Streamline Your Hospitality Business with Par Sheets and COGS

Running a successful hospitality business like a restaurant, bar, or hotel can sometimes feel overwhelming. However, you can regain control and feel more at ease in your operations by utilising par sheets and regularly monitoring your cost of goods sold (COGS). These tools can help streamline operations, reduce waste, prevent theft, and improve your bottom line, leading to a more efficient and stress-free business.

What is a Par Sheet?

Imagine a tool that can help you maintain the perfect balance of inventory, ensuring you never run out of stock or over-order. That’s what a par sheet is. It’s a comprehensive list of every menu item, recipe ingredient, beverage, and consumable, each with a specific quantity that’s just right for your business-the ‘par’ level.

Having par sheets makes it easy to:

• Maintain adequate inventory levels
• Place accurate orders with vendors and reps
• Reduce waste from spoilage or over-ordering
• Identify fast-moving items to keep in stock
• Plan for seasonal demand spikes

Par sheets guide precisely how much of each item to keep on hand. This takes the guesswork out of ordering and helps ensure you have the proper inventory to operate smoothly and efficiently.

How to Create Par Sheets

1. The first step in creating a par sheet is to list every menu item, recipe ingredient, beverage, and consumable item that your business uses.
2. Determine ideal quantities to have on hand for each item based on historical usage and sales data.
3. Factor in lead time for deliveries from vendors and reps.
4. Adjust par levels higher for seasonal spikes in demand.
5. Share par sheets with purchasing, kitchen, and bar staff.
6. Review and update par levels regularly as menu offerings change.

Having accurate par sheets makes ordering fast and easy. Staff can quickly compare current inventory to par levels to determine exactly how much each item needs to be reordered. This saves time and minimises waste from overordering.

Why Cost of Goods Sold (COGS) Matters

Monitoring your cost of goods sold gives visibility into how much you spend on inventory compared to how much revenue those items generate. COGS includes costs like:

• Food ingredients
• Beverages
• Kitchen supplies
• Serving wares
• Cleaning products

Tracking COGS as a percentage of sales reveals important insights like:

• Ideal pricing for profitability
• Waste from spoilage or over-portioning
• Loss from theft
• Production inefficiencies

Knowing your COGS percentage provides a sense of security, helping you make more intelligent purchasing and menu planning decisions. It also alerts you to problems like theft before they significantly impact your profits, giving you a greater sense of control over your business.

COGS Percentage Goals by Industry

Food Service

• Fast food: 25-35%
• Casual dining: 30-40%
• Fine dining: 30-45%

Beverage Service

• Beer: 18-25%
• Wine: 30-35%
• Spirits: 20-25%

Monitor your COGS against these industry benchmarks to ensure you’re on track. Investigate and take corrective action if your percentages fall outside the expected range.

Regular Inventory Counts Are Critical

The only way to accurately calculate COGS is by taking periodic physical inventory counts. This should be done at least monthly. Good times to perform inventory counts include:

• End of month
• Before placing large orders
• During slow periods

An annual deep clean with a complete inventory count is also a great practice.

Tips for efficient inventory counting:

• Create a spreadsheet listing all inventory items
• Sort items into sections (beer, wine, liquor, etc.)
• Assign count tasks to staff teams
• Double check final quantities
• Enter amounts into your COGS calculator

Comparing the usage to your sales will reveal your actual COGS percentage and whether it aligns with your goals. Act quickly if the numbers indicate waste or theft.

What to Do If Your COGS Is Off

If your COGS percentage falls outside the expected range for your establishment, take these actions:

If COGS is too high:

• Review prep and production methods to reduce waste
• Ensure portion sizes match menu specifications
• Check for expired or spoiled ingredients
• Reassess pricing – increase prices if necessary
• Look for theft – inventory going missing

If COGS is too low:

• Double-check inventory count accuracy
• Verify sales data completeness and accuracy
• Consider decreasing pricing if reasonable

Monitoring COGS regularly provides an invaluable gauge of your operational efficiency and profitability. Using par sheets and keeping COGS in check gives you the insight to make intelligent management decisions.

Implement Par Sheets and COGS Tracking

Don’t leave your purchasing, production, and profits to chance. Follow these best practices:

• Create par sheets for every inventory item
• Set par levels to meet demand without overstocking
• Take a monthly physical inventory count
• Calculate the actual COGS percentage
• Compare to industry benchmarks and goals
• Make adjustments as needed

Benefits of Par Sheets and COGS Tracking:

• Simplified, optimised purchasing
• Reduced waste and spoilage
• Right-sizing of inventory levels
• Early detection of theft and loss
• Menu engineering for better profitability
• Labour cost control in production
• Accurate budgeting and forecasting

Using par sheets and monitoring COGS gives you real-time insight into your most significant expenses. This allows you to make better decisions directly impacting your bottom line success.

5 FAQs About Par Sheets and COGS

Q: How often should you review and update par sheets?

A: Par sheets should be reviewed regularly, preferably every 1-2 months. When menu offerings change seasonally, par levels will need adjustments. Also, update par quantities if customer demand and sales trends change.

Q: Who should have access to par sheets and inventory data?

A: Purchasing managers and staff, kitchen staff, and bartenders should all use par sheets to inform ordering. Consider sharing par levels with trusted staff but keep actual pricing concealed.

Q: Is there par sheet software available?

A: Yes, several bar and restaurant management software systems provide digital par sheet templates that make building, updating, and sharing par levels easy. This automates the process rather than relying on static spreadsheets.

Q: What’s an easy way to calculate COGS monthly?

A: Add up all purchases for the month, then subtract the current month’s ending inventory value. This gives you the cost of goods sold. Divide that by total sales for the month to get the COGS percentage.

Q: What is a reasonable time to spend counting inventory?

A: Most restaurants and bars budget 2-4 hours for monthly inventory count. To get a faster count, enlist several trusted staff members. Schedule it at an off-peak time so your operation isn’t interrupted.

Conclusion

Par sheets and COGS tracking are indispensable management tools for hospitality businesses. Creating par levels based on historical data simplifies purchasing and reduces waste. Regular inventory counts and COGS monitoring provide transparency into sales and operations. By leveraging these best practices, managers can make smarter data-driven decisions to control costs and boost profitability. Implement par sheets and COGS tracking to streamline your bar or restaurant.