Len Panaggio, Beverage Consultant
By Len Panaggio
Between running a business and celebrating the holidays with friends and family, the dust has settled from the frenetic pace of the holidays and 2023 is over. January is a relatively quiet month in Rhode Island, as many places shutter for the winter and those in the industry are finally able to take a well-deserved vacation.
But tax season is around the corner, and our accountant is asking for data gathering as he/she prepares for our annual filing to the government. Hopefully, you took my advice from last month—when I suggested it was a time to reflect on where you were this year, where you are and where you are going—and you have a relatively clear picture of your financial situation.
Once your P&L draft is prepared, those critically important numbers for the year are staring at you. Did your bar costs go up, down or remain flat? Flat is good in this environment, down is good and up is a red flag. Time to tear it all apart to see what is causing an issue. Hopefully, your SOP is to break your bar costs down — liquor, beer and wine — making it easier to pinpoint which segment is the problem. I always bartered a bit with the food costs, charging certain fruits to the bar while the kitchen absorbed some, and then we shared the actual fruits.
So, what is affecting your costs? Pricing immediately comes to mind and, as you are all well aware, everything we buy for the restaurant seems to be going in one direction: up! Time to get into your POS system and check all your prices. Almost invariably, you will find errors and, in this quiet month, use your free front-of-house time to perform some office work.
The next place I always addressed was the bar staff. Now is a good time to have a meeting and reveal where you are cost-wise and, at the same meeting, test each bartender’s pouring. Most places still free pour, so this is a critical area to delve into. I never wanted to raise prices to make up for employees over-pouring; it never sat well with me. Check that your draught beers are pouring correctly—overflows, which go down the drain, are real money going down the drain. Do you have a structure in place for wine pours? Do the math on an ounce of wine and see what sloppiness does to your wine cost.
Another area that affects cost but doesn’t always draw the attention of operators is your glassware. I have noticed over the past few years that the glasses used for martinis and Manhattans have “shrunk.” There was a time that it was fashionable to have a 14-ounce up glass—not so any longer. Not only were you basically overserving, but the cost of the amount of liquor can be staggering.
Which leads me to upcharges for premium products. Think back to single-malt Scotches during the pandemic: you couldn’t keep up with the price increases! It is imperative that you are vigilant when your invoices come in and you flag a price increase for a product and adjust fairly what to charge your guests.
As you move through your P&L, look at your bar supplies: dishwasher soap consumption, your soda system, syrups. All these costs add up, so do keep an eye on them.
Lastly, our new minimum wage, $14 an hour, starts Jan. 1. While the RI Hospitality Association has done a great job on holding the tip credit in place, make sure you or your payroll company are aware of what the overtime is. With labor shortages still with us, precise scheduling is critical. Again, your timekeeping module is loaded with information, use it wisely.
I do hope everyone had a great holiday season, but now it’s time to think about what is in store for us. And I hope your Oktoberfest beer is depleted!
Len Panaggio’s career in food and wine spans more than three decades as an owner and as a beverage director at some of the top restaurants in Rhode Island. Currently a hospitality consultant, Len is a graduate of the University of Rhode Island and has attended the Culinary Institute of America Master Sommelier program and the Sterling School of Service and Hospitality.
