If you’re reading this you’re probably well aware that calculating inventory usage and cost are one of the most important things you can do to run a profitable bar.  They are the basis for establishing pars, calculating pour costs, and setting drink prices. 

Here’s how to calculate usage:

Starting Inventory
+ Orders Received
– Ending Inventory
Inventory Usage

First, record starting inventory.

For example, if on May 1st there are 10 bottles of Jack Daniels in the back room and 1.7 bottles at the front bar, your starting inventory for Jack Daniels is 11.7 bottles.

Next, record orders received.

If on May 4th, an order comes in with 2 bottles of Jack, your orders received would be 2 bottles.

Lastly, record ending inventory.

If on May 7th, there are 4 bottles of Jack in the back room and 1 bottle at the front bar,  your ending inventory for Jack Daniels is 5 bottles.

Then do the math:

+   2
 –  5

So your inventory usage for Jack Daniels from May 1st-7th is 8.7 bottles.

Do this for every bottle you stock and then add them up to get your total inventory usage.

Here’s how to calculate cost:

 (Wholesale Price x Starting Inventory)
+ (Wholesale Price x Orders Received)
– (Wholesale Price x Ending Inventory)
Inventory Cost

Using our example above, if Jack Daniels costs $20/bottle, the equation would be:

$20 x 11.7
+ $20 x 2
– $20 x 5

Your Usage Cost for Jack Daniels from May 1st-7th is $174.00.

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