To calculate the theoretical cost of sales, the following information is required:
For example:
A 75cl bottle of wine costs £8.00 and is sold at £25.00, therefore the cost of sales is 32% (68% GP).
If in an entire week, all that has been sold is 10 bottles of this wine, this would be the theoretical COS calculation:
If the wine is also sold by the 250ml glass, then we begin to see the power of the report. So in addition to the 10 bottles, 30 glasses were sold at £9/glass:
So the margin on wine by the glass is higher (understandable as it carries a higher risk - open bottles, can go off, over poured, etc.)
If we combine the sales we get the following calculation:
In other words, wine by the glass CAN improve the margin, but it carries risks like overpouring, and is more effort to serve than a bottle, etc.
At the end of a period, the actual against theoretical may prove that a bottle went missing which would mean, the cost was not £160, but £170. So the difference between actual and theoretical will be:
This report spread over all products for an entire period will provide enough information to ensure margins are realistic and achievable
- Cost price of an product
- Revenue generated from this product (sales)
- Quantity sold for a given period
For example:
A 75cl bottle of wine costs £8.00 and is sold at £25.00, therefore the cost of sales is 32% (68% GP).
If in an entire week, all that has been sold is 10 bottles of this wine, this would be the theoretical COS calculation:
Wine A 75cl
Sales: 10
Revenue: £250
Cost: £80
Theo COS = 32%
Sales: 10
Revenue: £250
Cost: £80
Theo COS = 32%
If the wine is also sold by the 250ml glass, then we begin to see the power of the report. So in addition to the 10 bottles, 30 glasses were sold at £9/glass:
Wine A 250ml
Sales: 30
Revenue: £270
Cost: £80
Theo COS = 29.63%
Sales: 30
Revenue: £270
Cost: £80
Theo COS = 29.63%
So the margin on wine by the glass is higher (understandable as it carries a higher risk - open bottles, can go off, over poured, etc.)
If we combine the sales we get the following calculation:
Revenue: £250 + £270 = £520
Cost: £80 + £80 = £160
Theo COS = 30.77%
Cost: £80 + £80 = £160
Theo COS = 30.77%
In other words, wine by the glass CAN improve the margin, but it carries risks like overpouring, and is more effort to serve than a bottle, etc.
At the end of a period, the actual against theoretical may prove that a bottle went missing which would mean, the cost was not £160, but £170. So the difference between actual and theoretical will be:
Revenue: £520
Actual COS: £170
Actual COS = 32.69%
Theo COS = 30.77%
Diff = 1.92%
Actual COS: £170
Actual COS = 32.69%
Theo COS = 30.77%
Diff = 1.92%
This report spread over all products for an entire period will provide enough information to ensure margins are realistic and achievable
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