I am trying to become more adept at figuring out list related math.
Specifically how much my cost should be per bottle if I am charging $110 per person for wine pairings and shooting for 25% cogs.
Amounts are 3oz - 3oz - 5oz per person spread between 3 bottles
Trying to figure out how to find the answer more than the actual answer
How much waste do you expect, I.e. how many 3 and 5 oz pours do you think you will realistically get from a 25 oz bottle? This could be worth tracking in a realistic environment taking into account tastes and bottles that go unfinished. I’m guessing it is less than you think it is, but if you know this number, the rest of the math is pretty easy and I’d be happy to lay that out.
Following. Geoff is there a good resource to look for sample business of wine math questions
This doesn't answer Nathan's question, but for anyone just getting to know these concepts, see our Wine Business Study Guide, particularly the first section, on profitability.
There are 25.4 oz in a bottle of wine. I tend to assume 24oz when doing math to account for waste. Then I figure out cost-per-ounce. If I paid $39.99 for a bottle, I divide that cost by 24 oz, and get $1.67 per ounce cost. If that’s a 3 oz pour, the total cost is $5.01 for the glass.
To look at this another way, at 25% COGS on $110 you have $27.5 to work with per person. To set up a baseline for bottle costs, we can figure out what it would look like if each bottle cost the same amount. There are 8 three ounce pours in my assumed 24oz per bottle, and 4.8 five ounce pours. So if x = our bottle cost for each of 3 identically priced bottles then we get the problem:
x/8 + x/8 + x/4.8 = 27.5
Hopefully you remember enough algebra to solve this, if not I’m happy to show the math. The result is x = $60. If the 1st bottle you want to use costs $100 you can have a rough idea of how much you need to drop costs on the other two bottles. Of course, with the different sized pours coming in different courses I find it best to calculate the $/oz anyway to make sure I’m hitting my numbers.
That’s an awesome question. Right now I’m specifically trying to get better at these equations.
For this one let’s say 2oz waste per bottle. Is that reasonable?
I’ll crunch the numbers and show my math to give people a chance to find the common mistakes I’m sure I’ll make.
I think the best way to better learn the math involved in running a beverage program is to become comfortable on Excel or a similar spreadsheet program (I use Google Sheets for almost everything). This will allow you to lay out all of the variables you have to make the best decisions. Take a look at this simple spreadsheet to get an idea of how to do this. I'd highly encourage you to try and make a few sheets of your own- that is the best way to learn creative problem solving.
Wine Pairing Math
The answer is this:
If you are charging $110/pairing and need to achieve a 25% COGS, you have $27.50 to play with. So, take the wines you are considering using, calculate their cost per oz by dividing the bottle cost (say, $50) by the number of ounces inside that bottle (25.36 for a standard 750ML). Once you know how much each wine costs per oz, multiply that number by the serving size. In your case, two of the wines come in a 3oz serving, and one in a 5oz serving. So it makes a big difference which selection you choose for each size serving. If the total cost of each wine serving adds up to $27.50 or less, you are theoretically running the pairing at a 25% or less cost. Importantly however, and to Geoff's point, $27.50 assumes a theoretical "perfect world" cost in which you have no waste. All restaurants have waste, so make sure you build an appropriate margin for yourself!
Thank you so much for taking the time!
So to keep it consistent if I want to move $5 from the cost of a 3oz pour that means I can add $3 to the 5oz pour, yeah?
That math checks out, yeah.
I like your name!
A very quick method, sans a 'deep dive' is to simply multiply $110 X .25 (25% is really 25.0%, thus, move the decimal 2 places 'to the left') = $27.50 ... take this number and divide by $110 to check the math ... $27.50 / $110 = .25 or 25%.
Now the above is a very basic process to get you in the 'ball park' for your target COGS, however, does not provide the in depth analysis you need as per Mr. Hinkle and Mr.Krauss.
Both Hinkle and Krauss have provided very salient, solid info. With Hinkle, he is using the true volume of 25.36 for a 750 ml bottle to determine the base-line cost per ounce. Regarding Krauss, he is 'burning off' the 1.36 ozs. and using 24 to account for waste. Both are correct. As well, Mr. Kruth began the thread with prompting the most important question, waste, which, if not accounted for, has a tremendous impact on your bottom line.
All in all, a tip-tip question!