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Bar-i Liquor Inventory Blog

Accountability & the Liquor Cost Performance Gap at Your Bar

The most important point we can make to you when thinking about upgrading your inventory system is that you need to have a clear understanding of your goals. Do you want to simply save time on the inventory process or do you also want to leverage your inventory data to help your bar make more money?

Ultimately, this should be your key consideration when choosing a new liquor inventory system:

  • Do you want a system that just replaces your clipboard and speeds up the bar inventory process?
  • Do you want a system that provides these time-saving benefits, but in addition provides you with data and analysis that will help you increase revenue at your bar?

Your answer to this question will significantly impact which inventory service best meets the needs of your bar.

Essential Tasks of an Effective Bar Inventory System

Clipboard Method for Bar Inventory - Bar-i If you’re simply looking for a faster replacement to the clipboard method, it’s important that you choose an inventory system which performs the following essential tasks:

  • Provides a method for recording product levels on open products (this is typically done by the tenthing method when you use a clipboard)

  • Provides a system that allows you to aggregate counts from multiple locations – this is typically done manually when you use a clipboard (i.e. .4 of 1 bottle, .7 of another bottle and 2 bottles in storage give you 3.1 bottles of a particular type of liquor on-hand)

  • Calculates the total value of inventory on-hand by multiplying the aggregate counts of products by their cost

  • Integrates sales and deliveries to calculate the cost of products sold at your bar (calculates your liquor cost)

  • Tells you what to order each inventory period

Bar-i Speed Count – Excellent Value for a Basic Liquor Inventory System

If all you want your inventory system to do is perform the above-mentioned essential tasks, Bar-i Speed Count provides you with the best value inventory method to accomplish your goals. The one-time start-up equipment costs for Speed Count are $650, and the service only costs $50/month. This monthly cost is very small compared with the value you receive from the service.

Speed Count is extremely efficient and effective at accomplishing all essential bar inventory tasks:

  • Recording product levels – Bar-i uses scales with all of our inventory systems in order to record your product levels with the highest degree of precision. Our scales are accurate to the hundredth of an ounce and allow you to weigh each bottle in just 2 seconds. This is one of the fastest and most accurate ways to record this data.

  • Aggregate counts – Bar-i’s software performs all aggregate counts automatically, eliminating the time it takes to do these calculations manually.

  • Total value of inventory on-hand – Bar-i’s software also performs this task automatically, eliminating the need to do the math in your head. This saves you time and reduces the risk of errors.

  • Integrate sales and deliveries – Simply enter this information into our system. There is no math required.

  • Tell you what needs to be ordered – Bar-i software compares your pars with your current inventory counts and tells you what you need to order to make up the difference.

For an average bar that performs inventory weekly, the monthly $50 cost for Speed Count equates to $12.50 per inventory period. How much time savings would make it worth your spending $12.50 per week for a service that also automates most of your process to reduce errors?

Most bars spend at least 4 hours doing inventory to get these calculations with a clipboard. When you use Speed Count, you can typically reduce that time to 2 hours, freeing up 2 hours of your manager’s time to focus on other important aspects of your bar’s operations. At $12.50 per week, this is a relatively small monetary investment to cut your inventory time in half and improve your accuracy.

Speed Count Pro and Bar-i’s Full Service System: Time Savings Plus Actionable Data to Help You Maximize Profits

If you really want to get the most out of your bar inventory system, you need to choose a service that not only performs the essential tasks discussed above, but also provides you with detailed data regarding the performance of every product sold at your bar. You can then use this data to improve accountability at your bar. This improved accountability will:

To understand how this actionable data will help you achieve these goals, let’s examine a case study of a current Bar-i client.

The graphs below represent data captured for a neighborhood bar in Lakewood, Colorado. Based on the upper portion of the graph, you can see that when Bar-i started working with this establishment, their accountability score was consistently in the low 90s. However, on the 5th week, their accountability score rose all the way to 96%.

Accountability and Liquor Cost Performance - Bar-i Bar Inventory

If you look at the lower portion of the graph, you can see how this increase in accountability impacted this bar’s liquor cost. The shaded part at the top of the bar graph shows the effect of missing product on the bar’s liquor cost. During the first few inventory periods, the accountability score of approximately 91% resulted in a liquor cost that was about 2% higher than it should be. However, the 5% rise in accountability on the 5th inventory cycle corresponded with a 1.4% drop in the bar’s liquor cost.

As you can see, the granular data this bar was receiving in their inventory audits allowed them to actively manage their business and make important accountability improvements. This particular bar did approximately $21,000 in sales each inventory cycle. Therefore, the 1.4% reduction in liquor cost saved this bar $294 during that inventory period. This is a solid return on investment for a service, Speed Count Pro, which cost them approximately $75 per inventory period.

Choose a System that Gives You a Solid Return on Investment

As you compare different liquor inventory services, remember to be clear about the goals you want to achieve:

  • Save time
  • Save time and make more money

Most bar inventory systems do an excellent job at saving you time, but it can be challenging to effectively address the additional task of increasing your profitability. If making more money is your primary goal, then you need to choose a system that has the ability to provide you actionable information regarding what was rung into your POS system vs. what was actually poured.

Liquor Inventory System Return on Investment - Bar-i Bar InventoryKeep in mind that you’re looking for a good return on investment, not the least expensive system. A system which makes it easy to calculate accountability offers additional advantages above and beyond saving time. It also helps you make more money, which ultimately provides you with a much greater return on investment compared to a system that just saves you time. This type of return on investment makes that additional expenditure on your inventory system well worthwhile.

Bar-i’s Speed Count is a great first step if you are using a more sophisticated inventory system for the first time. It will eliminate the manual aspects of the inventory process, which ultimately makes calculating your liquor cost much easier. The quick and easy nature of this service is also advantageous for bars that currently aren’t taking inventory at all since it will make it much easier for you to get into a routine of performing inventory on a regular basis.

Having a system such as Speed Count that is easy to use and offers basic inventory functionality, but also gives you the ability to upgrade at a later date is a great way to ease into using more sophisticated liquor inventory technology. Down the road, you can easily upgrade to either Speed Count Pro or Bar-i’s full service system. Both of these options provide you with greater levels of data analysis, which is essential if your primary goal is to make more money.

If you would like to learn more about the different liquor inventory system options we offer, please contact Bar-i today to schedule a free consultation. We serve bars and restaurants nationwide from our offices in Denver, Colorado.

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Topics: Liquor Cost, Accountability

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