Liquor Inventory – Is it time to lose the clipboard?
Written By – Jamie Edwards
Bar-i Liquid Accounting www.bar-i.com
I was recently invited by Ryan Dahlstrom from Rescue My Bar to write a post explaining why bars are increasingly ditching their trusty inventory clipboards in favor of using dedicated liquor inventory software to perform inventory each period. Rather than simply plug our own hybrid liquor inventory system, my aim here is to frame the problem and discuss the variety of systems available so readers can start to think about what style of system might work with their unique situations.
Let’s face it, there’s nothing fun about doing liquor inventory each period. The process of counting is slow, transferring data from clipboard to Excel spreadsheet is tedious and worst of all the final results tend to raise just as many questions as they answer. Many operators have realized that doing inventory to measure their liquor cost is largely a box checking exercise and a big waste of time. Why? The reason is that your liquor cost will tell you how much money you’re making but it will never tell you how to make more. Enter the concept of Accountability.
You measure Accountability at a bar by precisely comparing how many ounces of product were rung versus poured. For example in a 16oz pint glass you should serve 14.5oz of beer. Therefore if you used 1450oz of beer you poured 100 servings. If you sold 90 you are missing 10 servings and your Accountability score on that product would be 90%. In actual fact most bars are surprised to find that their 21% Liquor Cost translates into an Accountability score in the mid 80s. Eliminating those pesky variances is where the value of inventory software lies.
Calculating Accountability on every single product your bar carries is a task best handled by dedicated software so let’s explore the possibilities:
Full service inventory systems – Work by having a dedicated person come to your bar each period to perform precise liquor audits. These systems are extremely user friendly since you get a dedicated and expert inventory assistant at your disposal. The obvious downside is relatively high costs though if your bar does sufficient volume, the included management support and time savings may be well worth it.
Do-it-yourself inventory systems – Allow you to buy the dedicated hardware and software as a package and then perform detailed auditing all on your own. The upside is significantly lower costs while the challenges include integration to your POS system, a steep learning curve and lack of independence of results if your managers are the ones operating the software.
Hybrid inventory systems – Allow you to count your own liquor inventory faster and more accurately using dedicated software. After counting, data is submitted online to a remote assistant who completes the rest of the process and produce precise, accurate and independent results. Hybrid systems balance ease-of-use with cost and can offer the best of both worlds.
If your bar is simply using your liquor inventory counts to calculate your liquor cost, you’re not getting the most value out of the time you spend on inventory. I urge you to investigate investing in a dedicated inventory system. At Bar-i it’s typical for our clients to realize a 3% fall in their liquor cost so the upside can be very significant. If you’re interested in using our hybrid system, mention this post when you call and we’ll knock $200 off your setup.