Why shrinkage and pour costs effect bar inventory.
Managing your bar inventory can be complicated, so let's make it a little easier.
Keeping accurate control of your bars profits is affected due to the industries leading loss of revenue.... shrinkage.
Bar and restaurant operations that do not practice proper bar inventory control procedures, leave themselves vulnerable to losing a large percentage of profits to bartenders over-pouring drinks, free give-aways, cash skimming, and product stealing.
Industry studies have found that most bars are getting hit by an average 15-20% profit loss due to employee theft and carelessness.
The most common mistake that bars make when calculating profits is basing numbers on their "cost of goods" percentage — more commonly referred to as pour costs.
Traditionally, the industry has determined these percentages by adding up the cost of the product used and dividing it by the cost of the product sold.
The main problem with pour cost is deciding what to compare it against.
How do you know if your percentages are in line?
Most bar owners and managers simply look at the average pour cost in the industry or at their previous pour cost percentages.
By using these techniques there is no-way to measure the true amount of your profit and loss.
Bar and restaurant owners need to compare their ACTUAL cost percentages to their POTENTIAL (or optimal) cost percentages.
Potential cost percentages are determined by taking into account an operation's selling prices, purchasing costs, and sales mix.
When calculating a potential liquor cost percentage, the desired liquor shot size needs to be considered.
When determining potential draft beer cost percentages, the sales mix of each draft beer container (mugs, glasses, pitchers) needs to be figured into the calculation.
Bar management software helps you bring your pour costs to a true value by allowing you to implement a bar inventory control system designed to virtually eliminate over pouring, free give-aways, and theft while taking an accurate measurement of your beverage inventory.
One of the most important aspects of running a successful restaurant, bar, hotel, and nightclub is making sure that your employees stay honest and theft does not happen.
Having employees putting your profits in their pockets can result in the end of your establishment.
To be successful you need to stop bartender theft and inventory control software is one of the best tools you can put into place to help accomplish this.
Just like with POS software, there are many different inventory control options for your bar or restaurant.
If you serve food, then you will need to control your food products as well as your bar stock.
Inventory software choices vary greatly, from software on a laptop, scanner systems, and smartphone apps.
Do you want to weigh your open bottles or estimate by with eye-balling methods?
Do you want to keep stock control procedures in-house or hire a 3rd party company to do it for you?
At this point you probably are not sure which solution is right for your bar and that's ok.
It does not matter if you use a state-of-the-art POS system or simple cash register to run your establishment, without a stand-alone inventory control solution in place, you will have profits walking out the door.
There are many different types of inventory control programs available and the one you choose should fit the needs of your establishment.
Almost all bar inventory systems will monitor your product usage and show you that data.
The biggest difference between systems is going to be accuracy.
If you want to be have accurate inventory data, you need to weigh your liquor, wine, and draft beer.
Bar software that allows you to weigh your inventory will help you raise your bottom line profits by controlling employee theft and inventory abuse.
You'll get a close insight to where your retail profits are really going, keeping your employees honest and your profits in the register.
If you have any questions on how to control your bar inventory better and profit more, contact us... we'd love to chat.