Inventory, Management

Calculating Inventory Usage

July 10, 2015

Posted in Restaurant Management, Industry & Culture

Calculating Inventory Usage

Successful bar managers will tell you that efficient inventory management is the key to maintaining a profitable bar. To do this, you must understand inventory usage, or how much product a business has used over a time period.

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If your bar management software or inventory spreadsheets are set up correctly—we’ve got a bar inventory template for you if they’re not—you should be able to access an inventory usage report. That may sound simple, but this report is the first step in almost every measurement of a bar’s performance: helping you calculate profit margins or pour costs, detect over-pouring or theft, calculate pars, and find which products are performing poorly.


How to Calculate Inventory Usage

[See also: Bar Inventory and Usage for Beginners]

Let’s start with the inventory usage formula. Your inventory usage is equal to your starting inventory plus any received product orders minus your ending inventory:

Inventory Usage =
Starting Inventory
+ Received Product Orders
– Ending Inventory

Step 1: Take a ‘Beginning-of-Period’ Inventory

The first step for calculating inventory usage is recording your starting inventory for every item at the bar.

For example, if there are 4 bottles of Absolut Vodka in the liquor room, 1 bottle in storage, and 1.3 bottles at the main bar, then total starting inventory is 6.3 bottles.


Step 2: Add Any Received Product Orders During the Time Period

Next, we add in any received product inventory.

If 5 bottles were ordered and received from your distributor in the time between your starting and ending inventory, then this would represent your received inventory.


Step 3: Subtract Your ‘End-of-Period’ Inventory

The final step is to record an ending inventory for every item at the bar at the end of a time period (usually weekly or monthly).

For this example, let’s say we finished with an ending inventory of 3 bottles of Absolut Vodka.

So, Inventory Usage =
6.3 bottles (Starting Inventory)
+ 5 bottles (Received Product Orders)
– 3 bottles (Ending Inventory)

= 8.3 bottles


This can also be expressed in dollars. If Absolut Vodka costs the bar $15/bottle, then 8.3 bottles of inventory usage in dollars equals. ($15 x 6.3) + ($15 x 5) – ($15 x 3) = $124.50.

In this basic example, it seems very straightforward, but factor in the big picture of inventory usage and you’re looking at much more than just Absolut. Inventory usage will need to be broken down by category (spirits, wine, and beer), item type (vodka, whiskey, rum, etc.), and brand/supplier in order to get the best look at your bar’s performance.

That’s a lot of different calculations to be making on a regular basis!

And no matter how long you’ve been doing it and how much you understand the formula, without software automation, calculating inventory usage will always be a time-consuming and redundant task. Counting each bottle, recording it on paper, entering it into Excel, tracking and entering your received product from dozens of paper invoices and distributors, and keeping track of all of this on a weekly, monthly, quarterly basis…it’s never-ending!


Luckily, it doesn’t have to be so hard. [Shameless plug] BevSpot will automatically calculate your item-level usages over any time period for you! Simply place your alcohol orders across all of your product through our bar inventory app and complete your inventories in half the time directly on your phone or tablet.

Now for the real question…what will you do with all that extra time on your hands?


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