You probably don’t even like the fact that I just brought it up. (Sorry)
I know you probably don’t want to be reminded of the seemingly endless hours you’ve spent from 3 am until the break of dawn counting every single bottle behind the bar. You also probably don’t want to picture the multi-tabbed Excel spreadsheets and the number crunching.
If you haven’t done bar inventory, now that I’ve described it, you might consider skipping it.
Don’t skip it. Bar inventory is necessary for running a successful bar. Here’s why:
No one likes to hear, “I’m sorry, we’re out of that!” Especially if he orders something else and you’re out of that product too. If you don’t keep track of how much product you have behind the bar, you’ll run out of product without knowing it, and you’ll likely have some frustrated customers on your hands.
Taking bar inventory will help you avoid this sticky situation. If you stay on top of it, you’ll be aware of diminishing product early-on, giving you time to order more before you 86!
Your inventory is your largest asset. It represents an investment of your business’s cash and it can’t be used for other outflow purposes. If you’re just buying things without keeping track, you’re not going to have a very good understanding of where your inventory dollars are going.
Remember, every dollar you spend on inventory is a dollar you can’t put towards other costs. You need to keep track of how much and what variety of product you have so you don’t overstock or understock your shelves – and you purchase product that sells.
Say your distributor offers you a big sale on Shock Top. You decide to buy a few cases because he made the deal sound really worthwhile. However, what if you don’t even have Shock Top on the menu and it’s just sitting in the back room? Or, what if Shock Top just isn’t a big seller with your customer base? Without taking inventory, you won’t know if the product you purchased is actually selling. Taking frequent inventory will help you ensure your products are actually making it out of the back room and into your guests’ hands.
Remember, your investment in your inventory has a significant impact on your cash flow. If you over-invest in inventory, you’ll reduce the amount of cash you can use for other outflow purposes like rent and payroll. Every bottle sitting on your shelfs and in your back room represents unusable cash.
Taking inventory will help you gain a better understanding of how quickly your products are resold, helping you to set accurate pars so you don’t overstock your shelves and tie up your costs.
If you don’t take inventory, product could be disappearing without your knowledge. In fact, it’s estimated that internal theft costs bars 24 to 26% of gross sales on average. Although you’d love to trust your staff, it’s important to keep track of your sales.
Keep in mind, loss doesn’t always mean your employees are actually walking out the back door with liquor bottles. It could also mean they’re over-pouring or replacing well brands with call brands.
If your bar staff knows you don’t take inventory, they might be even more inclined to give away free drinks and/or take bottles for themselves because they know it will take you a while to catch on.
Taking inventory will help you notice when your sales and inventory don’t match up. If you’re thorough, you’ll be able to pinpoint what product is missing, how much is missing, and even when it went missing.
You could have a drink on your cocktail list that nobody ever orders or a beer variety that’s collecting dust. Maybe they’re priced too high for your bar demographic, or maybe they’re just not crowd favorites. On the other hand, you could have a popular wine variety that’s flying off the shelves that you could afford to bump up a dollar.
If you don’t keep track of what leaves the bar, you won’t know what’s selling and what isn’t. Taking inventory can help highlight products that need your attention. This way, you can address the problem with a price switch or by replacing the product entirely.
Sure, every now and then your bar staff will spill a drink or accidentally overpour. However, what if they’re constantly making mistakes? If your bartenders are free pouring without jiggers, there’s a chance their count is off and they’re constantly overestimating their ounces. To prevent this, you should properly train and continuously retest your staff in the art of free pouring. You should also take inventory to see if recorded sales and the amount of remaining product match up. If there’s a significant variance, it could be due to inaccurate pouring.
If you don’t know how many limes you have, you might decide to order a few more cases only to later find some cases in the storage room. Because you didn’t keep track, you now have too many limes and there’s no way you’ll be able to use them all before they start growing fur. Keeping an updated inventory count will provide you with valuable information to help you avoid wasting product and throwing your money away.
As you can see, taking inventory is necessary for running a successful bar. Although bar inventory isn’t the most glamorous of tasks, BevSpot’s bar management software can cut down the time it takes, set up pars to ensure inventory levels, track product usage, and combine orders and inventory numbers to help you better understand your bar.
Sound like something you’d be interested in? Schedule a demo with one of our product specialists to find out how we can help.
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Very interesting article/analysis and to the point. You have dealt with issues which most owners overlook. Thousands of dollars could be saved with a well integrated inventory management system.
Thanks George! I appreciate your feedback. I definitely agree with you. Sometimes managers/owners don’t realize the numerous problems that can arise if they avoid taking inventory or if they don’t do a thorough job. An integrated inventory management system can help bring attention to any money-suckers, and it also makes the inventory process less of a hassle.