Bar management terms, defined
Clear definitions of the industry terms every bar operator should know.
Pour Cost
The percentage of your selling price that goes to ingredient cost. Calculated as (Ingredient Cost ÷ Menu Price) × 100. Lower pour costs mean higher profit margins. Industry targets range from 15–18% for well spirits to 25–30% for wine by the glass.
Par Level
The target quantity of a product you should have on hand at any given time. When stock falls below par, it's time to reorder. Calculated as Average Daily Usage × (Delivery Frequency Days + Safety Stock Days).
Variance
The difference between theoretical usage (based on POS sales data) and actual usage (based on physical inventory counts). Positive variance indicates over-pouring, waste, theft, or counting errors.
Depletion Allowance
A type of brand deal where a supplier pays a rebate based on the volume of product purchased over a specific period. Common thresholds are measured in cases depleted during the deal window.
Split Case Fee
A surcharge ($3–$5 per partial case) that distributors add when you order fewer bottles than a full case. Minimized by rounding orders up to case sizes and consolidating across locations.
Tenthing
A method of estimating the remaining liquid in a partial bottle by dividing it into tenths. A bottle that's half full is '5 tenths.' Used during inventory counts to measure partial bottles consistently.
Three-Tier System
The regulatory structure in the United States that separates the alcohol industry into three levels: producers (distillers, brewers, wineries), distributors (wholesalers), and retailers (bars, restaurants, liquor stores). Bars must purchase through licensed distributors.
Brand Support
Financial incentives offered by brands/producers to encourage bars to carry and promote their products. Includes cash rebates, marketing funds, event sponsorships, equipment, and training programs.
Well Product
The default (usually lowest-cost) spirit used when a customer orders a drink without specifying a brand. Also called 'house' or 'rail' products. Well products have the lowest pour cost and highest margins.
Dead Stock
Products in your inventory that have had no sales movement for an extended period (typically 60–90+ days). Dead stock ties up capital and shelf space that could be used for faster-moving, higher-margin products.
COGS (Cost of Goods Sold)
The total cost of beverage products sold during a period. Calculated as Beginning Inventory + Purchases − Ending Inventory. COGS divided by Revenue gives your overall pour cost percentage.
Shrinkage
The loss of inventory between purchase and sale that cannot be attributed to recorded sales, comps, or waste. Causes include over-pouring, theft, unrecorded comps, breakage, and spillage.
Reorder Point
The inventory level at which a new order should be placed. Typically set at par level minus expected deliveries, ensuring stock doesn't drop below minimum before the next delivery arrives.
Cost Per Ounce
The wholesale cost of a product divided by the total ounces in the bottle. A standard 750ml bottle contains 25.36 ounces. Cost per ounce is the foundation for calculating cost per pour.
Inventory Turnover
How many times your inventory is completely sold and replaced during a period. Calculated as COGS ÷ Average Inventory Value. Higher turnover indicates efficient use of capital; typical bar targets are 8–12 turns per year.
Safety Stock
Extra inventory kept on hand above the minimum needed to cover normal demand. Acts as a buffer against unexpected sales spikes, delivery delays, or counting errors. Typically calculated as 1–3 days of average daily usage.
Cost Per Pour
The cost of a single serving of a product. Calculated as Cost Per Ounce × Pour Size (in ounces). For a 1.5oz shot from a $20 bottle (25.36oz), the cost per pour is approximately $1.18. This is the numerator in pour cost percentage calculations.
Volume Rebate
A discount or refund offered by distributors or producers when your purchases exceed a specified volume threshold over a defined period. Common structures include per-case rebates at quarterly or annual volumes.
Post-Off Pricing
A temporary price reduction offered by a distributor on specific products, usually lasting 1–4 weeks. Post-offs are a common form of short-term promotion and represent buying opportunities to stock up at reduced cost.
On-Premise
Establishments where alcohol is consumed on-site — bars, restaurants, hotels, and clubs. On-premise accounts are the primary market for BevSync. Contrasts with off-premise (liquor stores, grocery stores) where products are sold for off-site consumption.
Control State
A state where the government operates as the exclusive wholesaler and/or retailer for some or all categories of alcohol. There are 17 control states in the US (e.g., Pennsylvania, Virginia, Utah). Bars in control states purchase through state-run distribution with fixed pricing.
FIFO (First In, First Out)
An inventory accounting method where the oldest stock (first purchased) is assumed to be sold first. FIFO ensures accurate COGS calculations when product costs change over time and prevents older inventory from expiring on shelves.