Inventory Control of Liquor

liquorpourby Bo Ransdell of DCR Point-of-Sale

Liquor is big business for restaurants. According to one report, alcohol sales make up 18% - 20% of sales across the industry. The margins on liquor sales are always higher than the relatively slim margins on food sales, so more locations are exploring opportunities in liquor sales (even Shoney’s has a beer menu now!), while those already enjoying the revenue of beer, wine and liquor are looking to emphasize their returns. Considering how profitable alcohol sales are in comparison to standard food sales, the issue is not whether alcohol sales are revenue-generating, but how does one account for liquor inventory in frequently high-volume bars and restaurants?

The old methods of inventory management are well-known. One has a list of items, tours their storage areas, and counts their on-hand items. When contrasted with sales and the expected subtractions from inventory for customer checks, that is the count. Liquor, though, is more challenging. Where the profits are highest, there is always greater threat of theft, or simply miscalculating the alcohol usage in such a manner that suggests theft or spillage. Simply marking bottles with a grease pen or ‘guesstimating’ amounts remaining in opened bottles is imprecise at best, and given the high potential for returns on alcohol sales, proper and reliable inventory of these items is critical.

There are manual constraints, such as bottle pourers which automatically cut off when a pre-set pour amount has been reached. These manual pourers are quite reliable in their measurements, and range in price from a few dollars to over $50 for individual spouts, depending on vendor and degree of sophistication. While these devices excel in managing accurate pours, they do nothing to prevent second pours or intentional overpouring of drinks. Bartenders and servers may be quick to equate free alcohol with higher tips, making these measured pouring devices little more than a delay in the loss of alcohol, not a preventative.

Fortunately, technology has come to the rescue! There are now a variety of offerings to more precisely track the measurement and reporting of alcohol use. Some are updates of old methods of inventory, such as the Partender app (https://app.partender.com), a subscription service that consumers can expect to cost approximately $250/month. The app, available for iOS and Android, uses digital representations of bottles to create usage levels, much like the grease pens of old mentioned above. The real leap in terms of assistance to the consumer is the ability to set par levels and allow the app to generate purchase reports based on those levels and current reads. Of this type, other offerings like Accubar (www.accubar.com) and BevSpot (https://www.bevspot.com) operate using similar methods.

For those who prefer to chart more than bottle levels, other software offerings take alcohol inventory management a step further, employing the use of scales to weigh the bottles. The scale measures usage based on the weight variance from inventory period to inventory period. This provides, ostensibly, a greater degree of accuracy in the measurement of bottle volumes. Software of this type includes Barkeep (http://www.barkeepapp.com), which also features an online management component, and Bar-I (http://bar-i.com), the latter of which also boasts a service where Bar-I staff will do the weighing for you!

In most of the above applications, the focus has been on inventory tracking via app or additional software. While there is substantial value in accurately reporting alcohol inventory, the disconnect between the users’ point-of-sale system and their alcohol management can be damaging to the potential return on investment. Why spend money on an app to manage your bar sales when the savings are eaten up by the additional labor used to translate that inventory information into reporting which can enable a manager or owner to evaluate true liquor cost?

The benefits of integration with a point-of-sale system are obvious. The flow of information between the POS system and any third-party alcohol inventory application should include the easy uploading of reporting from the alcohol inventory into the POS. With this information, the point-of-sale system may weigh sales with expected inventory against the actual inventory, thus providing the variance. If the inventory count is accurate, and both the POS system and inventory management software are communicating properly, one can see how a greater degree of control may be achieved.

While there are a variety of offerings, this type of integration is key for a variety of reasons, be it labor reduction or simply a more meaningful flow of information about the business. Bevinco (http://www.sculpturehospitality.com/bevinco) offers a variety of integrations, along with the more enviable features of accurate digital scales and mobile management. Accubar, mentioned above, is another that integrates directly into a wide variety of point-of-sale systems. For each of these, the ability to quickly translate inventory information into the POS reporting is cost-saving and convenient.

While every business concept is different in its own way, the data indicating the importance of alcohol sales is indisputable. If your concept is offering alcohol, there is simply no reason not to include bar management software as part of a complete solution. Gaining greater control over the most lucrative revenue center in a restaurant would seem to be an easy decision, but few restaurants appreciate the significance of this revenue stream. It is up to those of us in the POS industry to provide solutions that go beyond the simple installation of POS software and hardware, and to look at custom solutions, tailored to fit the needs and revenue opportunities of each client.

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About the Author

Bo Ransdell has worked in the service industry for almost thirty years, and with DCR for more than a decade. As a leading reseller in the Southeast, DCR is committed to finding innovative solutions in the ever-changing point-of-sale landscape.

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Tagged under Inventory