If you’re considering upgrading your liquor inventory system, it’s important to do your research. Not all inventory systems are created equal. Some only provide basic functions, such as:
While these are important benefits that offer a significant improvement over counting inventory manually with a clipboard, these systems are still not providing you with the best possible value for your inventory efforts. By using an advanced liquor inventory system, you can take the process a step further and gather the data necessary to improve your profitability. We call this process level 3 inventory.
Level 3 inventory will provide you with the most robust data, allowing you to make changes to your operations that will drive profits. This is by far the most effective use of your efforts.
In our last blog post, we discussed the important elements to consider when evaluating basic systems providing level 2 inventory. Below, we’re going to review the elements you’ll need to consider if you want to upgrade to an advanced liquor inventory system that delivers the full range of benefits associated with level 3 inventory.
Once you’ve done all the work to track level 2 inventory data, you’re most of the way towards collecting the information necessary for level 3 inventory. However, gathering level 3 inventory data will require a system that provides greater precision and detail.
Extremely Precise Counting Process
When you calculate liquor cost by category, you’re blending many different results into one aggregate figure. In this situation, it won’t matter if the amount of liquor in each bottle isn’t estimated accurately. However, when you’re trying to identify how many servings of a specific product are missing, you need significantly more precise counting data.
If you don’t accurately count all inventory down to the serving, it will cause you to experience incorrect results that will skew your understanding of how each product is actually performing. We recommend using a system that can measure inventory more accurately than a 1.5 oz. serving.
Line by Line Deliveries
To achieve level 3 inventory, you need to know how many ounces of each product were delivered. Software can do this math for you by converting bottles into ounces. This is important data to know if you’re going to track how many ounces of each product were poured during the inventory period.
There is a lot of data entry involved in entering your deliveries line by line into your inventory system. A system that can enter deliveries for you, provides assistance with the process or automates the process will be very helpful in minimizing the amount of time your staff spends on this tedious task.
Bar-i enters the invoices for you. We also have the capability to extract this information using Optical Character Recognition (OCR) technology. This frees up your managers to devote additional time to other aspects of running the bar.
Button Level Sales
Level 3 inventory requires you to look at the sales per product. To do this, you need to create a recipe for every drink button on your POS system. This way, your inventory system will be able to identify precisely how many ounces of each product were sold during the period.
Creating these recipes can be a time-consuming task. They need to assign the specific amounts of every product used in the drink. When you serve craft cocktails, this can involve three or more different products. You need to think about who is going to write these recipes and how you’re going to manage them to ensure accuracy.
When Bar-i sets up a new client for level 3 inventory, the recipe writing process often takes two full days. We work with you to determine the proper recipes for each drink, and we enter this information into the system for you.
Comps, Voids and Adjustments
This can be complicated, and you’ll want to use a system that makes the process of entering these adjustments as easy as possible.
Error Resolution
You’re capturing a lot of data during the inventory process. Often 200+ items must be counted, and each item is stored in 2-3 separate locations throughout the bar. You also need to account for multiple deliveries during the inventory period. Therefore, it’s common for 10-20 data points to be involved in determining how many ounces of a specific product are missing during the period.
If you carry about 200 items, this means you may have 4,000 separate data points being captured during one inventory count. With such a large amount of data being collected, errors are inevitable. You need to have a system for identifying and resolving these errors.
Bar-i makes this process easy. We identify the errors and provide you with a variance report that shows you which items need to be checked. This is an important element to the process that many self-service inventory systems are lacking.
Recommendations and Follow-Up
This level of follow-up and recommendations is the way we make these inventory efforts worthwhile. We turn the results into recommendations for changes that will help improve your bar’s performance moving forward.
If you’d like to learn more about how Bar-i can streamline your operations and help you maximize profits, please contact us today to schedule a free consultation. We serve bars and restaurants nationwide from our offices in Denver, Colorado.