Every bar manager, regardless of expertise and knowledge, muses over how to conduct an exact liquor inventory with accuracy.
If we asked a room full of managers to show their enthusiasm for inventory management by raising their hands, not one hand would likely go up.
The truth is - liquor inventory can be a tedious, mistake-prone process. But don't despair!
With some strategic changes, you'll soon find yourself continuously excited to work on your liquor inventory - no exaggeration. Indeed, the revenue and accuracy lost during this process can be recovered with just several simple adjustments!
First and foremost, establishing an efficient restaurant inventory system that works well for you and your staff is critical.
It’s the first building block you must have in place to run your bar or restaurant successfully.
We’ll lay out the steps and tools you need to ensure you know how to do liquor inventory, in the best way possible.
Bar Inventory Management 101
An effective liquor inventory system is essential for keeping your bar running smoothly, providing customers with what they need - and more than that, it allows you to analyze how much liquor inventory usage.
Not only will this help ensure shelves are stocked up and drink ready to pour, but it can also guide smarter decision-making around purchasing new stock, saving money and time in the process.
Utilizing a successful beverage program unlocks powerful insights into your business and grants you access to hidden potential profits.
Equipped with reliable and accurate data, you can immediately identify which bar's inventory is performing optimally and the ones that could use a little tweaking.
This way, you'll never have to guess what your customers want - instead, you’ll possess definitive knowledge!
To elaborate more, if you take liquor inventory with accuracy it can provide you helpful insights into your bar's financial situation, such as which products are thriving, and those that generate the highest return on investment (ROI) - though they don't always go hand in hand.
With the help of this valuable data, you will have a better grasp on how often to place purchase orders and identify unused liquor inventory--also known as dead stock. Having access to such information is invaluable in that it not only allows one to save money but also helps reduce product waste.
Beyond logistical concerns, the process of taking inventory allows you to determine your product variance and recognize where potential shrinkage is occurring.
Doing this is not only beneficial for your inventory count but can also help set pars and calculate the pour costs of your liquor stock.
Having the capacity to accurately calculate inventory usage has numerous advantages, which is why taking liquor inventory should be done with caution and care.
How to do liquor inventory?
Inventory management is, at its base level, a straightforward process.
Nonetheless, the most critical aspect of successful inventory control lies in an individual's ability to accurately measure and conduct physical inventory counts.
To do so, when you take liquor inventory, you need a few key terms:
- Starting Inventory, or how much stock of your liquor inventory your establishment had at just the beginning of your inventory period (which might consist of the previous week or the previous month, depending on your preferences). Your starting inventory will be counted in bottles, cases, or kegs.
- Ending Inventory, this calculation will tell you exactly how much of your product remains at the end of each inventory period. It is essential that you accurately count all inventory to ensure that your ending inventory tally matches the actual physical number.
- Received Inventory, or how much inventory count you received during this period through purchase orders.
With these three factors, you can effectively manage liquor inventory in a precise and accurate manner.
All you have to do is plug the numbers into the formula below:
Starting inventory + received inventory — ending inventory = usage
After using this formula, you should know how to take inventory and determine your product usage.
This simple calculation gives you the power to unlock all the knowledge mentioned above.
Before we get to the end product, though, we’ll answer a few more questions about the process to get there.
It is important to note that the ending inventory count must be accurate to accurately determine liquor cost and pour cost.
A pour cost is the amount of money spent on liquor to make one drink.
This cost is determined by dividing the total liquor cost by the total number of drinks poured. To determine your pour cost, you must have an accurate ending inventory count.
If the ending inventory count is incorrect, it can greatly affect the accuracy of your pour cost and therefore impact your profitability.
Taking inventory is a tedious task, yet absolutely essential if you want your restaurant (or bar) to be successful.
It is recommended to take inventory and have the exact same process at least once a month, and more frequently for establishments with a high volume of liquor sales, such as front bars.
Taking inventory regularly ensures that you have an accurate understanding of your liquor usage and helps you to make informed decisions about ordering and stocking your inventory.
It also helps to identify any discrepancies in the ordering or pouring process and prevent losses due to theft or over-pouring.
If you take inventory regularly, you can stay on top of your liquor costs and ensure the profitability of your business.
How does liquor inventory work?
Let’s discuss the bar inventory basics and what processes you can use to find your bar’s starting, ending, and received inventory.
Before beginning your inventory count, it is prudent to become familiar with essential practices that can help you achieve an accurate result.
If not implemented before starting the process, bad habits could significantly compromise the accuracy of your inventory counts.
1. Count your liquor using the same method, every single time
Start in the same part of the bar and track each factor in the same order.
While we’re on the topic, you can make your life easier if you always conduct inventory when your restaurant (or liquor stores) are closed.
This will eliminate any disruption from customers and make the process more efficient.
To reduce any chances of miscounts or errors, always make sure to have accurate inventory counts and keep track of your bar inventory.
2. Create a reliable schedule and commit to following it.
How frequently should a bar count inventory and track its stock?
As mentioned above, your inventory period and schedule depend on your preferences.
The best rule of thumb is to take your front bar inventory at the same rate throughout the year and know what will work best for your bar and lifestyle.
Consistently taking front bar inventory each week or month allows you to gain a well-rounded view of how your business is performing and provides the opportunity for careful analysis of your bar inventory usage and sales trends.
This allows for the most judicious and effective management of both aspects.
3. Monitor your inventory KPIs
Taking Bar inventory tracking isn't limited to just a physical count of bottles; it also provides you with the chance to record reliable data that surpasses quantity.
As such, establishments need to monitor their inventory KPIs (Key Performance Indicators).
To make sure your bar or restaurant is running smoothly, it's important to track a few vital metrics such as pour costs percentages, product variance, inventory usage, and shrinkage/theft rates.
Out of all the data points you need to keep up with though, pour costs and par levels are arguably one of the most integral in measuring success.
Anyone aiming for an efficiently operated business should ensure that these two areas are well-tracked. Once these figures have been tracked effectively and accurately, they can be used as an invaluable tool in making profitable decisions.
4. Involve the whole team
Unsurprisingly, you’ll need to train a few employees when you take inventory by themselves. While all employees might not be involved in the whole process, you should train everyone to look out for potential inventory risks such as over-pouring, excessive free drinks, spillage, and shrinkage or theft.
This will keep your staff vigilant and help them take responsibility for their actions.
Establishing clear SOPs (Standard Operating Procedures) and making sure that each employee comprehends your bar inventory process is of the utmost importance.
This will not only help to reduce any potential losses or discrepancies but also guarantee that everyone is aware of what's expected from them.
Master the Basics of Liquor Inventory - Here's How!
Armed with the tips above, picture yourself in your establishment and imagine the places where your liquor is kept.
Then, decide where your ideal inventory process will start. Whether you’re using old-fashioned pen-and-paper inventory or bar inventory software, make sure your tools are laid out consistently and sensibly to achieve efficient business.
Now, you’re ready to take inventory and start counting the actual bottles. Include the alcohol type, brand, name, liquor costs, and bottle size.
Create each spreadsheet column or category for products stored in different areas of your bar, or at different locations. If your inventory software comes equipped with a liquor scale app or integration, make sure to use it.
Lastly, measure each bottle consistently, and don’t switch up your methods.
Repeat the same process for the entire storage room area of your bar. Your units of measurement might vary based on cases vs. bottles, so account for that in the organization of your liquor inventory spreadsheet or bar inventory app.
Once you’ve completed counting and measuring your on-hand inventory levels, add up the totals for each category you created.
At the end of the inventory periods, you decided, you’ll recount everything. Repeat the same process, taking inventory in the same direction and with the same scale. With your beginning and ending inventory counts in hand, you are all set!
During the inventory period, your restaurant will, of course, sell and generate sales, as well as receive various whole bottles.
Make sure to account for that product by keeping a record of how much stock you receive through saving and tracking invoices.
It’s important to keep a record of the product you sell and inventory usage through your POS system.
This covers the basics of how to do liquor inventory.
But, whether you’re an inventory newbie or a long-time pro, any inventory management process can use an upgrade. With that said, you now have a thorough understanding of how to do liquor inventory.
Next, we’ll lay out a few tips that you can use to tweak and perfect your current inventory system.
5 Ways to Better Manage Your Liquor Inventory
1. Know your customers and how to keep them happy
The happiest customers are the ones who get what they want. In fact, it’s important to collect as much information about them as possible.
By knowing their favorite drinks, you can significantly reduce drink shortages.
Are your customers the type who wants a beer on draft or the next trendy cocktail? If they are the cocktail type, which liquor is consumed most frequently and how can you optimize the brand you use for popular menu items?
Use the inventory data at your disposal to get to know your customers and keep them coming back.
Assessing your inventory usage over a period of time will help you quickly assess this information.
2. Place purchase orders strategically
Placing rush orders for products because you didn’t realize the bar is low on stock is an easy way to waste a lot of money. Consistent and thorough inventory, as described above, helps prevent rush orders, as does the use of a liquor inventory scale.
On the flip side, ordering too much of any given product leads to dead stock sitting unused in your back storage room, and can be equally as harmful to your business.
Strategic purchase orders, using valuable information from an effective inventory management system will go a long way toward preventing lost profits and extreme scenarios.
3. Recognize where your money goes
In other words, identify areas of how much liquid or where you’re wasting liquor. Excessive pours, improper storage, employee theft, inventory miscounts, or general negligence could all be causing your bar to lose out on profit when it isn’t necessary.
To remain profitable and protect the well-being of your business, it is essential to take measures to evaluate where waste is occurring in your bar inventory, measure it, and then strive to reduce it.
4. Get smart about how you use an existing product
There are several practices in the bar industry to facilitate better use of the liquor bottles you already have on hand.
The “first in, first out” method is an industry favorite that involves selling old products before selling brand-new products. This helps reduce the amount of stock that goes bad without ever seeing the front of your bar and is a great way to reduce waste.
Investing in safety stock is another option in which you order the excess products in anticipation of customer preferences or changing seasonal demands.
Along the same lines, use your sales data to optimize deals and promotions to move products quickly when needed.
Finally, creatively use the low-selling product by crafting new menu items that pair the unpopular products with the popular product to move them out of your back room.
5. Invest in a time-saving liquor inventory app
All of these methods to better your bar inventory management hinge on having a robust inventory system process. The easiest way to level up your inventory is to invest in an app that can fit your bar’s needs and automate your processes for faster, painless sessions. But it’s not just speed you want, it’s effectiveness and efficiency too.
Why an Efficient Bar Inventory System is a Game Changer
Most importantly, taking bar inventory efficient liquor inventory system will protect your carefully planned budget. Efficiency in your inventory process will cut down on employee hours and the amount of time you spend counting liquor.
More than that, it will help prevent last-minute orders, wasted products, unforeseen costs, and revenue loss.
If the health of your bottom line isn’t enough to convince you, a more efficient inventory system will also boost employee morale and customer happiness.
With better organization and foresight of seasonal demand, you’ll be less likely to run out of popular ingredients, making your customers more likely to return again and again. With better knowledge of your business and what areas need work, you’ll be better able to build a trusting and transparent work environment. Efficiency is a win for everyone involved.
Bar Inventory Software, a Better Solution
Learning how to do bar inventory is bad enough as it is.
So, don’t make it any harder than it needs to be. Instead, choose a bar inventory software made by restaurant owners, for restaurant owners.
It’s crucial to pick one that can accomplish everything a busy bar needs to maximize profits and succeed.
From beverage analytics and recipe costing to easy inventory and ordering, WISK does it all.
When you go with software that includes 24/7 customer support and features that cut your inventory time by 80%, you know you’re in good hands.
We believe that’s what you deserve.
Implement these liquor inventory strategies, and you'll soon see your ROI rise, indicating a more prosperous bar.
So, cut it out with a pen and paper, spreadsheets, and other ancient data entry tools. Instead, get in touch. We’d love to hear from you. For more details, check out https://www.wisk.ai/for/wisk-bar-management-software.
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