Sophisticated inventory software is starting to gain traction in the bar industry. Currently, a little less than one quarter of bars use a modern inventory system, but recently there has been a noticeable increase in the number of bar owners that recognize the benefits modern inventory systems provide to their business. There are also many more inventory options today than there were even just a few years ago, which is an indicator of the increased demand for these services.
This trend is similar to what occurred with the adoption of POS systems by the bar industry 20-25 years ago. At first, very few bars used them, but eventually the benefits of using a POS system became apparent to even the slowest adopters of technology, and today there are very few bars that don’t use a POS system.
If this trend continues, it’s likely that many more bars will begin upgrading to advanced inventory systems over the next few years. If you’re considering making this move with your bar, it’s important to weigh your options carefully before choosing the right system to meet your bar’s needs.
Identify What You Want to Achieve with Your Inventory Efforts
Some systems just provide the basic functions associated with liquor inventory:
By automating these processes, basic inventory systems can save you a lot of time, which is a significant benefit. The more sophisticated bar inventory systems on the market perform these basic functions, but they also provide the added benefit of helping you manage your profitability.
It’s important to decide what you want to achieve out of your inventory efforts before choosing a system. Are you simply looking to save time or do you want the detailed precision and accuracy necessary to use your inventory efforts as a tool that will help you make more money? By clearly identifying your goals, you’ll be able to choose the right service to address the needs of your bar.
DIY/App-Based Systems vs. Full Service Bar Inventory Systems
There are a variety of DIY/app-based inventory systems available. When you use one of these services, you purchase the software and start using the system on your own. In most instances, there won’t be any hardware integration required with these DIY/app-based inventory products.
You’ll experience a great deal of time savings with these DIY inventory products. However, it’s also common to struggle with the execution of these systems due to the complexity of problems that occur when they aren’t being operated by an expert user. It can be challenging to track 200 plus products down to the ounce when you don’t have an expert running the system who knows how to troubleshoot any errors or issues that may arise during the inventory process.
In addition, the lack of hardware for these DIY systems reduces the level of accuracy that can be achieved:
- Many of these app-based services lack the precision and objectivity that is achieved when you weigh each product at your bar
- You also lack the speed and ease of use that is achieved when you set up your system using barcodes and a barcode scanner
As a result, the results that can be theoretically achieved by these systems are often different from what you actually accomplish when using these products with your bar. In many instances, it takes a lot of energy and effort to make these software systems work properly in real life, and this can be much more challenging when you don’t have an expert running the system for you.
In order to get the most out of your bar inventory efforts, it’s beneficial to have an expert manage the process for you. Of course, having a third party manage your inventory will increase the cost of the service, but the benefits you’ll achieve will far outweigh the additional cost, especially since you’ll be able to more effectively use your inventory efforts as a profitability tool.
Benefits of Managed Inventory
Bar-i offers managed inventory with our pro version and full service systems. Having a dedicated inventory expert operate the system for you provides the following benefits:
- Results are verified down to the serving – Drinks are sold in servings. If you want to know exactly what is missing at your bar, you need to be able to precisely compare how many servings were sold vs. poured. This is the key to an effective inventory system. Knowing how many servings of each product are missing during every inventory period will help you identify the gaps in performance at your bar and enable you to take the steps necessary to improve this performance. Bar-i provides results that are accurate down to the serving, ensuring you have the level of detail necessary to improve your profitability.
- Errors are resolved at every step of the process – Anyone that’s managed a bar and had to perform inventory is used to the dreaded bouncing liquor cost – those head-scratching moments where the numbers just don’t make sense. When you experience a bouncing liquor cost, it’s a clear sign that an error has occurred at some point in the inventory process.
Bar-i’s system recognizes that errors are an inevitable part of the inventory process, and it contains a robust error resolution system to ensure that these issues don’t impact your final results. With the pro version of our software, we identify errors and build a stage into the process where we present all potential errors to you in order to get your feedback regarding whether these are actual errors or whether we need to double check our results.
- Delivery invoices are reconciled for you – In order to calculate usage down to the serving, which is essential for managing your profitability, you need to reconcile all delivery invoices line by line. You can perform this task on your own in the following ways:
- Scan items right away when they’re delivered. This is time consuming and requires you to have an employee available to do this when all deliveries are made, which isn’t always feasible.
- Go through delivery invoices line by line to enter this information into your inventory software. This task is incredibly boring and time consuming, which reduces the likelihood that it will get done consistently.
Bar-i will perform this task for you. We recognize that your time is valuable and it’s not best spent doing mundane paperwork. This will free your staff up to focus on more important aspects of running your bar while giving you the peace of mind that this task will consistently be performed correctly.
- Drink recipes will be managed for you – Writing out specific recipes for every drink served at your bar is an important part of Bar-i’s inventory system. It ensures the liquor in every drink that gets rung into your POS system will be precisely accounted for during the inventory process. This is crucial to our ability to compare what was poured vs. sold during an inventory period.
Bar-i will maintain and update these recipes for you. It’s not a one-and-done process because there are always going to be new drinks that get added to your menu. Bar-i takes ownership of this process to ensure that recipes are written for every button on your POS. We put in the time necessary to make sure that these recipes are always up-to-date and reflect what’s actually being served in these new drinks. Our software automatically flags new POS buttons so that we’re aware that a new recipe needs to be written.
- Training and support resources are provided to new managers – Staff turnover is an inevitability in the bar business. When this turnover occurs on the management level, you may lose the expertise to do your inventory correctly. Bar-i can provide automated training resources to your new managers, making it easy for them to get up to speed on how to work the inventory system. This coaching for new managers ensures that you won’t experience a lapse in the important profitability data provided by your inventory efforts.
- Coaching and recommendations will help you act on your inventory data – If you use a DIY inventory system, you won’t have any help in figuring out how to leverage your inventory data in a way that improves your bar’s performance. You’ll have to interpret this data on your own, which can be time consuming and sometimes challenging. If you don’t interpret the data correctly, you may have trouble formulating an effective action plan that will help you improve your bar’s performance.
Bar-i has a unique perspective on the industry. We see this very specific component to running a bar over and over again, and we’re easily able to spot trends in your data that may not be as apparent to someone who doesn’t have this extensive experience managing the inventory process. We combine our unique industry perspective with your deep knowledge of your business in order to provide coaching, best practice advice and recommendations to your staff that comes from a collaborative process. We can provide you with several different ways to troubleshoot an issue and you can choose the best option for the unique needs of your business.
- POS integration and management is done for you – Often, inventory systems can integrate with your POS system. To do this effectively, you need to be able to integrate down to the button level. If you’re not extracting the sales data down to the button level so that we can precisely calculate what was sold, it becomes much more challenging and complicated to get the data you need for driving profits.
Some inventory systems will offer POS integration, but not do this task for you. This creates the possibility that it won’t get done properly or in some cases it may simply not get done at all. Bar-i manages this process for you to ensure it gets done right so that you get the precise, detailed data necessary to improve your bar’s performance.
- Inventory system setup and implementation is performed for you – Implementing a new inventory system can be challenging. It takes a lot of time and expertise. Bar-i does this for you, which provides several benefits:
- The system will be set up properly
- Setup is completed quickly, allowing you to start receiving important profitability data right away
- No energy or effort is required by you or your staff to set up the system
- You’re set up for success since the system will provide a good user experience right away and deliver usable, meaningful results from day one
- Inventory data is independently verified, ensuring there is no conflict of interest – When your manager handles the inventory process, it can potentially create a conflict of interest since the same person responsible for running a profitable bar is also measuring the profitability of the bar. When you work with Bar-i, your results are independently verified by a third party whose primary concern is to deliver accurate results as opposed to delivering results that show the bar is being run well. This allows you to be confident that you’re receiving an accurate picture of what’s going on at your bar.
It’s important to understand that while Bar-i performs all of these important tasks for you, there will still be a few tasks that must be performed by your staff. You will still count inventory in-house, run your sales reports and scan your invoices. Everything else will be done by your dedicated and independent Bar-i inventory expert to ensure you receive highly accurate data and the right recommendations to leverage this data as a profitability tool.
If you’d like to learn more about how Bar-i can help 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.