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Bar-i Liquor Inventory Blog

11 Things Your Current Inventory System Isn't Telling You

It their most basic form, liquor inventory systems can help you determine how much of each product you have on-hand, calculate your liquor cost, and guide your ordering processes. While this basic information is important to ascertain, it’s hardly leveraging your inventory efforts to maximum effect. By using sophisticated inventory software, you can have the ability to leverage your inventory efforts as a profitability tool.

However, it’s important to understand that all inventory systems have their own unique features:

  • Some modern systems will help automate your processes and save you time, but they may not provide the actionable data necessary to improve the performance of your bar

  • Some systems may be complicated and challenging to use, making it harder for you to get the most out of your inventory efforts

  • Some systems may provide you with the data you need to improve the profitability of your bar, but they may not come with detailed and customized recommendations that will help you improve your bar’s performance

  • Some systems, such as Bar-i’s, will provide you with all of the data necessary to maximize profits along with recommendations that will help you achieve this goal

using bar inventory to maximize profitsWhen evaluating new inventory systems, you should always determine what you would like to achieve out of this process. If you are simply looking to save time and perform the basic inventory functions discussed above, then you will be looking for a different type of service than if you are also trying to maximize profits.

There are several inventory systems that can help you improve profitability, and Bar-i’s system is one of these options. You’ll want to choose the right system for your bar’s unique needs. When comparing systems, you should evaluate the type of information you’ll be receiving from your inventory audits.

Bar-i’s inventory system provides you with highly detailed information that can help you improve your bar’s performance and maximize profits. The following 11 items are things that in-house inventory systems and even most sophisticated inventory software won’t provide you with.

Product by Product Variances

A fundamental problem with taking liquor inventory is that your bar purchases alcohol products in different units than they are sold to customers. This makes it more challenging to accurately track what is poured vs. sold.

Many bars that use in-house inventory systems typically collapse the liquor cost of multiple products into one figure. This lacks the granularity necessary to effectively evaluate the performance of each product sold at your bar.

Bar-i’s system tracks the performance of every product down to the serving to ensure the accuracy necessary to leverage your inventory efforts as a profitability tool. For example, you’ll know how many servings of Jameson (or any other product) are missing for each inventory period. This is a piece of information that most in-house systems and many third party inventory systems fail to provide with a high degree of confidence and accuracy.

Exact Wholesale Loss

Bar-i provides an accurate dollar figure for the amount of product that wasn’t accounted for during each audit cycle. When you compare what was sold vs. what was poured, these figures will never match up identically. It’s virtually impossible to ensure that all drinks are poured correctly at all times, that no mistakes or mispours are made, and no drinks are given away.

As part of your inventory report, we’ll provide you with a precise dollar amount for the difference between what was poured and what was sold. We can calculate the dollar loss for each individual product down to the penny, and that information is very useful in helping you to improve the performance of products at your bar.

Your dedicated Bar-i account manager will help you evaluate these dollar figures to determine which products are performing well enough to leave alone and which products are experiencing losses that are significant enough to require you to take action in order to improve their performance moving forward.

Most bars that start to work with Bar-i find out that these losses are higher than they realized. In most instances, the bars we work with are experiencing losses between 15-20% of everything being poured prior to using our inventory services. This translates into a substantial loss in profits when you consider how much alcohol is being poured each week. Bar-i can help you identify ways to significantly reduce these losses.

Accountability of Your Bar Staff

bartender accountability - Bar-i Bar InventoryAccountability is a metric created by Bar-i to evaluate the performance of your bar staff. Our accountability score reflects the percentage of product used that was actually sold.

If everything poured at your bar was sold, the accountability score would be 100%. You can easily tell how far away your staff is from perfect by looking at your accountability score. When you act on the recommendations we make in your inventory reports, we can typically help you achieve an accountability score of 95% or better.

Variance Report to Identify Errors in Your Inventory Process

It’s common for bars to experience a bouncing liquor cost. This is a sign that there are some errors being made during your inventory process. Bar-i’s variance report identifies potential errors so they are easily resolved before your results are finalized.

The primary challenge is distinguishing between the real errors and the false errors. For example, if you’re missing two bottles of fireball, it’s a sign that you need to double check and make sure you’re actually missing these bottles. You can troubleshoot these potentially false errors by doing things like making sure all the recipes were written properly and all deliveries were correctly accounted for during the inventory count.

resolving errors with liquor inventoryIn more drastic situations where you’re missing a very large amount of a product – for example, 12 bottles of Jack Daniels – it is most likely a sign that we’ve uncovered a false error. If something was miscounted in such a gross manner, it’s possible that a case was sent back that wasn’t properly accounted for during the inventory count.

The variance report will present these discrepancies to your bar manager before Bar-i issues our report to you. This enables us to get rid of these false errors so that we can look at the real errors (product that is actually missing from over-pouring or being given away) with confidence and act on them.

Auto Generated Orders

Nothing is worse than running out of a product at your bar. It’s never good for business to have to tell a customer you’re out of the product(s) used to make the drink they just ordered. To avoid this problem, many bars often over-order. This typically occurs when ordering is based on gut feelings instead of real data, and it creates a situation where you have too much inventory on-hand.

Having too much inventory on-hand creates several problems for your bar:

  • It ties up too much money on products that won’t be used
  • It slows down the inventory counts since you have to manually go through all of this excess product
  • It becomes harder to find every bottle for certain products, increasing the likelihood that an error will be made in your inventory counts

Bar-i will generate a weekly order report based on a comparison of current counts with dynamic pars that update as the usage of products changes over time. We also allow you to flex these pars based on how many days’ worth of inventory you want to have on-hand. Your ordering report will give you a precise list of what you need to order, and it will be organized by distributor to make your ordering process easier and more streamlined.

You’ll experience several important benefits from our ordering guide:

  • Save time when placing orders
  • Ensure you only order precisely what you need to have on-hand
  • Free up money that was previously tied up in excess products, providing you with additional capital to invest in other areas of your business

Achievable Liquor Cost

Bar-i will provide you with an achievable liquor cost figure. This identifies what your liquor cost would be with nothing missing, and it provides you with a specific goal to aim for.

Most bars can easily calculate their liquor cost from their inventory efforts, but they don’t know what it would be under ideal circumstances where nothing was missing. As a result, many bars will often try and compare their liquor cost to industry averages. The problem with working off of industry standard figures is that your actual liquor cost and your achievable liquor cost is very specific to your bar. Therefore, the only way to accurately determine what your liquor cost should be is to look at the data and base this figure on factors such as:

  • What you’re selling
  • How much you’re paying for products
  • How much you’re discounting products sold to your customers

You need a sophisticated inventory system that calculates this data down the serving, and Bar-i provides you the precision necessary to accurately determine what your liquor cost should be.

Inventory to Usage Ratio

inventory to usage ratio - bar inventoryYour inventory to usage ratio will help you understand how much inventory you have compared to how much you use. By understanding this figure in relation to the ratio of many other bars, Bar-i can identify a specific inventory to usage ratio for you to aim for that will be appropriate for the unique needs of your bar.

Bar-i can manage your inventory on-hand based on actual data instead of the use of gut instincts. In many instances, we are able to halve the amount of inventory a bar has on-hand by looking at this inventory to usage ratio.

POS Optimization Grade

The way you program your POS system will have a significant impact on your profitability. Bar-i will provide you with a figure that objectively measures how well your POS is programmed for profits in order to determine whether changes need to be made.

Price Change Report

It’s important to monitor the price you’re paying for products to ensure you’re getting the best possible deals. This can be a messy, boring and annoying task for your bar managers.

As part of your regular Bar-i inventory report, we’ll send you a price change report that will show you which products had price changes during that inventory period. You’ll be able to see whether these price changes were increases or decreases so that you can make sure you’re getting the best possible deals from your distributors without the need for a tedious manual process to track this information.

If you don’t track this information, it will cost your bar money in the long run, and Bar-i makes it very easy to monitor these price changes.

Customized Recommendations to Help You Improve the Profitability of Your Bar

Bar-i’s inventory service is much more than just a software system that manages the process. You will also have a dedicated account manager who will help you operate this software properly. We teach you how to use it, we coach you on how to perform the inventory counts (if you choose our self-count system), and we perform all the technical aspects of the process such as POS integration and error resolution.

Each time we deliver an inventory report, we provide specific insights and comments based on our extensive industry experience and expertise. Not only do you get extremely accurate inventory results, but you receive recommendations on how you can improve these results moving forward.

Efficiency Index

With every inventory report, we’ll provide you with an efficiency index. This figure scores how well your managers are doing with providing Bar-i with the information necessary to do our job. This will let you know how effectively our service is being used based on the effort your managers are putting in on their end of the inventory process.

A poor efficiency index score is a sign that you may need to talk to your managers about being more diligent with their inventory responsibilities so that you can maximize your ROI on Bar-i’s services.

If you’d like to learn more about how Bar-i can help you improve your bar’s operations and maximize profitability, please contact us today to schedule a free consultation. We serve clients nationwide from our offices in Denver, Colorado.

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Topics: Bar Inventory, Liquor Inventory Systems

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