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Par Level & Stock: Par Inventory Definition, Formula & Sheet

October 14, 2019
Table of Contents
par level analysis from binwise

Do you want to ensure you never run out of stock?

What about ensuring that you never have too much stock, it expiring, and you losing that money?

Then you need par levels. They’re a best practice in restaurant and bar inventory. And they effectively eliminate the risk of losing sales because of 86’d items or burning money on expired inventory.

So let’s look into what par levels are, how to set them with a par level formula, and what a good par level policy typically is. We’ve even got a free par level worksheet you can download.

Par Level Definition: What Are Par Levels?

A product’s par level is the minimum amount of a product a bar or restaurant should have on-hand to meet that product’s demand—until additional inventory is delivered. It’s not quite the same as safety stock.

The right par level inventory ensures two things.

First, that you don’t run out of inventory and miss sales opportunities. Second, that you don’t have too much cash tied up in sitting inventory or wasted on expired inventory.

How to Determine Par Levels in Restaurants

Par level inventory is determined by using the average of your past inventory usage numbers. And there are two primary ways to do it.

Crunching the numbers yourself with the par value formula, or using a par stock inventory system.

Par Value Formula

Here's the formula for par stock:

Par Level = (Average Inventory Usage + Safety Stock) / Number of Deliveries per Time Period

Let’s walk through how to use the par value formula to determine par level.

Step 1

First, look at historical usage. In setting the par level for a certain vodka bottle, look at your bar’s past usage and note that you used 400 vodka bottles over a period of 3 months.

Step 2

Then calculate average usage. Divide the total number of bottles used in a period of time over the number of months. You'll get the number of bottles that your bar uses per month. In our example, 400 vodka bottles divided by 3 months is 133 bottles per month.

Step 3

Factor in safety stock. To account for unexpected spikes in demand, keep a little extra stock as a cushion. Best practice is about 25% of your average inventory usage. In our example, that's another 33 bottles.

Step 4

Consider delivery frequency. The idea is that the right par level will keep the product in stock until the next delivery arrives. That's why setting par level depends on how frequently you get deliveries. And what your inventory turnover looks like. Let's say we get one deliver per week, so 4 per month.

Step 5

Use the par level formula:

Par Level = (Average Inventory Usage + Safety Stock) / Number of Deliveries per Time Period
Par Level = (133 + 33) / 4
Par Level = 41.5

That means your bar always needs 41.5 bottles of vodka on hand in your inventory to meet demand in between the placing and receiving of a new order.

That ensures you maintain inventory levels that meet demand but you're not sitting on too much unused product.

Par Level Inventory

Note that you should not order your par level. You should order enough to restock up to your par level. Par level is not order size. The order size should replenish the inventory back up to par level.

Bar inventory management ebook

Par Stock Inventory System

Alternately, you can automate the process.

Calculating par stock inventory manually is time-consuming and prone to errors. That’s why people use par stock inventory systems.

End-to-end bar inventory software like BinWise Pro knows exactly how much you sell, when, and for how much. That makes it ridiculously easy to calculate inventory usage and set par levels.

The Benefits of a Par Level Policy

Setting and sticking to a par level policy allows bars and restaurants to:

  • Avoid 86’ing items, which disappoints guests and necessitates reprinted menus (unless you’ve got a QR code menu)

You can measure the effectiveness with some other useful metrics:

  • Days on hand is how many days worth of inventory a business has at any given moment.
  • Inventory shrinkage. Also called variance. The amount of inventory that slips through the cracks and isn't sold.

The above numbers will shine a light on how effectively you’re stocking and using inventory to meet demand.

Par Level Worksheet

Sales patterns change frequently—think of seasonality, holidays, etc.—par levels change frequently. Setting par inventory levels monthly is ideal, then. But you can get away with quarterly.

Below you’ll find two versions of par level inventory sheet template.

One is a downloadable PDF that can be printed out. You’ll find an inventory sheet template example right below it to illustrate how it’s used.

The other is a par level worksheet calculator that will make the calculations for you. It’s a spreadsheet file that can be opened in Google Sheets or Microsoft Excel.

How to Use the Par Level Worksheet Template

Here’s a breakdown of what each column in the restaurant par sheet means:

  • Supplier: the vendor you’re purchasing the inventory from
  • Item: What the inventory is
  • Par level: The par level you set using the process outlined above
  • Current inventory: The amount of that item you presently have in stock
  • Extra par: Any known events, private parties, or circumstances which necessitate extra inventory. Inputting “1” in this column means you know you’ll need at least 1 more quantity of the item.
  • Order amount: The amount you need to order to maintain par level inventory. It’s the par level minus current inventory plus extra par.

Blank Par Level Worksheet Template

Click the below preview to download our printable, blank restaurant par sheet.

blank par level worksheet template

Par Sheet Template Example

This is what a filled-out version of the above par level worksheet template looks like:

par level worksheet example

Par Level Worksheet Template Calculator

You can also download our par level worksheet calculator. It calculates the order amount for you (rounded up to the nearest whole number). Just import the .xlsx file into Google Sheets or Microsoft Excel and input par level, current inventory, and extra par. It’s also sortable by column.

We’ve also got a wonderful (and free) bar inventory spreadsheet to help with taking inventory in the first place. And liquor cost and beer keg tracking resources to take it a step further.

Bar inventory software

Set and Observe Par Level Inventory Easily with BinWise

This may sound quick and easy when you only have to do it for one bottle. But what about doing it for thousands of bottles and brands of varying liquor bottle sizes?

Couple that with how frequently traffic and demand change, and manually calculating par level inventory approach full-time-job status. Not to mention it’s error-prone. Because you’re human.

Manual bar inventory management isn't easy.That’s where BinWise Pro comes in.

Our bar inventory software allows you to quickly set and adjust the par level inventory based on historical data. BinWise alerts you when your inventory is falling below the par levels. And enables you to place orders directly to your distributors right through the platform. There's even a bar inventory app.

It should also be said that this all applies to any product, not just liquor. Food, dry goods, cleaning materials, anything. It's a valuable tool in avoiding issues like excess inventory.

So whether it's wine inventory or restocking a kitchen, BinWise Pro will do it for you.