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If you have a bar in your restaurant, it can be a great profit center
for you.
It
can also be a drain on your profits if you are not carefully monitoring
your inventory. Alcohol is a liquid product that can be over-poured,
stolen or sold for cash profit by your staff. In this article,
we’ll take a look at what you need to do to maximize your
sales revenues by controlling your inventory.
BUSINESS BASICS
I
spoke with Robert Plotkin, president of Bar Media, about how
controlling your inventory can increase your profits. He says there are
six essential business procedures you need to implement:
- Keep your inventory levels
as low as you can. When you have an excess of stock, you cannot control
it as easily.
- Know exactly what inventory
you have, where it is, how much you paid for it and at what rate
you’re using it.
- Make sure a manager is there
to check in the shipments.
- The alcohol needs to
automatically be taken some place secure such as a liquor closet. This
room needs to be key controlled. The door always needs to be closed,
and you should only have two keys to the room: one for you, one for the
manager.
- There are some basic
bookkeeping controls you need to have in place. You need to track the
flow of the inventory in the liquor room and out of the liquor room.
"At any point in time, a manager should be able to go to the perpetual
inventory book and look up any product," Robert says. "The quantity in
the book should correspond exactly to how many bottles of Jim Beam are
on the shelf. It’s like keeping track of how much money you
have in your checking account."
- You need to requisition your
inventory against the perpetual inventory book just as you do with your
bank statements, Robert says.
 The
best way to keep with all this is to do a physical audit weekly,
biweekly or monthly. Robert says it’s best to do it as
frequently as possible. "The more frequently you audit your inventory,
the more control you’re going to have and the safer your
inventory is going to be." After you do your audit, you will know how
much inventory you still have. At the end of the month, the balance of
bottles is your beginning inventory for the next month. By doing this
audit, you are also figuring your liquor cost.
"The
best way to gain control of your business is to frequently audit your
business," Robert says. "By determining what’s been used and
what’s left, you are taking the first steps at preventing
internal theft."
Everyone
knows doing inventory is a time-consuming process, and a manager is
usually the person to do it. Robert says that even here you have to
exercise some caution. By having a manager do the inventory, you still
run the risk of losing money. Absentee owners definitely run the risk
of having management and staff take advantage of them. Robert says this
is one of the reasons absentee owners fail so frequently. "If you
don’t have a vigilant management, you are setting yourself up
for failure."
Here’s
an example about why you need to be involved in the audits.
Let’s say you have a manager with a drinking problem. The
manager is responsible for inventory as well. You tell your manager
that they need to audit the bar and liquor room. Well, this manager
steals a couple bottles of booze from you and adjusts the inventory to
reflect that he didn’t steal anything. If you
aren’t active in your audits, you may not realize this is
happening.
INVENTORY SERVICES
Robert
says there is a service that can come in do your audits for you called
Bevino. They come in with a laptop and electronic scale and do your
audits, Robert says. "The process is accurate to one hundredth of an
ounce," he says. "They can tell me precisely how much Johnny Walker
Black Label I’ve used between inventories. They compare
what’s there to what sales the bartenders ring up. On their
reports they will tell you exactly what your cost percentages are, what
your actual profits per brand are and what your retail losses. Because
they’re an outside auditor, they have no vested interest in
how those numbers come out."
 Robert
also spoke of a handheld device called AccuBar that can help you do
your inventory. The AccuBar device is first programmed with all your
brands. When you are doing your physical audit, you will look at the
bottles at the bar. The image of the product you are taking stock of
will appear on the screen. The bottle you are looking at is half empty.
You touch the middle of the label on the Accubar screen, and it
automatically figures out how many ounces you have left.
I
spoke with Dave Grimm, partner and communications manager at AccuBar,
about this product. He says the AccuBar comes in with two options. You
can buy the PDA device and pay a monthly fee for the Internet based
version of AccuBar, which provides you monthly reports. You can also
buy the standalone version and have the reports on your computer. Dave
said this product can also be used to track your food inventory as
well. For more information on AccuBar, go to www.accubar.com.
HOW TO CONTROL INVENTORY AT THE POUR
Robert
says there are four ways to deal with dispensing of liquor and making
sure you exercise some control.
- Free Pouring (Vegas Style)
– This is where the bartender inverts the bottle and counts
off one-1,000, two-1,000 as an Ball-bearing spouts like this can
drastically cut down on overpours at the bar. Photo Courtesy of
Precision Pours www.pmq.com 63 ounce. "There is a lot of flair to it,
and it’s very fast, but it is the easiest to over pour,"
Robert says.
- Using a Shot –
This is a method where you use a shot glass to measure off the liquor
amount. "It does offer some control," Robert says. "It’s just
as easy to steal using a shot as it is to free pour, but it keeps
honest people honest."
- Spouts with Ball Bearings
– These are similar to spouts used in free pouring, but they
have ball bearings that control the amount. I talked to Duane Nordling
at Precision Pours, a manufacturer of these spouts. He says they range
in size from a quarter ounce to three ounces. The nice thing about
these spouts is the all cost under $4 a piece. Duane says that that
even the best bartenders can over pour. The line between the fill line
on a shot glass and the top of the glass is one-eighth of an ounce, he
says. If you pour one-ounce drinks from a bottle, you’ll get
34 drinks. If you over pour that eighth an ounce on the same bottle
four times, you only get 30 drinks. At $4 a drink, those 34 drinks
constitute $136 in sales. At 30 drinks, you only make $120;
that’s $16 in sales lost by over pouring just four times,
Duane says. He says for around $250 you can outfit your entire bar. If
you are using three cases of liquor a week, at $180 a case, you can
save $540 a week. Visit www.precisionpours. com for more information.
- Electronic Dispenser
– These dispensers are controlled by a computer and dispense
the predetermined amount. Robert cautions against using these because
they are very impersonal. He says you need to consider your type of
establishment before implementing something like this.
SURVEILLANCE CAMERAS
To
protect your inventory, a surveillance camera can be an asset. "It
makes it harder to steal bottles out the back door of the place,"
Robert says. "This prevents the tricks like dropping the bottle into
the trash and retrieving it from the dumpster later."
CONCLUSION
By
installing some basic inventory controls in your business, you can cut
your bar costs and increase profits. Robert says that with the
bookkeeping procedures and implementing some of the pour controls,
it’s very possible for you to lower your liquor costs 5 to 10
percent. "What that means is, before you started controlling your
inventory, let’s say you were running a 28 percent beverage
cost, you can conservatively pick up five points," Robert says. "Five
points means for every $100,000 in sales, you’re picking up
another $5,000 that would have gone down the drain."
– PMQ –
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