Cost of Goods Detail Comparison

Cost of Goods Detail Comparison


Cost of Goods Detail Comparison

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Click here for video explainer


This report will give you a detailed look at all products in the venue and show you the Target, Potential and Actual COG percentages for these products.


The numbers in the report can help clients adjust prices and show them where they are not achieving their desired Cost of Goods on products, subcategory, or categories.
 
If products are not meeting the Target COG, it could be a result of happy hour pricing, comps/promos discounts and cocktail pricing.  

Before showing this report to any clients you must make sure all your retail prices are up to date or a client will have questions.



All items in Pilot are displayed as the following:

  • Entered Manually: Values physically typed into Pilot by an Account Manager.
  • Imported Digitally: A CSV file exported from the POS or purchase management system, modified, and imported into Pilot.
  • Combination of Both: Importing a CSV file and making manual adjustments.
  • Calculated: Pilot will calculate these values based on equations from different numbers in the software.


To explain the reports clearly to clients, you will need to have a complete understanding of each number in this report, where it comes from (i.e. how you entered it into the reports) or how it’s calculated.  


This report is one of the most important reports that Pilot produces and one you will use several times per day.



Knowing how it works inside out will not only help you double check your work, but provide the highest possible value to your clients.






  1. Date Range - Entered Manually - This is the date range you have selected when running the report in Pilot


  1. Unit Size - Entered Manually - The unit size is the serving size of the product for a single serving.  This value can vary by venue and will be different depending on your office location.  The value will be shown in Oz for the North American markets and in mL for the other markets throughout the world.


  1. Landed Unit Cost (LUC) - Calculated - The LUC will be calculated based on the wholesale cost entered for a full bottle.  If the bottle is served in partial units (liquor, draft, wine by the glass), Pilot will break down the LUC based on the cost and number of servings.


Below are the equations to calculate the LUC:


  1. Bottle Size in mL

------------------------------------------- = Ounces per bottle

29.57 (conversion for mL to Oz) 


1140 mL

-------------- = 38.55 Ounces per Bottle

29.57


  1. Ounces per Bottle

---------------------------- = Number of Units per Bottle

Serving Size


38.55 oz

-------------- = 40.15 Units per Bottle

0.96 oz


  1. Wholesale Price per bottle

------------------------------------------ = Landed Unit Cost

Number of Units per bottle 

$35.24

--------------- = $0.88 per unit (LUC)

40.15


  1. Target Retail Price - Entered Manually - This value you will get from the POS or from the client and is the full priced charged for a product ordered at the venue.  


  1. Target Margin - Calculated - This is the profit margin after subtracting out the wholesale cost per unit.


Target Retail Price - Landed Unit Cost = Target Margin

$7.96 - $0.88 = $7.06


  1. Target COG - Calculated - This value is the ideal COG if all sales are rung up for full price and there is no variance on the product.  


Landed Unit Cost

-------------------------- = Target COG%

Target Retail Price

$0.88

---------- = .11 x 100 = 11%

$7.96


  1. Average Retail Price - Calculated - This price will come from the clients POS system.  The price will include sales a full retail value, happy hour pricing, and any comps/promos that were given on the sales of that product.  Pilot will also factor in a retail price for products used in cocktails and assign a retail value for the product.  If the cocktails are not priced properly the retail value will be lower than the Target Retail Price and will increase the Potential COG% for that product.  The retail prices for products used in cocktails could work out to be higher and this would increase the Average Retail Price.  


  1. Average Potential Margin - Calculated - This is the profit margin after subtracting out the wholesale cost per unit from the Average Retail Price.  Based on the Average Retail Price, the Potential Margin could be higher or lower than the Target Margin.


  1. Potential COG% - Calculated - The value here is the best case scenario for that period of sales based on the Average Retail Price and the Average Potential Margin.  If the Average Retail Price is higher than the Potential COG% will be lower and more favorable for that product.


  1.  Wholesale Variance - Calculated - This dollar value is the Wholesale value of the Variance in Units and is multiplied by the Wholesale Cost per Unit for each product.  


The Wholesale Cost per Unit is a value provided on the invoice as the cost the venue must pay to have that product on the

shelves and will need to be entered by the Account Manager.  This number will also be in the CSV file that is imported for

purchases.


  1. Actual COG% - Calculated - The value here is the real COG% after factoring in discounts and variance for that period of sales based on the Average Retail Price and the Average Potential Margin.  In this equation, you will often be subtracting a negative number which is the same as adding it.  


(Total Cost of Sales - W/S Variance)

-------------------------------------------------------  = Actual COG%

(Average Retail Price x Total Units)


($6.15 - (-$4.76)

------------------------ = 19.6%

($7.96 x 7)


  1. Total Units - Combined - Number of units sold in the venue at full retail or with discounts.  
  2. Total Cost of Sales - Combined - This is the value of the products sold at a wholesale value.  The number of units sold during the audit period.


Landed Unit Cost x Units Sold = Total Cost of Sales


$0.88 x 7 = $6.15


  1. Average Target Margin - Calculated - This value is the average of all the Target Margins prices for a subcategory.  Adding up the Target Margin for each product and dividing by the total number of products will equal the Average Target Margin.


  1. Average Potential Margin - Calculated - This value is calculated by adding up all the Potential Margin prices for each product and if there are any blank values for the products these can be treated as adding in the Landed Unit Cost as a negative number.  It is not shown in the reports, but where you see no value for a Potential Margin that value is the Landed Unit Cost as a negative number.  


$7.09 - $0.88 + $6.74 + $6.95 + $5.91 - $0.99 = $24.82


$24.82

--------- = $6.20

4


  1. Total Cost of Sales for Products - Combined - This is the sum of the wholesale value of the products sold in a subcategory.   


Sum of the Landed Unit Cost = Total Cost of Sales for Products


$6.15 + $84.48 + $112.97 + $61.12 = $264.72

  1. Target COG  - Calculated - The value is calculated by dividing the sum of the Landed Unit Cost by the Sum of the Target Retail Price for a Subcategory.  


($0.88 + $0.88 + $0.80 + $0.95 + $0.89 + $0.99)

------------------------------------------------------------------ = 11.8%

($7.96 + $7.96 + $7.54 + $7.96 + $7.08 + $7.08)


  1. Potential COG % - Calculated - This subcategory percentage is calculated by taking the Total Cost of Sales for Products for all products in that subcategory and dividing by the Sum of the total Retail sales for the products in that Subcategory from the POS Consolidated Report.


Total Cost of Sales for Products

-------------------------------------------------------------------------------------------- = Potential COG%

Sum of Retail Sales Subcategory from the POS Consolidated Report


$264.72

---------------- = 11.7%

$2,255.22


  1. Actual COG % - Calculated - The Actual COG % is the value for the subcategory combining all products to give you an overall look at how the subcategory is performing compared to the Potential COG% for the subcategory.   In this equation, you will often be subtracting a negative number which is the same as adding it.  


This is calculated as:


(Sum of Total Cost of Sales - (Sum of the W/S Variance)

-------------------------------------------------------------------------------------  = Actual COG%

(Sum of the Average Retail Price x Sum of the Total Units Sold)


  1. Target COG% for the Venue - Calculated - This value is the ideal COG if all sales are rung up for full price and there is no variance on the products and factoring in all products sold at the venue.


  1. Potential COG% for the Venue - Calculated - The value here is the best case scenario for that period of sales based on the Average Retail Price and the Average Potential Margin and factoring in all products sold at the venue.


  1. Actual COG% for the Venue - Calculated - The value here is the real COG% after factoring in discounts and variance for that period of sales based on the Average Retail Price and the Average Potential Margin.


  1. Total Cost of Sales for the Venue - Calculated - This is the sum of the wholesale value of the products sold in the venue






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