My previous blog about bar inventory systems identified the main categories which the various options fall into. These include in-house methods, third party hardware and software systems (sometimes known as do-it-yourself solutions), full service systems and the recent addition of hybrid bar inventory systems. Before delving deeper into a few of the key decision points when choosing a suitable inventory system for your bar, here’s a quick refresher on the main types available:
In-house methods- Still by far the most common. Typically involve counting using a clip-board and then entering information into Excel to perform basic analysis including calculating Liquor Cost. In-house methods are inexpensive but are typically ineffective at controlling liquor inventory shrinkage since they only result in knowing your liquor cost. No information on the performance of individual products is available and frequent errors damage their effectiveness further.
Third party hardware software bar inventory systems- Spend a few thousand dollars buying a system which is specifically designed to take liquor inventory at a bar. Ditch the clipboard and use some type of electronic data entry method (meaning after you do the counting you don’t have to enter those counts into Excel). These bar inventory systems also provide a way to interact with your POS system so that you can compare what you used with what you sold. These systems can be effective but the learning curves are often very steep meaning in many cases they are not used to anything like their full potential. Other issues include lack of independence of the numbers, problems with technical elements such as updating the POS system to increase effectiveness and problems when your manager moves on and you have to start the whole learning curve once again.
Full service bar inventory systems- For those that recognize the value of independent and professionally prepared performance reporting, outsourcing your liquor inventory can be a great choice. Having professional involvement is more expensive but as well as ensuring accuracy and effectiveness, your business will benefit from saving hours of manager time. Not to mention the profit maximizing benefits of having regular advice from a liquor inventory expert.
Hybrid bar inventory systems- An attempt to steal the best elements of DIY and full service bar inventory systems. Counting is performed in-house by you or your managers which keeps the cost down. Professional involvement makes setup a breeze, saves time as much of the work is done for you and ensures accuracy and independence since technical elements and error checking are handled by a professional.
Having reminded readers of the main types of bar inventory systems, below I compare them across five important factors: setup cost, overall cost, effectiveness, speed and ease.
In-house bar inventory systems:
• Setup cost: Very low; typically all that is required is time, a clipboard and a computer with Excel installed.
• Overall cost: Low, with the only real cost being time
• Effectiveness: Poor; calculating liquor cost for your bar will tell you how much money you are making but provides no information on how to increase profits. With so many factors affecting your liquor cost simultaneously, it’s impossible to see how inventory shrinkage is affecting your business (and it’s a certainty that it is!)
• Speed- Variable but generally poor. There are vastly superior options to using a clipboard and then transferring data manually into excel.
• Ease- easy. In house systems are pretty simple to operate since they are unsophisticated and analysis is very simplistic. Since sales and usage are summarized by category (beer, liquor and wine) there is less work to account for sales and usage of individual products.