The 7 Elements of “Verified to the Serving” Bar Inventory

Bar inventory options are becoming more varied and complicated by the day. With all of these options, identifying the right inventory system for your bar can be overwhelming. Ultimately, the right bar inventory solution for you will depend on what you are trying to accomplish with your efforts.

There are three different levels of bar inventory:

• Level 1 Inventory – Determining what needs to be ordered to ensure you always have enough product on-hand
  
  
• Level 2 Inventory – Calculating liquor cost by product category (draft beer, bottled beer, liquor and wine)
  
  
• Level 3 Inventory – Product level reporting to identify underperforming products and make the changes to your operations that will improve profitability

Level 1 inventory is the most basic function you need to accomplish from your efforts. It’s crucial that you don’t run out of product, and counting inventory will ensure you know what needs to be ordered to prevent this issue from happening. That being said, if all you’re doing with your inventory efforts is determining what needs to be ordered, you are missing out on some important benefits to this process.

Level 2 inventory allows you to start gathering some data about your bar’s performance. However, it’s important to understand that you can only learn so much from seeing your liquor cost by product category. Since this is an aggregate figure of many products, you’re unable to see which individual products are profitable and which ones are driving your costs up. The only way to truly evaluate the performance of all items you carry is to use a system that allows you to achieve Level 3 inventory.

With Level 3 inventory, you have the ability to evaluate the performance of every product you sell in order to identify areas where products are either being overpoured or given away at too high a frequency. At Bar-i, we accomplish this by comparing what was poured to what was sold during each inventory cycle. In order to compile this data, we need very precise measurements of your usage. This is why we verify all of our results down to the serving. It is one of the aspects of our service that makes Bar-i truly unique.

In addition to verifying all of your results down to the serving, you benefit from achieving this data the same day your counts are made. Once we provide you with our inventory report, your dedicated inventory specialist will be available for a follow-up conversation to answer any questions you may have regarding the data and our recommendations.

What is Involved in Achieving “Verified to the Serving” Inventory?

In order to achieve Level 3 inventory, you need to use a system that provides data that is accurate down to the serving. It is the only way to track the precise product usage necessary to identify the specific products that are underperforming. Unfortunately, not all inventory systems have the ability to provide you with this level of precision.

At Bar-i, we provide a service that delivers the precise data necessary to leverage your inventory efforts as a profitability tool. We feel that if you’re going to spend the time performing inventory, you should get the maximum benefit from your efforts. Over the years, we’ve continually refined our processes in order to ensure you not only receive extremely accurate data, but that you can be confident in your ability to trust this data. Below are the 7 elements that enable us to verify your inventory results down to the serving.

Precision Scales

The tenthing system is often used to estimate how much liquor is left in a bottle. This method is used by many app-based inventory systems as well as by bars that are still using a clipboard to manually take inventory in-house. Unfortunately, the tenthing system won’t provide you with accurate enough results to achieve Level 3 inventory.

A 1-liter bottle contains 34 oz. of liquor. Therefore, one tenth of a bottle is approximately 3.4 oz., which equates to more than two shots. If you’re still tenthing bottles, even if you’re using app-based inventory software, you don’t have a proper match of measurement system to the servings you deliver to customers, which typically come in 1.5 oz. portions or less.

Bar-i addresses this problem by using scales to weigh each bottle behind your bar. Our scales are accurate to the hundredth of an ounce, ensuring they will provide you with the precise usage data necessary to identify which products are underperforming. In addition, each bottle can be weighed in under two seconds, making the process extremely fast and efficient.

Mapping and Barcodes

When performing Level 3 inventory, it’s important that every aspect of the process is extremely precise. Therefore, you need to count additional bottles with the same degree of accuracy as you’re using to determine how much liquor is in each open bottle. At Bar-i, we ensure our counting process is accurate in two ways – we use a mapping system and barcode scanner:

• Mapping system – Bar-i maps out your bar to improve both the speed and accuracy of the counting process. By following our map during your counts, it ensures you won’t miss any areas where extra bottles are stored.
  
  
• Barcodes – There will inevitably be some occasions where items are moved around in your storage area, resulting in the need to update the map used for counting. When this occurs, you need a system in place that will let you update the map quickly, accurately and efficiently.
  
  For example, if you are using an app to manage your inventory process and you type Jamieson into the app when it changes locations behind your bar or in the storeroom, it will generate options for four different types of Jamieson, all of which come in three different sizes. This requires you to sift through 12 options, which makes the potential for choosing the wrong option significant.
  
  Our simple solution to avoid this problem is to use barcodes. When you need to update your map, just scan the barcode of the product being moved and the right product will automatically be pulled up in the system.

The combination of using a mapping system and barcodes means the work is frontloaded by mapping out your bar and storage areas. In addition, we’re using existing, proven barcode technology to make the setup of your system and the management of your counting map a lot more efficient.

Layered Error Checks

It’s important to account for the potential for human error in the inventory process. At Bar-i, we do this by building a series of layered error checks into our system:

• Every time you finish counting one of our micro-zones, the software calculates the total number of items on the shelf. You can then recount the total number of bottles on the shelf to make sure the figure matches total number of items counted for the zone. Doublechecking your counts in each zone in this manner significantly cuts down on counting errors, which tend to be glaring when you are performing Level 3 inventory.
  
  
• When we enter your invoices into the system for you, we match every invoice to the penny. This ensures we got the prices right and recorded the correct quantities that were actually delivered.
  
  
• Bar-i always maintains an open book philosophy. We are able to show you the settings we use after every audit so that you can verify the data and doublecheck that our counting and calculations were performed correctly.

Delivery Integrations

A lot of systems claim they can export or integrate your deliveries for the inventory period, but they often require you to hand-enter them. This often reduces the likelihood that deliveries will be integrated since entering them by hand is a very time-consuming process. The end result is that in most instances, your deliveries never get reconciled.

When you use our system, you upload your delivery invoices and we take care of reconciling those deliveries for you. We are using increased automation, but this work is always checked by one of our inventory experts to make sure the invoices were entered correctly.

Button Level Recipes and POS Reprogramming

You will also need to take your itemized POS sales report and turn it into an exact record of what was sold. This requires technical recipe writing, and it often also requires that you reprogram your POS system to ensure that every drink has its own button.

We take care of both of these items for you:

• Bar-i writes custom recipes for you based on the unique products you carry and the pouring assumptions you’ve established for each drink.
  
  
• We will reprogram your POS system so that it provides a correct record of what type and amount of liquor was used for each drink sold.

In addition to helping you with these items, we include an objective measure on all of our inventory reports that we call “percentage rung as unknown.” This figure shows us what percentage of your sales are providing an unclear record of what has been sold in order to determine the extent to which these items are obscuring the accuracy of your data. This level of detail in the sales integration is crucial to our ability to deliver data to you that is accurate down to the serving.

Variance Report

In real life, human error is inevitable on occasion. At Bar-i, we expect these errors to occur during the inventory process. Consider all the factors involved in counting your inventory:

• We’re often tracking 200 or more products down to the serving
• These products are often being counted in five different locations
• All deliveries for the inventory cycle must be accounted for
• There are multiple POS recipes required for every product to ensure that the liquor usage in every drink sold is calculated accurately

Given all of these variables, it is highly likely that an error will occur somewhere in the process. Therefore, we’ve designed a system that will help make it easier to identify these errors and correct them before we generate your final report.

On the same day we count your inventory and before we send back your final inventory data and recommendations, we send you a variance report which lists the items that could be wrong. This allows you to check the details of our count and make sure an error hasn’t occurred. We make this process easy because we identify the items that need to be checked, and we provide the information to you in an easy-to-digest manner. This makes the process of doublechecking for errors as efficient as possible. The end result is errors get resolved and variances are confirmed, which ensures that you and your staff can trust the data you’re receiving.

Independent Verification and Consulting

At every step of the process, we’ve got experienced inventory experts checking to make sure all the data is correct. All we do for a living is process bar inventory audits, and this gives us a unique perspective and skill set:

• We have a unique perspective that comes from performing over 7,000 detailed inventory audits for bars in 23 states. We’ve seen just about everything that can occur during the inventory process, and this allows us to easily identify and troubleshoot issues as they occur.
  
  
• Because we do this every day, we have a level of skill and expertise with data analysis that very few people possess. We can provide you with the most accurate data possible regarding your bar’s performance, and we use this data to generate a series of recommendations that will help you improve your bar’s performance and boost your profitability.

With our detailed inventory reports and availability to field follow-up questions and emails, we are able to provide you with a robust consulting element that often isn’t included as part of a third-party inventory service. In addition, you will have greater overall confidence in your results than can be achieved with a fully automated or DIY app-based inventory system.

Verified to the Serving Inventory will Help You Make more Money

Everyone likes the time savings benefits associated with sophisticated bar inventory systems. However, it is more important that you also have the ability to leverage your inventory efforts to save money and improve your profitability. On average, Bar-i clients reduce their liquor cost by 3%, which can result in a significant boost in profits over time.

In order to use your inventory efforts as a profitability tool, you need to have results that are verified down to the serving so that you can compare precisely what was sold to what was poured. When you get to this point every time you take inventory, the process becomes more useful and meaningful, and the data you generate can be tremendously valuable to the profitability of your business.

If you’d like to find out how Bar-i can help you streamline your processes and maximize your profits, please contact us today to schedule a free consultation. We serve bars and restaurants nationwide from our offices in Denver, Colorado.