

Remove from heat and allow to cool slightly.  Stir in vanilla and coffee concentrate.  When fully combined move to a mixing bowl (preferably with a pour spout), using stand mixer or hand mixer whip cream and cream of coconut until mixture is frothy.

Lastly, add whisky slowly while whisking or stirring constantly.  This is important.  Whiskey is very acidic compared to milk and the change in Ph is the primary reason that milk curdles.  The fat content of the milk and cream will help to buffer this until the mixture is fully combined but you don’t want to dump the whole cup of whisky in all at the same time.  You can read more about the process here.

Place in air tight bottles and refrigerate.  It doesn’t really need it because of the alcohol content but it will last longer.

If by some miracle the mixture does curdle all is not lost.  Curdles in your product may be texturally undesirable but they do not mean that the milk has spoiled.  Milk curdles on its own because it turns more acid as it ages.  You might have to drink your own failure but it will still be potable.

The result will likely be a bit thinner than you are used to from commercial products unless you either double down on the sugar content or reduce the milk more than you would otherwise.  Using heavy cream won’t really thicken the product much but it will change the texture.

 

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.