There’s no hard-and-fast rule regarding the ideal frequency of bar inventory counts. This must be determined by the unique needs of your bar and the goals you’re looking to achieve from the inventory process. That being said, if you want to use your inventory efforts to improve your bar’s profitability, more frequent counts will be crucial to your ability to achieve this goal.
The average bar experiences 15-20% inventory shrinkage when they don’t use an advanced liquor inventory system that precisely compares what was poured vs. sold. While this figure is industry standard, it’s far from ideal. You’re leaving a lot of money on the table when you’re missing 15-20% of your product. By upgrading your inventory software and counting inventory at more regular intervals, you can significantly reduce this figure and save a lot of money in the process.
Bi-Weekly Inventory Counts Can Work If You’re Using a Basic Inventory System
If your goal is to get the maximum value out of your bar inventory efforts (by reducing shrinkage and improving profitability), this is the absolute longest time period you should consider for your inventory counts. That being said, we strongly recommend that clients using the pro version of our software consider weekly counts. When you use a longer inventory period, mistakes become more common, your memory about why numbers seem to be off aren’t as clear, and you tend to experience more problems with your inventory results.
If you’re going to perform bi-weekly inventory counts, we recommend that you always count inventory on the same day of the week. This will minimize the risk of errors by:
- Allowing you to have a dedicated employee who always counts on his or her regular shift
- Ensuring there is always 14 days between each count, which will eliminate variances in the numbers of deliveries from period to period
- Creating more consistency with your process
Weekly Inventory Counts Allow You to Achieve the Most Accurate and Actionable Results
An increasing number of bars are doing inventory on a weekly basis. There are many benefits to this:
- Significant increase in accuracy – Your staff will be extremely experienced with the process since they do it every week. This reduces the risk of errors.
- More frequent data – Receiving data every week will allow you to monitor the performance of your products more closely and make it easier to determine the reasons why certain products may be struggling.
- Allows for weekly ordering – We find that many bars carry too much inventory. Many of our bars are able to halve their inventory on-hand when they start using intelligent ordering. As a rule of thumb, you shouldn’t need more than four times the amount used each week on-hand at any time.
- Routine builds confidence – The task becomes less intimidating when it is done regularly, and your staff will be confident that they are performing counts properly.
We strongly recommend that our clients count liquor inventory every week due to the money they will save. Many of the bars we work with have experienced a 5% accountability improvement when they increase the frequency of inventory counts from bi-weekly to weekly. In general, a 5% improvement in accountability equates to a 1% reduction in liquor cost.
If your bar generates $50,000 in sales per month, this 1% reduction in liquor cost equates to $500 in savings per month. This should be a no-brainer considering the time investment for each count.
While the level of savings will be more modest for bars that generate a lower monthly sales volume, the money that you do save will still provide resources that can be invested back into your business to improve the overall performance of your bar. Over time, getting into a weekly groove with your inventory will provide a significant benefit to your bar.
Which Option Is Right for Your Bar?
Bar inventory is a very useful tool if done correctly. Well-run bars are counting inventory at least every two weeks, and a weekly schedule is typically ideal in order to maximize benefits you receive from the inventory process. You can determine the right frequency for your bar based on the improvement you’re seeing in your performance.
In general, we’ve found that flexing the schedule of your inventory according to performance and volume is the smartest way to approach the process. This allows you to collaborate more with your staff when determining the frequency of your inventory counts. This is best accomplished by sharing the inventory results with your staff during a regular meeting so that they know how well they’re hitting the goals you establish.
A collaborative process is the most effective way to get staff buy-in on achieving inventory goals, and it will prevent the process from feeling like a “big brother” scenario where employees are always being checked on. You can increase staff buy-in even more by setting up an incentive program that provides certain rewards when inventory goals are met. Some examples include:
- Increasing the number of shift drinks for each staff member on weeks where inventory goals are achieved
- Scheduling a staff outing or an employee party when accountability goals are consistently achieved for a set time period (you can offer this reward quarterly or bi-annually)
- Allowing your manager to reduce the inventory period to bi-weekly if accountability goals are consistently met over an extended period of time (with the caveat that a weekly schedule will resume if goals don’t continue to be met)
In the event that you aren’t seeing your desired improvement from weekly inventory counts and an employee incentive program, we recommend using spot checks when warranted to identify the source of struggling performance. This will allow you to drill down the performance on specific shifts as part of your weekly inventory process. You can then identify any issues occurring and discuss them with the bartenders working those shifts.
Bar-i offers a spot checker tool as part of our inventory system. It allows you to spot check up to 10 items on a specific shift or day, which is more than enough to evaluate any struggling products as needed.
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.