iPourit is one of the most innovative changes that’s happened to the bar industry in years, and it’s increasing level of adoption by bars is a testament to how popular this idea is among customers. This technology allows your patrons to pour their own drinks, providing a unique experience. While it is most commonly used with draft beer, some bars have also begun using the technology with kegged wine products and pre-batched cocktails that can be served from a cornelius keg.
At Bar-i, we like to partner with other industry leaders like iPourit in order to stay on top of the latest trends. As technology becomes increasingly prevalent in the bar industry, it’s important to look for ways to combine these different innovations in a complementary manner so that they can help your bar operate in the most effective and efficient way possible. One excellent way to get the most out of your iPourit system is to use it with sophisticated inventory software that can help you not only track your usage and calculate your liquor cost, but also help you improve your profitability.
Why Do I Need to Perform Inventory when the System Automatically Charges Customers?
A common assumption we’ve heard from our clients that have been considering iPourit is that it should eliminate the need to do inventory. One of the main reasons to perform inventory is to calculate the amount of missing product at your bar and take steps to reduce this shrinkage (we call this process Level 3 inventory). Since iPourit is charging customers as they go, you know you’re charging them for every drop used, which should eliminate this need for tracking your inventory.
However, there are still a few reasons why it’s important to count inventory while using this system:
- You need to identify delivery errors – As part of our inventory services, we reconcile the deliveries received by our clients, and we regularly see delivery errors. In 90% of these instances, the errors are in the favor of the distributors. Therefore, you should always be following best practices and check in all of your deliveries. This will also help you confirm that everything you’re buying is being used and that you’re not overpaying for these items.
- Eliminate whole item theft – It is possible for whole kegs to be stolen, which could be really damaging to your bar’s bottom line. We’ve also seen delivery drivers pick up kegs that they claim were empty, but in reality, still contained beer. Alcohol goes missing at bars, especially when inventory isn’t being tracked carefully. It’s important to have a system in place to monitor your inventory and ensure items aren’t going missing.
- Measure the performance of the products you carry (liquor cost) – While the iPourit system is designed to charge the customer, it isn’t calculating the overall performance of these products. As your products change over time, it will cause the cost of your products, prices you charge customers, and your customer usage to change. Under these circumstances, it will be very challenging to track your liquor cost without the assistance of an inventory system.
The importance of tracking your liquor cost can’t be overstated. Most bars carry a variety of draft beer products – some of these may be low end beers with a high margin, while others are more expensive beers on a lower margin. Your liquor cost tells you how much you spent purchasing a product for each dollar of sales you capture. It’s important to manage your liquor cost in order to ensure you’re maximizing your bar’s profitability.
The first step in managing your liquor cost is to measure it accurately. While it’s generally easy to identify some of the standard products that sell in high volume and some interesting selections your customers like to try, it can also be very easy to get bogged down buying a lot of trendy, niche beers that don’t sell as well or have such a high purchase cost that it becomes impossible to charge your customers a price that will make these items profitable.
The most effective way to identify which products are selling well and are profitable for your bar is to track your liquor cost in addition to your sales volume. iPourit can effectively track your sales volume on specific products, but it doesn’t allow you to track your liquor cost. Therefore, it’s important to use an inventory tracking system that will allow you to monitor your liquor cost for all of the products you’re selling using the iPourit system.
7 Best-Practice Tips to Help You Get the Most Out of Your Bar Inventory Efforts for iPourit Products
There is no one-size-fits-all way to handle your inventory efforts. You should always evaluate your bar’s operations, the products you serve and your goals for the inventory process in order to identify the right approach for you. If you use the iPourit system at your bar, the following tips will help make your inventory efforts as effective and efficient as possible.
1. Use iPourit’s Built-In Margin Calculator
This tool is designed to help you determine your pricing. Enter the purchase price and your target liquor cost for a particular product into the iPourit margin calculator, and the system will generate pricing recommendations to help you achieve your desired liquor cost goals for that product.
2. Spot Check the System
The automated flowmeters used with the iPourit system work effectively most of the time, but they aren’t perfect. Checking how many servings were dispensed and paid for per keg between the time you tapped it and changed it out is a good way to make sure the system is working properly and you’re not missing any product.
If you find that these numbers are consistently correct when you perform spot checks, then you can most likely back off and only do this once a month. However, if you’re seeing discrepancies during these spot checks, it’s a sign that you need to dig deeper to figure out what is going on.
This missing product can be caused by a number of factors, including theft, foaming, half-full kegs being untapped, or excessive comping of customers when the system doesn’t work smoothly. By monitoring the performance of the system, you’ll minimize the likelihood that it will be abused.
3. Calculate Liquor Cost Metrics by Category
Break out the aggregate liquor cost of draft beer, wine and batched cocktails being served by your iPourit system separately. These items typically have very different cost profiles and if you look at one aggregate liquor cost for all of these products, it becomes much harder to evaluate trends. Tracking each category separately helps you more effectively monitor the performance of the products you’re serving, which allows you to make smarter decisions about your product mix moving forward.
4. Calculate Liquor Cost Per Period
Most well-run bars calculate their liquor cost on a weekly basis. If you want to manage your bar effectively, you need to continuously gather data, and a weekly inventory period is the ideal timeframe to monitor this data.
To calculate your liquor cost, you need to divide the dollar amount of product you use by the sales. To calculate your usage for the inventory period, use the following formula:
starting inventory minus ending inventory plus purchases
Once you have your usage data, divide this figure by your sales to get your liquor cost.
5. Create a Precise Recipe for Your Batches that All Your Bartenders Must Follow
Mixing batches haphazardly is a poor way to approach these drinks. When you create recipes that are used every time your batches are made, it ensures they will always taste the same and maintain a consistent liquor cost.
6. Use Inventory Software that Will Make the Counting Process Faster and More Efficient
Bar-i offers a free version of our system that allows you to experience all of the benefits of our counting software without the robust data analysis provided by our pro version. Our free version is downloadable at app.bar-i.com. With our counting software, you can build out custom products and record counts for these items on the screen of your portable device. It’s a good fit to help keep your inventory organized when you’re using the iPourit system.
The software is also auditable so if you have a problem, you can go back and check your work. It’s much harder to check and resolve these discrepancies when you’re counting inventory with a clipboard.
7. Perform Level 3 Inventory on Other Products
iPourit is tracking all of your sales for products used through their system, but most bars serve other items as well. If you sell other products that aren’t being served through the iPourit system, it’s crucial that you monitor inventory for them. In an industry where 15-20% of product goes missing, there is a huge risk to your bottom line. You’re missing an important opportunity to minimize this inventory shrinkage if you’re not tracking the performance of every item you serve.
Learn More about Inventory Best Practices
Regardless of whether your bar uses the iPourit system, it’s crucial that your inventory process helps you to effectively compare what was poured vs. sold. This information will allow you to identify items that are underperforming so that you can take the steps necessary to reduce inventory shrinkage. Over time, this careful management of your inventory will significantly increase your profits.
If you’d like to learn more about how Bar-i can help you streamline your operations and maximize your profitability, please contact us today to schedule a free consultation. We serve bars and restaurants nationwide from our offices in Denver, Colorado.