THE CRAFT

The ultimate resource for alcohol beverage news, trends and reports for bars, distributors and suppliers.

Inventory Hacks to Reduce Bar Costs

  • by: Maggie Mahar
  • On: 23, Jan 2020
27 min read

We know firsthand that taking inventory might not be on your ‘favorite things’ list. Inventory days often mean arriving early or staying late at the job, for one thing. But, the reality remains -- properly tracking inventory in your bar is a huge key to success. In our business, profit margins can be thinner than an orange peel, so it’s crucial to constantly be on top of your inventory counts. With that in mind, we’ve assembled a few handy hacks to keep your inventory ship sailing smoothly. By paying close attention to your counts, and employing some of (or all of) the following tips/tricks, you can hack your way to a better bottom line.

 

Monitor High-Cost Inventory Items

Say it with us: not all ingredients are created equal. Be sure to keep an extra close eye on high-cost inventory items. Before we go on, we should specify: this isn’t just to avoid theft. Generally speaking, employees are more likely to steal the cheap stuff (if anything), under the assumption that you won’t notice. The main reason we keep an eye on those pricier ingredients is to avoid buying more than we need to. It’s especially important to track the input-and-output of these high-priced items. This is going to help us eliminate waste of these precious commodities, which can disproportionately affect our ingredient costs if they are not properly accounted for.

 

Demand-Based Production

The hospitality industry is often at the whims of ‘on’ and ‘off’ season, as you probably have figured out by now. Your inventory should similarly adjust to these changes in season. For an extreme example: in the middle of the summer, probably skip the egg nog when it comes time to order. For a more practical route, we suggest looking over your orders every week. See what people are hot on, and what people seem to be ordering less and less of. Don’t use the same pars for your inventory management year-round. Instead, make adjustments based on the customers’ behaviors. As you go on with this, you can even begin to predict what items you’ll need (or won’t need) in the future, and adjust accordingly.

 

Identify One Person To Be Your Receiver

If you’re a high-volume establishment, you’re likely bringing in loads and loads of product every week. While this is awesome for business, it does present some possible hurdles. The biggest pitfall here may be lost time and a breakdown of efficiency. Like any other job in the business, getting the ‘feel’ of receiving takes time. It’s a job that we generally want to be done quickly and without much fuss. Dedicating one person to the role of receiver is a great way to make sure that happens. Consistently handling the product is going to allow that employee to grow and perform the task in a quick and efficient manner. As well, it can provide that person a growth opportunity. Why stop at receiving? You can also teach that person to file invoices, redirect missed orders, and mark missing items on invoices.   

Identify One Person to Be Your Inventory Taker

Similar to our last tip, we suggest designating one or two people as the dedicated inventory takers. Because these people are consistently taking inventory, they’ll learn to understand the patterns involved in your establishment’s inventory process. The more inventory they take, the better they become at taking inventory! This will also make identifying inconsistencies much, much easier. Be sure to communicate to these employees the importance of taking inventory properly, and explain how it can impact the establishment’s bottom line.

 

Eliminate Old Inventory & Turn It Into Cash

If you’ve had a bottle of something sitting on the shelf for six months, entirely unopened...it’s time to move on. Cut your losses. Run a drink special for a few nights to get rid of what you can, sure, but dead inventory is no good. It’s taking up and wasting shelf space, for one. On top of that, dead inventory is wasting your time each day/week that you have to include it in your inventory counts. To turn dead or unused inventory into cash, we suggest an employee sale. Offer your staff a chance to purchase the bottles/items from you at a below-retail price. You get to break even, and they get some cheap booze. It’s a win/win, and scores some points in the employee-relations category as well!

 

Order Smart

Being savvy when ordering from a distributor is a huge key to keeping liquor costs down. Quantity and frequency both make a huge impact on your total liquor spending. As well, the fewer purveyors you can buy from, the better!

One example of this savvy ordering: don’t order a split case of bourbon each week. Instead, avoid a potential split-case fee and order in bulk for the future. That’s going to save you time and money when end-of-year comes. In general, the more you can order at once, the better.

 

Inventory Starts with the Menu

Creating a profitable inventory starts with sculpting a profitable menu. Avoid putting items on your menu that only have one or two applications. If an ingredient appears in one menu item, it should probably appear elsewhere as well. This way, you can avoid having to special order ingredients for the sake of just one drink. Ordering a single bottle or a split case of a specialty liqueur is going to add up quickly. But, if you can find places on your menu to use that same ingredient a few more times, you’re going to create a much more efficient inventory.

This is just one of the many ways that your menu impacts your inventory management. From the ground up, having a profitable program means putting the right things on your menu. Which, in fact, brings us to our next point…

 

Create a Hit Record

Think about the chart-topping songs every summer. They’re rarely complex or creative, but instead, carry an undeniably universal appeal. Try to consider your cocktail menu in the same way. While there’s certainly a place for craft-made cocktails that are sophisticated and challenging...try making some pop music!

Having one or two people-pleasing cocktails on the menu is going to afford you the luxury of creating more interesting drinks. The simple, two-or-three ingredient cocktails are where you’ll find significant profit margins and consistently high sales. They might not be your bartender’s favorite drinks, but they’re the ones keeping the lights on.

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