There are essentially two potential goals behind ditching the clipboard and upgrading to a more sophisticated liquor inventory system:
- To save time
- To save time AND to be able to use your inventory efforts as a profitability tool
If you’re going to use your inventory efforts as a profitability tool, you need to be able to evaluate the performance of each product down to the serving. This is the essence of Bar-i’s inventory philosophy, and it is the primary reason we are able to reduce our clients’ liquor cost by 3% on average. We take this “down to the serving” mantra very seriously, and we feel it’s important that you understand the reasons why this level of precision is necessary.
What is “Down to the Serving?”
Let’s first start by defining what “down to the serving” isn’t. Clipboard inventory methods and simple inventory systems calculate results “by category.” This means you collapse the performance of many related products into a single number, which becomes your liquor cost. For example, these systems will collapse all draft beer products together to get one combined liquor cost for draft beer. You lose a significant amount of detailed, actionable data when you take inventory in this manner.
On the other hand, inventory systems that provide you with product level data precisely measure the performance of each individual product by comparing what is sold vs. what is actually poured. This is a much higher level of detail that really allows you to understand what is going on with every product you sell.
Accurate results at the product level require counting down to the serving since we’re interested in precise performance, not just percentage costs. Invoicing down to the serving and integrating sales down to the serving allows for a much more detailed level of analysis which will help you make adjustments to your operation that will improve the performance of each product and maximize your profitability.
At Bar-i, our “down to the serving” mantra is the “special sauce” which helps us make bars more profitable. It’s element that separates our service from the many other products which simply help you save time but fail to provide the actionable data necessary to make more money.
What is Required to Achieve “Down to the Serving” Accuracy?
Most bars sell liquor in 1.5 oz. increments. As a result, your inventory system needs to achieve at least this level of accuracy. Otherwise, the system won’t be able to effectively evaluate the performance of the products you sell.
This is especially important for high end products which only sell a few servings per week. If you typically sell 1 or 2 glasses of Johnny Walker Blue each week, it will be impossible to evaluate whether each glass was rung in if your inventory system uses a tenthing method to measure what’s in the bottle. Over time, this can lack of performance data can significantly eat into your profits since it will be impossible to hold your staff accountable for ringing in every drink they serve.
5 Elements of “Down to the Serving” Accuracy
Achieving “down to the serving” accuracy is a complex process that requires a highly sophisticated inventory system that is able to compare what is rung in to what was sold. There are 5 essential elements necessary to achieve this level of accuracy.
- Highly Accurate Counting Method
No method for taking inventory has the same combination of speed and accuracy as weighing. Bar-i’s scales can weigh each bottle in 2 seconds, and they are accurate to the hundredth of an ounce. Systems which allow you to estimate the level of bottles on your phone or tablet are fast, but much less accurate. In addition, they don’t provide an effective way to measure the inventory of a keg currently in use.
The use of zone counts can also help reduce the risk of human error. When you’re counting several hundred products in a bar which are stored in multiple locations, the chance of making a counting error is rather high. Bar-i’s zone counting system allows us to check each zone when it’s done to ensure everything was counted properly. After every bottle in a particular zone has been counted, our software will tell you how many total bottles were counted. You can then do a quick check to make sure the total number of bottles in the zone equals what you initially counted for each individual product in that zone.
- Invoicing Needs to Be Highly Detailed
Calculating usage requires knowing how much of each product was present at the start of the week, how much is present at the end of the week, and how much was delivered during the week. To accomplish this, you need to know the exact number of ounces delivered, which involves entering invoices into the inventory system line-by-line.
If you know that 12 33.82 oz. bottles of a particular product were delivered last week, it provides the granular data necessary to calculate usage of that product down to the serving. Entering invoices line-by-line can be very time consuming, but fortunately this task is done for you by Bar-i. We take on all of the mundane data entry tasks so that you can focus your efforts on running your bar.
- Sales Data must Be Precisely Tracked
If you’re doing inventory at the category level, you would simply enter in the total sales for each category (draft beer, bottled beer, liquor, etc.) so that you can calculate the percentage cost for that particular category. But if you want to evaluate performance down to the serving, you need to know your sales down to the serving as well.
This level of detail requires writing recipes for every button in your POS system. The recipe writing process is straightforward for drinks that only use one type of liquor, but it becomes much more complicated for drinks that use several different types of liquor such as Long Island iced tea, White Russian, or signature drinks. In addition to writing detailed recipes, you will typically need to make some updates to your POS system so that every drink served has its own button.
The recipe writing process is technical and time consuming, but it’s only done once and it’s well worth the effort. As with invoice data entry tasks, Bar-i will handle the recipe writing for you.
- A Good Error Checking System is Necessary
Errors are going to happen during the inventory process. Multiple delivery drivers drop off shipments each week, you have many different staff members serving drinks, and hundreds of bottles are being counted. There are many opportunities for an error to occur. When you evaluate performance down to the serving, errors become glaring, making them easier to troubleshoot.
Bar-i expects errors as a natural part of the process, and we have a robust system to resolve them. An entire part of Bar-i’s inventory system, called the Variance Report, is dedicated to identifying these errors for you and presenting them in an easy to digest format so that you can tell us what updates need to be made before we provide you with your weekly performance report.
If your inventory system doesn’t have a formalized error checking system, you won’t realistically be able to evaluate the performance of each product down to the serving.
- Inventory Results must Be Independently Verified
While Bar-i does have some less expensive self-service systems such as Speed Count, all of our high end liquor inventory systems that get results down to the serving are independently verified. There is a Bar-i account manager involved every single time you calculate your numbers.
We do this because taking inventory is a technical task that is more effectively handled by an independent third party who is an expert at this process. In addition, having results that are independently verified eliminates the conflict of interest that occurs when this task is performed by an in-house manager. We’re trying to measure overall bar performance, so it doesn’t make sense to have the person responsible for these performance numbers measure them.
Having an independent third party perform inventory also provides for a more efficient distribution of work. Your manager’s time is valuable, so if we can free up their time to handle other tasks related to running the bar, it’s a win for your business. Since we’re experts at the inventory process, we can also complete the task faster, more efficiently and more accurately than your in-house staff.
“Down to the Serving” Accuracy Results in More Actionable Data
When you know which product is missing, you can usually figure out why it is missing. Consider the following example involving the performance of your draft beer:
If your liquor cost for all draft beer products went up 1% last week, you don’t necessarily know why this happened or what to do to fix the problem. But if you have performance data down to the serving of each individual product, you can more easily see what caused the problem. If every beer is missing servings across the board in proportion to their usage, then your draft beer system is probably broken. However, if you find that one particular draft beer product is missing in disproportionately large quantities, it is most likely a sign that this product is being given away.
Having this type of granular data down to the serving is the only way you can use your inventory efforts to understand the performance of each product at your bar and make the necessary improvements to increase profitability.
If you would like to learn more about how Bar-i’s liquor inventory system can help you streamline your operations and maximize profits, please contact us today to schedule a free consultation. We serve bars nationwide from our offices in Denver, Colorado.