With more and more of the top wines in South Africa moving to annual releases of “take-it or leave-it” allocations it is very useful to have a “war chest” of funds available to be sure of not missing out when the wines are released.
In my previous life as a head sommelier in Melbourne I could not keep enough Burgundy in the cellar. The restaurant never had the cash to buy a year’s worth of Burgundy in the one or two months of releases. We did not want to over-extend our credit terms as we would have been cut off by our suppliers.
So this is what I did: Firstly I spoke with the accountant and made sure we were accurately measuring both our beverage purchases and beverage sales.
My budgeted cost of goods sold (COGS) was 38% at the time, meaning my weekly/monthly purchases on beverage had to be 38% of the total we sold in the same period.
So, if our beverage sales for a certain period was $10,000 then my purchases over the same period had to be a maximum of 38% of that, which is $3,800 or less. This took me a little time to get used to, and you have to be careful with all your mark-ups to make sure your stock holding remains constant or slowly increases. If it cost me more than $3,800 to replenish the stock I had sold for $10,000 I had a problem.
Again, you need to be able to accurately measure your purchases and sales to be able to plan for future releases.
Once I was receiving good reporting from the accountant, and I was able to put a system in place for weekly purchases, and my mark-ups were right, it was easy to stick to a COGS of 38%. I then moved the COGS to 36%; I increased my mark-ups so that I could spend $3,600 to replenish stock sold for $10,000 – please note this included water, beer, spirits, coffee, tea, mixers AND wine – I then “banked” the extra $200 I didn’t spend and allocated it for future wine releases.
Over time this allocation fund grew to a point that I was able to buy large allocations of expensive Burgundy and have zero impact on my weekly/monthly COGS figure. This massively improved the restaurant’s year-round wine offering.
Tagged David Clarke