For the love of all things holy

Please do this!

I have two P&L’s in my possession from two different breweries. One profitable and one not so much. They are very different in many ways except for two: They don’t break their sales down. OK here we go again, I’m going to get wonky.

In a brewery/brewpub, you sell more than just beer. You may also sell food, wine, liquor, merchandise, and non-alcoholic beverages. You may be thinking, “what’s the big deal? It’s all sales right?” Wrong, and let me tell you why.

If you are selling beer, the cost of that sale will have a target cost percentage. Let’s say it’s 10% (your mileage may vary). That means .10 cents on each dollar you bring in, covers the ingredients. Not labor, not utilities, just the ingredients.

Food will have different targets depending on your menu. A fancy place selling lots of meat and fish may have a target of 35% -40%. Pizza 22%. Mexican 22%. Burgers 28% and so on.

Wine will probably be around 38%, Liquor 20%, Merchandise 50%. Non-Alcoholic beverages 22%.

So it’s important to know if you are hitting these targets. If your food cost is 26% when it should be 22%, then you can narrow your search for the problem to just food. It could be stealing, it could be a food item is rung up but coded under wine rather than food, it could be you need to raise your prices.

You calculate all these things by doing your monthly inventories which I’ve covered in the past. That way each month you will have a current percentages to look at. This is super important.

The two P&L’s I was just talking about look like this.

SALES 682,000

Cost of Good Sold

Brewing Costs 18,096

Cost of good sold 15,7097

Kitchen cost 26

TOTAL COST OF GOODS 175,220

You can see the problem here. They run a good operation but there is no way to discover if something is out of whack.

The way the P&L should look, would be something like this

SALES

Beer

Wine

Food

Beverages

Merchandise

TOTAL SALES

COST OF SALES

Beer

Wine

Food

Beverages

Merchandise

TOTAL COST OF SALES

This way you can take each one of these costs and divide it by its corresponding sale. This will give you a % that you can compare against your target.

This may seem mind-boggling but look at it this way. If by chance you think that you should be making a cost of sale for your beer at 10% when in fact it’s 14% on annual sales of $450,000, you wouldn’t know it. Because you don’t break out the sales and cost of sales by category, and inventory it every month, you are flying in the dark. What does it cost you? Well, $450,000 x 4% =$18,000.00. That’s a lot of money. It could be that grain and hops have gone up in price, or it could be you have a lot of product either not being paid for or outright stolen.

I keep going on about inventories, so I made an amateur video explaining it you can watch here.

Once you get this set up, and do your monthly inventories, it really takes less time than it does to clean a tank. You could argue that if you are too lazy to clean a tank, you shouldn’t have a brewery. In addition, if you are too lazy to do inventories, then you probably shouldn’t be owning a business. Does that sound harsh? Maybe, but it’s really that important: business 101.