How to Calculate Your Inventory Usage

To run a profitable bar, a manager should master efficient inventory management. To achieve this, you must understand inventory usage.

Inventory usage is simply known as the amount of product you used over a specific period of time. These numbers play a crucial role in tracking your bar’s performance. They will help you know your pour costs, detect shrinkage, calculate pars, and identify the products that are not performing well.
So how can you easily calculate your inventory usage?To start, it’s important to remember the formula.
Inventory Usage = Starting Inventory + Received Product Orders – Ending InventoryNow that you know the formula, here’s a step-by-step guide to calculating your inventory usage.

Step 1: Determine your starting inventory

First, record your starting inventory for every item at your bar. Say there are 4 bottles of tequila in the liquor room, 1 bottle in the storage, and 1.3 bottles at the bar. Then your total starting inventory of tequila is 6.3 bottles.

Step 2: Add the received product inventory

Get the number of products you received from your distributor during the time between your starting and ending inventory.If you ordered 5 bottles of tequila during that time frame, then that’s your received inventory.

Step 3: Subtract your end of period inventory

The last step is to take the ending inventory for every product at the end of a time period. You can do this either weekly or monthly. Lets assume that your ending inventory is 3 bottles of tequila, now we’ll use our formula.
6.3 bottles (starting inventory)+ 5 bottles (received products inventory)- 3 bottles (ending inventory)= 8. 3 bottles

Keep in mind that this can be expressed in dollars as well. If a bottle of tequila costs $15, then 8.3 bottles is equal to ($15×6.3) + ($15×5) – ($15×3) = $124.50.

Pretty easy, isn’t it?

However, you need to do this computation by category, item type, and brand/supplier to fully understand your bar’s performance.Also, even if you know the formula by heart, calculating your inventory usage can be a redundant and time-consuming task. Luckily, there are many platforms available that can do the job for you, like Bevsight.

Do you want to monitor your bar’s performance without sacrificing your work-life balance?  Register today for your free trial!