Not all liquor inventory methods are created equal. There are four factors which impact the effectiveness of a particular method. In order to ensure you receive the precise, actionable information necessary to determine the performance of each product sold at your bar, you will want to choose a liquor inventory method that is:
We will review four of the most common methods to inventory the liquor bottles at your bar. While these methods offer some benefits, they all possess certain flaws which prevent you from achieving the quality of data necessary to maximize your profitability. It is important to understand these drawbacks before choosing to move forward with one of these liquor inventory systems.
Standard Tenthing Method
The standard method for taking inventory of liquor bottles is to tenth them. This involves picking up or eyeballing the bottle to estimate how full it is to the nearest tenth. You will then record this estimated measurement on a clipboard. When you finish taking inventory of every bottle in your bar, you must then manually transfer this data from your clipboard to a spreadsheet.
In spite of its widespread use, the tenthing method is by far the least effective way to take inventory of your liquor bottles. It does not meet any of the four criteria mentioned above for an effective liquor inventory method.
The problems with the tenthing method include:
• Subjective – It is highly likely that different employees may record a different reading for the same bottle.
• Inaccurate – This type of measurement relies heavily on human judgment. This becomes particularly challenging when you are taking inventory of oddly shaped bottles such as Crown Royal, since it is much harder to determine how much liquor is in a bottle that doesn’t have a standard shape.
• Slow – In most instances, the product order in your bar won’t match the order on the clipboard. Typically, products are arranged in alphabetical order on the clipboard. However, the bottles are most likely arranged differently in your bar in order to make life easier for your bartenders. As a result, you will constantly have to scan the clipboard to find the product you are trying to inventory, making it a time-consuming and poorly designed system.
• Manual data transfer – With this method, data transfer must be done manually. Not only is this very time-consuming, but it creates numerous opportunities for data transfer errors. There is always a chance that you may misread a figure or fail to transfer the right data for the right product.
For these reasons, Bar-i doesn't recommend using the standard tenthing method under any circumstances.
Electronic tenthing is very similar to the traditional tenthing method, but technology is used to speed up the process. In this method, you will download software that will work with your iPhone or iPad. You then take a picture of the bottle using your iPhone or iPad and point to the level of the liquid left in the bottle on the picture. The software uses an algorithm to determine how much is left in the bottle.
This method represents an improvement over standard tenthing. It is:
• Faster – Bottles can be loaded into the software in the order you have them at your bar, speeding up the process significantly.
• More objective – An algorithm is used to calculate the level of inventory in each bottle instead of the human brain.
• Automatic – The software used with this system records all data and does everything for you.
In addition, the software used for electronic tenthing will generate a report that tells you exactly what needs to be purchased based on inventory levels that have fallen below the pars you set. Standard tenthing does not give you this kind of actionable information.
However, it is still very difficult to generate accurate data using this method. There are two problems with the accuracy of electronic tenthing:
• It is possible to put the line on the wrong spot on the bottle, which will give you an incorrect inventory level.
• This is still a tenthing method, which means you can never be confident in measuring individual pours. For example, rarely-used products such as Johnny Walker Blue may only sell one or two servings a week. This will not even equate to one tenth of the bottle, and as a result, this method will not be accurate enough to measure the amount of product that was actually used. Considering the point of your liquor inventory system is to provide precise data to make informed decisions, this lack of precision is a real problem.
The sticker method uses a special sticker to identify the amount of liquor left in each bottle. When you receive your deliveries, you place a sticker on the side of every bottle. Then when it is time to take inventory, you scan the sticker to find out how much liquor is left in the bottle.
There are two important benefits to using the sticker system:
• Automatic – Once you scan the bottle, all data is automatically entered into the inventory system for you.
• Objective – The sticker system eliminates the human judgment errors that are common in the standard tenthing system.
However, there are also several problems with the sticker system that make it less than ideal as your liquor inventory solution:
• Not accurate – This method is only slightly more accurate than the tenthing method, but not accurate enough to give you actionable data on rarely-used bottles.
• Slow – The process of scanning stickers when you take inventory may be fast, but the overall process is slow and inefficient. Every time you receive a new bottle in a shipment, you must attach a sticker to it. This takes a great deal of time.
• Expensive – These stickers are very expensive. Since you need one for every bottle that is used at your bar, these costs add up quickly.
• Daily inventory responsibility – With this system, you must consider inventory issues immediately with each delivery because stickers must be attached to each bottle right away. Any time your inventory system requires you to do something every day, it increases the chances of a problem, and it also increases the amount of time you spend performing inventory-related tasks. With Bar-i’s liquor inventory system, you simply hold onto your inventory invoices and let us do all of the data entry for you.
Real Time Liquor Inventory Systems
Real time systems use stoppers that are placed on each liquor bottle to measure precisely how much liquor has been removed from the bottle. This represents an opposite approach from the other systems discussed above. In those systems, you are determining how much liquor is left in the bottle, but with real time systems, you are determining how much has been removed.
There are several benefits to using a real time liquor inventory system:
• Fast – Since these calculations are made in real time while you are pouring drinks, the system is very fast. However, you still need to verify your results.
• Objective – You will receive the same exact reading no matter who pours the drink.
• Automatic – Calculations are performed automatically every time you use a bottle.
However, there are also several problems with this liquor inventory system that make it a less than ideal solution:
• Inaccurate – You will get small inaccuracies with each pour, requiring you to verify that your theoretical inventory matches your actual inventory. Therefore, you must still perform a physical inventory, which is time-consuming and somewhat negates the efficiency of this system.
• Unable to reconcile deliveries – Since real time systems only measure what is poured, they don’t provide the comprehensiveness to determine if whole bottles have been stolen or to spot an overcharge on your invoice.
• High set up cost – You need to buy a stopper for every bottle at your bar. As a result, the set up cost can run you as much as $10,000 for a real time system.
• Highly visible – Since your customers can see the stoppers on each bottle in your bar, real time systems are highly visible. This makes it obvious to customers that you are being very careful with every pour, which can create the impression that you have stingy pours for your drinks. Ultimately, this will be a huge turn-off to many customers.
There is one other liquor inventory system which addresses all four of the criteria for an effective system. We will discuss this method in our next blog post and explain why we recommend you choose it as your liquor inventory solution at your bar.
To find out how our liquor inventory system can benefit your bar and help you maximize profits, please contact Bar-i today to schedule a free consultation. We provide services to bars nationwide from our offices in Denver, Colorado.