How to Monitor Bar Stock Levels to Increase Profitability
Running a bar is no easy feat. With so many different drinks and ingredients to monitor, keeping track of your bar’s inventory can be challenging. That’s why bar inventory management is essential for any establishment serving alcohol. An effective bar inventory system will help you maintain control over what products you have in stock and help monitor sales and profits.
Keeping track of your bar inventory is vital for any successful business. It’s important to know what you have, how much it costs and when to order more. Let’s take a closer look at what bar inventory management entails.
Bar inventory involves tracking every item behind the bar – from liquor, beer and wine to mixers. By knowing these numbers, bartenders / managers / owners can better determine when to re-order certain products or potentially adjust pricing. Furthermore, tracking usage rates helps determine the popularity of the various drinks on the menu and ensure that you never run out of product.
Proper bar inventory helps streamline operations while providing valuable insight into customer preferences and spending habits.
What Is Bar Inventory Management?
So, what is bar inventory management? In a nutshell, it’s the process of tracking and managing all the items used for bartending. This includes everything from liquor to wine to beer, mixers, garnishes, glassware, napkins, straws and more.
The difference between regular bar inventory and a bar inventory audit comes down to timing and what’s included. Bar inventory should be done daily or weekly and generally just includes the items behind the bar. On the other hand, inventory audits are done much less frequently and include everything in the bar, including stock stored elsewhere, cutlery, dishes and anything else used in the day-to-day operations.
Getting Started with Bar Inventory Management
Start by creating an organized list of all the items behind the bar, including all the bottles on the back bar and stored behind the bar. Depending on where you store backup bottles and extra cases, your bar inventory could contain only the items stored behind the bar; or it could include cases stored elsewhere. Oftentimes, items not stored behind the bar are counted during an inventory audit rather than during the daily or weekly bar inventory.
Bar inventory should be done regularly. Ideally every morning / night. Every week at a minimum. The more often you do the alcohol inventory, the easier it is to see discrepancies and address them accordingly.
The biggest decision you’ll have starting out is whether to do things manually or use automated bar inventory software. The obvious differences are price and accuracy.
Doing bar inventory manually is cheap and inaccurate. Getting an automated bar inventory system is expensive and accurate.
Since it’s expensive to start a bar in the first place, most bar owners tend to go the manual route when starting out.
Types Of Bar Inventory Systems: Manual or Automated
There are basically two different ways to manage your bar’s inventory: manually or automated.
Manual Bar Inventory Management Systems
Manual inventory management involves manually tracking stock levels through paper lists or spreadsheets. This can help save money initially but takes much more time and effort and is far less accurate.
There are two common ways to do bar inventory manually. First is by “eyeing” or “eye-balling” the bottles to determine what percentage or point mark they are at.
For example, if a full bottle equals 1, then a half bottle is .5 and a quarter bottle is .25. Although any type of bar inventory system is better than nothing, this system tends to have a fair number of inconsistencies.
The three main issues with eye-balling bottles to determine how much is left in each bottle are:
- Shape of the Bottles – Many of the bottles have different shapes and therefore it can be difficult to determine what .3 or .7 of the bottle is.
- Color of the Bottles – Some of the bottles are so dark that it becomes difficult to see through the bottle to accurately determine how much liquor is left.
- Bartender Differences – no two bartenders are going to see and measure the bottles the same. One bartender could see .5 of a bottle of Baileys, whereas another bartender may see .4 of the same bottle. Right there, your inventory for that bottle of Baileys is off by 10%.
The second manual way of doing bar inventory is to weigh the bottles. This system involves some fairly in-depth advance preparation as you’ll need to have the weights of the bottles as well as the density of the liquors before you start. Yes, it’s a big pain in the ass to get started with this system and it’s prone to more human error due to the calculations required.
The short story here is that all liquor and alcohol have different densities and, therefore different weights. If you want to measure how many ounces are left in a bottle based on its weight, you’re going to need to find the full weight of the bottles and the densities of the different alcohols.
The mistake bartenders make with this method of weighing the bottle is that they think that the equation is as simple as:
Full Bottle Weight (in oz) – Newly Measured Weight (in oz) = oz Used
This is NOT correct! The problem with the above equation is that Fluid Ounces differ from regular Ounces or Weight Ounces. This is because of the different densities (or thicknesses) of different types of alcohol. Sambuca, for example is much denser than vodka. And because of that, a fluid ounce of Sambuca is heavier than a fluid ounce of vodka.
Density is also tough to measure as it changes based on the ambient temperature. If you decide to go this route (which is much more accurate than eye-balling once implemented) and start to weigh bottles for bar inventory, get in touch with your liquor rep to see if they have an alcohol density chart. You can also search online but the numbers differ from brand to brand so it’s best to get them from the alcohol producer themselves or from a liquor rep.
Here’s a basic round-down of the process of weighing your bottles:
- Using a scale, weigh a full bottle of each product first as you will need this number to eventually get the product usage.
- Next, calculate each product’s adjusted fluid ounce size based on the density of the alcohol. We’ll call this the Adjusted Bottle Size. Use the following formula to get the adjusted Bottle size:
Density x Bottle size (in fluid ounces) = Adjusted Bottle Size.
- Then calculate the bottle tare weight (full bottle weight – adjusted bottle size) based on that adjusted bottle size.
Full Bottle Weight – Adjusted Bottle Size = Bottle Tare
To start, weigh a bottle and record the weight.
Bottle Weight – Tare Weight = Fluid Oz Remaining in Bottle
To calculate your usage for each bottle, subtract the ending weight data from the starting weight data.
Remember that it’s important to keep track of new bottles that are added between the start and end of each bartender’s shift.
Automated Bar Inventory Management Systems
Then there are automated bar inventory management systems. These require specialized software and hardware to track stock levels and identify when items need restocking. Automated systems can also be used to create purchase orders and monitor shipments. However, they can be expensive, usually have a fairly steep learning curve and can require ongoing technical maintenance.
Technology solutions such as POS systems, inventory management software, and online ordering platforms can help streamline the bar inventory process. These tools allow for more accurate tracking of orders, sales, and inventory levels. Additionally, these systems often come equipped with analytics tools that provide data-driven insights into customer preferences which helps bars make better decisions about their offerings and pricing structures.
Software solutions are often tailored to meet specific needs – whether that means tracking multiple locations or managing complex recipes for cocktails. These tools offer features such as real-time reordering notifications, so bars never run out of their most important ingredients.
With advanced reporting capabilities like these readily available, managers gain greater visibility into their operations than ever before; allowing them to make sounder decisions around product mix, pricing strategies, and overall operations efficiency.
Establishing Par Levels Of Liquor
Establishing par liquor levels is an integral part of bartending and inventory management. Par levels refer to the minimum amount of stock that should be kept on hand to meet customer demand without running out. Keeping track of this is essential, as running out can lead to lost profits and customer dissatisfaction.
The bar size and type must be considered when deciding the quantity of liquor required in stock. Additionally, it’s important to consider the popularity of certain drinks among customers and how often they are ordered compared to other beverages. This way, a bar can ensure that there is always enough liquor available for its customers’ favorite drinks.
Finally, par level tracking must be done regularly to remain accurate. As trends change and customer preferences evolve, so should the par levels that a bar maintains to stay competitive and profitable. Regular evaluations will help ensure that the right amount of liquor is being stocked at all times.
Understanding Bar Metrics And Key Performance Indicators
Navigating bar inventory management can be tricky. To make sure you’re running a successful business, it’s important to understand key performance indicators (KPIs) and metrics that show how well your bar is doing. This will allow you to identify areas of improvement and take action accordingly.
When assessing the performance of your bar, there are some specific KPIs you should evaluate. These include beverage cost, total sales volume, staff efficiency, money spent on marketing campaigns, customer loyalty, average check size per patron, and food-to-beverage ratio. Each KPI offers insights into different aspects of your operation, so it’s essential to track them all for an accurate overview of your business’s health.
Analyzing these metrics regularly allows you to stay up-to-date with the progress of your bar – and ensure that it continues to thrive over time. Keeping tabs on KPIs also gives you valuable information about which strategies have been working so that you can adjust accordingly. This knowledge can help boost profits by streamlining operations and providing customers with better experiences. So if you want to get the most out of your bar inventory management efforts, start tracking those KPIs!
Bar Inventory Management: Frequently Asked Questions
How Often Should Bar Inventory Be Taken?
It depends on several factors, such as size of the venue, volume of customers, and turnover rate for beer, wine, spirits and mixers. It’s wise to do an initial count at least every week but preferably every day. This will help you spot any discrepancies and address them in a timely fashion. At the very minimum, monthly inventories are recommended to ensure accuracy and up-to-date records.
Taking regular inventories also allows you more data to make better decisions about what products need restocking or perhaps discontinuing. Keeping accurate records lets you easily identify areas where cost savings can be achieved while ensuring that customer demand is met – all essential components of a successful operation.
How Often Should I Conduct A Full Inventory Audit?
It’s best to run an audit at least twice a year – once prior to the busy season and once afterwards. This will help ensure that you have enough stock and can make informed decisions when ordering new items for the next busy season.
Here are some other tips for conducting successful inventory audits:
- Set aside specific time each year for your audit
- Track all discrepancies between what’s ordered and what’s received
- Pay attention to data trends so you can identify potential problems early
- Have someone else double-check your numbers
Closing Time
Plain and simple, bar inventory management is an important part of running a successful bar. One of the biggest takeaways here is to do inventory regularly. The more often you do it, the more profitable your bar will be.
Taking the time to manage your bar inventory properly can greatly impact your business’s bottom line.
