Chapter 15 — Exercises

Work these with a calculator and show your arithmetic. Items marked † have worked solutions in the answers appendix. Unless a problem says otherwise, use Bellwether's plan figures: \$1,550,000 of year-one revenue, 28% beverage (\$434,000), a 22.0% pour-cost target (\$95,480 of beverage COGS), \$338,520 of beverage contribution, a \$46.00 dinner check split \$33.12 food / \$12.88 beverage, and a blended spirits cost of \$1.20 an ounce.

All prices, keg costs, and distributor terms in these exercises are illustrative. Alcohol pricing, distribution structure, and promotion rules vary enormously by state — cost your own products and verify your own rules.

A. Recall and definitions

1. Write the pour cost formula and the usage formula. State in one sentence why the second is required to compute the first honestly.

2. Define standard pour, over-pour, and free pour, and explain why over-pour is almost always in one direction.

3. What is the difference between pour cost and liquor cost? Give a situation in which quoting the wrong one would mislead a listener.

4. † Convert each to fluid ounces and state how many 1.5-ounce pours each theoretically yields: 750 mL, 1 liter, 1.75 liters.

5. Define well, call, and premium. Which tier typically carries the lowest cost percentage, and which typically carries the highest?

6. What is draft yield, and what four physical events make up most of the loss?

7. Define beer-clean glassware and explain why it is a Bellwether-specific concern in year one.

8. State the tenths method in one sentence. Name two of its limits.

9. What is a beverage transfer, and why does failing to record one make you wrong twice?

10. Explain what comp and spill tracking does and — precisely — what it does not do.

B. Applied reasoning

11. † Bellwether's blended COGS is 27.8%. Show the arithmetic from the 72/28 mix. Then compute blended COGS and prime cost if the beverage share fell to 21% with all other targets unchanged, and say in dollars what that costs at \$1,550,000 of sales.

12. A bar's aggregate pour cost moves from 21.8% to 23.5% over a quarter with no change in procedure, staffing, or price. Give three explanations that have nothing to do with bartender discipline, and say what report would distinguish among them.

13. Your point-of-sale system reports a "theoretical beverage cost" of 21.4%. Name the single dependency that determines whether that number means anything, and describe the calendar habit that protects it.

14. † A weekly count shows a total variance of +2.4 points. List, in the order you would actually check them, the five things you would rule out before concluding that anything was taken.

15. Explain why a restaurant weighted toward wine has a structurally lower-margin beverage program than one weighted toward cocktails, and why that is a legitimate choice rather than a mistake.

16. A rep offers you a deal: buy twelve cases of a liqueur and get three free. Beverage inventory at Bellwether turns about eight times a year. Write the four questions you would answer before saying yes, and name the financial statement the deal most affects.

C. Cost this

17. † Cost this cocktail completely and state its pour cost and contribution margin at a \$14.00 menu price. Round each line to the cent.

18. Re-cost the Rivermill Sour if the rye moves from \$27.94 to \$33.02 per 750 mL and lemons move from \$0.35 to \$0.48 each with the same 1.1-ounce yield. What is the new drink cost, the new pour cost at \$15.00, and what price would restore a 21.3% pour cost?

19. A house syrup batch takes eleven minutes of a prep hand's time at a loaded \$19 an hour and yields 32 ounces. The chapter charges only the ingredient cost to the card. Compute the fully loaded cost per ounce, restate the Rivermill Sour's cost with it, and argue for or against including it.

20. † Cost one 14-ounce glass of draft from each of the following, at a 12% loss, and state the pour cost at the given price: (a) sixth barrel, \$118 delivered, sold at \$9.00 (b) half barrel, \$152 delivered, sold at \$7.00 (c) 50-liter import keg, \$196 delivered, sold at \$10.00

21. A bar switches from a 16-ounce glass poured to 14 ounces of beer to a 20-ounce glass poured to 18 ounces, holding the sixth-barrel cost at \$105 and raising the price from \$9.00 to \$11.00. Compute sellable glasses and pour cost at 12% loss both ways. Which is the better decision, and what non-financial consideration might override the arithmetic?

22. Compute the ice cost per drink if the machine's annual operating cost is \$2,100 and the restaurant runs about 52,000 ice services a year. Then compute the annual ice cost carried by a cocktail program selling 15,400 drinks.

D. Price this / build this program

23. † A cocktail costs \$3.85. Price it at a 20% target, at a 22% target, and at a 25% target. State the contribution margin at each. Then choose a menu price and defend it in three sentences using Chapter 12's argument.

24. Build a five-drink cocktail list for Bellwether with a price ladder, given that the signature sits at \$15.00. State each price, and state which two ingredients you would require to appear on at least three of the five drinks and why.

25. Bellwether pours roughly 3,815 well drinks a year. Model a well upgrade that adds \$0.26 per 1.5-ounce pour, priced for with a \$1.00 increase on the house highball from \$10 to \$11. Compute the annual cost, the annual gain, the pour cost before and after, and state the decision.

26. † Design a back bar for a 10-seat bar with four draft lines, a service well, and no glasswasher. Draw it as a labeled ASCII diagram, then write three sentences explaining what each placement decision protects.

27. Your six draft lines currently run: three craft sixtels at \$9.00, two craft sixtels at \$10.00, and one house lager half barrel at \$7.00. Draft pour cost is running 26.4% against a 22% target. Propose three changes that do not involve raising prices, and estimate the direction and rough size of each.

E. Read this and find the leak

28. † A bar reports the following week. Find the leak, quantify it, and state what you would do Monday.

29. A bar's pour cost has run 24.8% against a 22% target for six straight weeks. The owner is certain a bartender is stealing. The bar manager notes that the kitchen added a beer-braised short rib, two mussels dishes, and a bourbon caramel to the menu in that same period, and that the restaurant has no transfer sheet. Estimate the transfer effect at \$70 a week on \$8,400 of weekly beverage sales, state how much of the 2.8 points it explains, and write the two sentences you would say to the owner.

30. Bellwether's week-19 count showed a \$76 spirits variance — roughly a quarter ounce a drink. Project it forward at 245 drinks a week for a year at \$1.20 an ounce, express it in pour-cost points and in 750 mL bottles, and compare it to the annual cost of a jigger policy.

31. † A draft system's loss rate has drifted from 11% to 19% over four months. Annual draft revenue is \$61,200 at a blended \$8.50 a glass, and beer costs \$0.118 an ounce at a 14-ounce pour. Compute the annual cost of the drift, then evaluate a \$1,680 line-cleaning contract against it — first on yield alone, then including two remade beers a service across 364 services.

F. Write the memo, the policy, or the response

32. Write the one-page pour standard for Bellwether's bar: standard pours by drink type, the jigger policy including the well-highball exception, and the audit that governs the exception. Keep it under 400 words and write it so a new bartender can follow it on their first shift.

33. † Write the comp and buyback policy: who may comp, a per-shift allowance, what must be entered in the POS, and what the weekly review looks like. Then write the three sentences you would say in a pre-shift meeting introducing it, in a way that does not imply anyone has been stealing.

34. Write the refusal-of-service protocol for the bar: who makes the call, what is said, what alternatives are offered, how it is documented, and what management's role is when a refused guest complains. State explicitly that specifics vary by jurisdiction and must be verified locally.

35. Your bar manager proposes a Thursday "industry night" with 50% off all drinks for anyone with a restaurant pay stub. Write a 250-word response that computes the break-even multiplier on the \$15 cocktail, names the two non-financial risks you are most concerned about, and either approves, modifies, or declines the proposal with reasons.

36. Write a 200-word note to your chef explaining why you are putting a transfer clipboard by the walk-in, without making it sound like an accusation.

G. Judgment and ethics

37. † A bartender you like and trust has the best guest relationships in the building, and the weekly count shows their shifts running consistently 1.5 points worse on spirits than anyone else's. Nothing suggests dishonesty. Describe the conversation you would have, in order, and identify the three most likely explanations you would want to rule out before you say a word about it.

38. A regular who tips extremely well is being bought a drink by the bartender roughly twice a week. It is never rung. It has been going on for a year. Estimate the annual cost using Bellwether's figures, then discuss: is this theft, hospitality, or a management failure — and does the answer change what you do about it?

39. A promotion proposal would double bar volume in a ninety-minute window with a per-round price that gets cheaper on the second and third round. It is legal in your state. Explain why you would still decline it, and what you would counter-propose that achieves a similar traffic goal.

40. Your happy hour is working — \$740 a week of additional contribution — and your dining-room manager reports that the 6:00–7:00 seating now feels loud and crowded in a way that does not match the concept. Chapter 2 called this positioning. State the tradeoff explicitly and describe the measurement you would use to decide.

H. Business Plan extension

41. † Extend the Beverage Program section of the Bellwether plan with a beverage break-even sensitivity: build a small table showing beverage contribution and prime cost at beverage shares of 22%, 25%, 28%, and 31%, holding food cost at 30%, pour cost at 22%, labor at 32.3%, and total revenue at \$1,550,000. State which row is the plan, which row would concern you most, and why.

42. Write the opening beverage inventory line for the plan. Bellwether carries roughly \$11,800 of steady-state beverage inventory at about eight turns a year. Estimate a defensible opening inventory figure, explain why it is larger than steady state, and state which two categories carry most of it.

43. Add a beverage seasonality note to the plan. Patio beverage is concentrated in roughly twenty weeks a year. Sketch the shape of the beverage line across a calendar year, name the two months you would expect to be worst, and state what that implies for the count cadence and for purchasing.

44. The plan assumes \$12.88 of beverage per dinner guest. Write the service-side plan that would actually produce it: what a server says, what gets suggested and when, what the bar sends to the dining room, and how you would measure attachment weekly. Reference Chapters 18 and 22 where the material properly belongs.