Alcohol sales can be the most profitable area for a restaurant, but liquor inventory can be a difficult management aspect for restaurant owners. While ordering errors and breakage can impact inventory value, theft and over-pouring are the main reasons for disappearing beverage inventory. If bar inventory is only counted monthly, thousands of dollars can be lost before you realise that there is an issue. Daily aspects of inventory management can help you identify areas for concern and issues that can be corrected with training. Effective management of bar inventory requires bottle tracking and careful comparison to liquor sales.
- Skill level:
Count your beginning inventory. This includes all bottles and kegs in storage, as well as open bottles and kegs behind the bar. Enter this data into a spreadsheet. The spreadsheet should include each bottle's price and compute total inventory value.
Train staff not to throw away empty liquor bottles. These should be saved for the morning shift to count and replace. Also keep a log book in the liquor storage room and train staff to write down what bottles are removed and when. Review the log book daily so you are aware of what to order.
Compare sales to inventory. At the end of the inventory period (generally one month), count the beverage inventory. Enter this data into the inventory spreadsheet. Calculate the difference between the previous night's inventory and the morning inventory. Divide this number by your liquor sales to determine your beverage cost.
Review the beverage store room logs against your invoice records for the inventory period. The beginning inventory plus bottles purchased less bottles transferred to the main bar should match your ending inventory. Breakage may affect this total slightly, so instruct staff to maintain a list of broken bottles and provide the broken bottle top as evidence.
Calculate your pour cost. This number will be different for each beverage type, depending on the purchase price and selling price. For liquor bottles, divide the bottle cost by the product of the selling price and number of pours (shots) in a bottle. One litre bottles contain about 27 1-1/118ml shots and 750ml bottles contain about 20 shots. Use the same basic formula for wine and keg beer, but replace the number of shots with the appropriate number of glasses that can be poured from each.
Tips and warnings
- Beverage cost is directly related to profit. When cost is running at 30 per cent, the profit margin is 70 per cent. An average profitable beverage cost falls in the 25 to 30 per cent range. This number can be higher, for example, if sales of beer or wine are greater than liquor sales. When monitoring inventory, look for big changes from one inventory period to the next. Inventory software that interfaces with your point of sale system can be a helpful tool. Consider pour spouts that limit bartenders' ability to free pour. Use a graduated scale of 10 parts to count bottles that are partially consumed. For example, five parts would equal half of a bottle remaining. Pour cost analysis can help you determine if bartenders are pouring heavy or if your prices are too low.
- Theft is not always removal of alcohol from the premises. Look for signs of cash skimming, such as negligible cash sales or register tickets that are not closed until the end of the bartender's shift.
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