Expert Advice on Hospitality Topics

Loss Prevention: Don't Let Bartenders Rob You Blind

Posted by Nick Kaoukis on Tue, Sep, 25, 2012 @ 12:09 PM

By Bob Johnson

Part 1 of 2: Do Bartenders Steal?

bartender theftDo bartenders steal?  I've worked with some outstanding bartenders over the years, men and women who are honest, hard-working, team/family-oriented and loyal. I'd like to think all bartenders are like that, but according to some, I'm misguided.

Joe Motzi of Entrepreneur Consultants in New York wrote an article on the subject for Restaurant Hospitality magazine, in which he said: "The theft is incredible! In the past three years we ran across only one bartender who wasn't stealing from his employer. That's out of about 1,000 clients! Only one bartender went by the rules of the house!"

Employee Service Reports in Fort Myers, Florida, a surveillance service to restaurants and lounges since 1950, reports that more than 50 percent of bartenders surveyed are not recording sales. That's a polite word for stealing. After weeding out the undesirable employees, the theft problem goes away - at least until after the new hires are comfortable with taking advantage of management.

A Michigan bar owner I know fired her last nine bartenders for stealing - in just one year. The owner of the Au Main bar in New York City has filed a $5 million lawsuit against 12 former bartenders and his chief financial officer for "working together (collusion) against the house, not recording drink sales and splitting the money amongst them for the past 8 years". The CFO changed the numbers in the books to cover up the missing inventory.

The temptation for a bartender to steal, and the ease of doing it, is scary. Receiving cash each time you sell a drink creates the temptation to keep the money (is anyone watching?). The drink sale is simply not rung up. The money for the drink goes straight into the cash register drawer by hitting "00" (No Sale), or they work out of an open drawer. They keep track of how much they are "over" by using a type of abacus system - 3 match sticks in a nearby empty glass equals $30, or a black sneaker mark on the floor equals $20 (3 black marks and they're up about $60).

The bartender takes the "over" out of the cash register drawer before turning in their money. Selling a cup of coffee or a "virgin" daiquiri (non-alcoholic) increases the temptation for bartenders or servers to take that money, too. Most bars do not inventory non-alcoholic type drinks, and most do not require their bartenders/servers to issue a receipt for each sale.

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While taking from you, there's a good chance they're also cheating your customers. Your bar might feature "tooters", which are 24 shots of liquor served in a one-ounce tube. The bartender is supposed to sell them for a buck apiece, but decides to charge the customer $2 - and pockets $24 at the customer's expense. Of course, the house gets hurt when the customer discovers the scam.

The theft process starts when first hired. The bad bartender usually looks for areas where management is lax. They run little "spot tests" - seeing what will work and what won't. Once it's established what works it's full steam ahead.

Another type is the overt thief - one who steals openly, thinking no one, including the customer, realizes what he or she is doing. Professional spotters describe this type of bartender theft as "wide open". These people fear no one - customer or management.

This is reason enough to use professional surveillance companies, or spotters, routinely. Spotters are hired to watch for, and report, any act of theft by a bartender, waitress, manager, or any employee working on the premises.

However, there can be problems with spotters. Many don't understand a bartender's organization, motion, or actual transactions. Many are also "minimum wage plus expenses" employees of a local security company and have never tended a bar before. The best spotter is one who has bar experience and can detect a discrepancy in another bartender's work routines.

 

Bob Johnson is a nationally recognized Beverage Management consultant who specializes in multi-unit management of nightclubs/bars and bartending. He is a 50 year veteran of the bar business and is known for creating America’s first certification program for bar managers, “CBM” (Certified Bar Manager). Mr. Johnson has taught at Florida International University in Miami, Florida, serving as Professor of Beverage Management.

Mr. Johnson can be contacted at:

Website: BobTheBarGuy.com

Email: bjbarhop@aol.com

Tel: (800) 447-4384

Topics: liquor inventory, inventory managers, Bar inventory, bar inventory levels, bar efficiency, NightClub Management, managing liquor inventory cost, Bar Management, Nightclub Consulting, Loss prevention, bar control, inventory counting, inventory control

Loss Prevention: The Bar Manager's Key to Quick Profit Growth

Posted by Nick Kaoukis on Thu, Aug, 16, 2012 @ 13:08 PM

How Keeping Close Tabs On Your Liquor Supply Can Both Cut Costs & Generate Revenue

Inventory ControlIndustry studies have consistently shown that a full 25% to 30% of a bar's liquor inventory never converts into registered sales. That is the equivalent of about six to eight 1.25 oz portions per bottle (which should yield at least 25 portions.) This loss of liquor volume--due to unauthorized comps, over-pouring, spillage or theft--should be of great concern to any bar manager. 

While losing 25% of a $25 bottle may not seem like a very serious problem--an unavoidable cost of doing business--the true cost is much greater than that $6 or $7 per bottle. The question you need to ask yourself is: Where is this lost liquor going? And how is it affecting sales? For instance, if your bartender is not pouring 1.25 oz portions, but is instead pouring 2 oz portions (say, perhaps, to curry favor with clients and receive a bigger tip), you're not just losing liquor volume, you're also losing potential sales. Where the customer may have been disposed to buy three drinks (3.75 ounces), he may now be content to buy just two 2-ounce drinks. Your bartender's actions, in this case, haven't merely cost you a dollar's worth of liquor, they may well have cost you $6-$8 in lost sales revenue (depending on how you price your drinks). And that's just for one customer buying two drinks. How often is this occurring? What if your bartender also happens to be giving away free drinks without your knowledge or authorization? The point is: "shrinkage" does not only affect supply costs, it can also affect revenues in a big way. 

That's why loss prevention is so important. The profitability of your business depends on whole bunch of variables--the location of your establishment, the overall economy, ever-changing customer tastes.... Achieving profit growth can be difficult and can rarely be accomplished overnight. Increasing the price of your drinks is risky, and can prove more harmful than helpful as far as your bottom line is concerned. And growing your clientele usually takes time. The best way to increase profits in the short-term, therefore, is not to try to fiddle with pricing or to increase your client base. (Of course, this is something you should always be doing. But it is not easy to do in the short-term.) The quickest way to increase revenue is to make the most of the clients you're already serving. And one way to do this is to improve operations by getting tighter grip on your inventory. Loss of liquor supply at double-digit levels is not an "unavoidable cost of doing business". It is "bad business". And it is entirely avoidable. Put simply, loss prevention can pay big dividends. What's more, it can be achieved quite quickly through the implementation of a quality liquor inventory control system.

Topics: liquor inventory, Bar inventory, bar inventory levels, bar efficiency, bar profitability, Bar Management, Liquor cost, Liquor Inventory savings, alcohol cost, Increasing Profits, Reducing Liquor Costs, bar control, inventory control, managing liquor costs

Bar Management: Standardizing & Optimizing Serving Practices

Posted by John Cammalleri on Mon, Jan, 09, 2012 @ 11:01 AM
By Chris Parry
Atlantic Publishing
 

Part 1 of 3: Establishing House Drink Recipes

A bartender makes a good drink with originality, panache, speed and skill - but a great drink starts with the boss. You determine the drink menu, you determine the recipes to be used and you set the price and make the rules. Your staff just follows your lead. In many bars, it's left to individual members of staff to know the "standard" formulas for cocktails and mixed drinks. Everyone is supposed to know that a Tequila Sunrise has one shot of tequila, right? Or is it two? Maybe it's a shot and a half... Profits are too hard won to just throw away alcohol when your staff crosses their wires about your drink recipes. Some easy steps to ensuring standardization of your house recipes include:

  • Recipe lists. Make sure when you take on new staff they receive detailed recipe lists to take home and look over before they start their first shift. It doesn't cost you a lot to photocopy a few pages of text and give them to your staff, so make sure there's no excuse for them not to know as much as they can before they start mixing on your dime.
  • Recipes on display. Ensure that there are either laminated index cards or recipes listed behind the bar at all times so that any member of staff - even emergency fill-ins and temps - can see exactly what is needed to prepare each drink - no more, no less. Below is an example of a recipe card and the information it should contain:
drink recipes

  • Cocktail menus. When you leave cocktail menus on tables, make sure that each one shows exactly what is in the drink - not just the ingredients, but the ounce amounts of each. This will not only serve as a more informative drink menu to your customers, but will also allow them to more accurately measure what they've consumed over the course of the night.
  • Premium ingredients. If you use premium or middle-shelf ingredients in your cocktails, make sure that your cocktail menus make a point of that fact by showing the brands used. There's no point in hiding the fact that your base spirits and liqueurs are of a higher quality than those of your competition, especially because your liquor distributor might chip in for some of the cost of printing if they're being marketed in your literature in this fashion.
  • Accuracy. Make certain that the cocktail and mixed-drink recipes give a clear indication of what glass is to be used, what garnish should be used, for how long and on what setting any blended drink should be blended and what brands of alcohol should be used for their creation. If you leave anything out, you can bet someone will get it wrong - and with alarming regularity.
  • Bartending recipe computer programs. For example, Interworlds Software's "BarBack for Windows" can tell your staff how to create a drink even if a customer asks for something ridiculously obscure. BarBack includes over 10,000 different drink recipes, as well as information on glassware, ingredients, mixing methods and garnishes. Rather than taking away from the skills of your staff, insightful programs such as these actually complement their skills to ensure your customers get exactly what they want in the quickest possible time. BarBack can be downloaded at www.barback.com .

 

This article is an excerpt from the Food Service Professional Guide to Bar & Beverage Operation, authored by Chris Parry, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company 
Amazon.com


Topics: inventory managers, Bar inventory, bar inventory levels, Bar staff, bar profitability, alcohol, NightClub Management, bar business, Bar Management, bar control, Drink Recipes, controling costs, liquor products

Safeguard Bar Profits: Introduce Basic Theft-Reduction Procedures

Posted by John Cammalleri on Mon, Oct, 03, 2011 @ 11:10 AM
By Elizabeth Godsmark
Atlantic Publishing
 

 

Safeguard Liquor AssetsTheft reduction policies and procedures are no good unless they are strictly enforced. Employees must be made clearly aware of the dire consequences of flouting house rules. There can be no gray areas. New members of staff should be asked to sign a confirmation that they have read the rules and fully understand the implications.

  • Prohibit bartenders from totaling the cash at the end of their shifts. This policy also protects honest bar staff.
  • Prohibit bartenders from both on- and off-duty drinking. Off-duty drinking leads to fellow bar staff overpouring, giving away free drinks or undercharging.
  • Prohibit bartenders from taking part in physical inventory counts. Ideally this should be a management-only function.
  • Bartenders should not be involved in ordering, receiving or issuing inventory. Again, this should be a management-only function.
  • Security. Enforce security procedures for all liquor, wine, beer, spirits and any other high-value inventory. Also, only key personnel should have access to the storeroom.
  • Require bartenders to record post-shift bar par readings. This refers to the number of bottles behind the bar at any given time. Bartenders should take a bar par reading at the end of the night shift.
  • Prohibit bartenders from recording more than one transaction per drink ticket. If bartenders are allowed to use a "running" ticket, they can easily neglect to record all the drinks they have actually sold.
  • Enforce voiding procedures. Bartenders should request managerial approval before continuing with a void. 

 

This article is an excerpt from the Food Service Professional Guide to Controlling Liquor Wine & Beverage Costs, authored by Elizabeth Godsmark, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

Topics: liquor inventory, Bar inventory, bar inventory levels, liquor theft, bar theft, Bar Management, bar control, inventory counting, inventory control

Insider Theft Can Have a Major Effect on Bar Profits

Posted by Nick Kaoukis on Tue, Sep, 27, 2011 @ 15:09 PM
By Elizabeth Godsmark
Atlantic Publishing
 

bartender theftThis is an alarming fact: most types of beverage operations lose a crippling percentage of profits through insider theft. The vast majority of employees in the beverage industry are honest and hardworking; it is the small minority of staff that can ruin your business through dishonesty. Insider theft can often escalate if there are weaknesses in the following general areas of the operation:

  • Lack of supervision. Theft from behind the bar, storeroom or storage areas is a major problem. Curb losses by increasing supervision, either in person or by means of strategically positioned security cameras.
  • Proprietor attitude. Don't make matters worse by treating all employees with suspicion. Get the honest staff on your side.
  • Weak management. Unfortunately, some beverage managers compound the issue of insider theft by turning a "blind eye" and simply increasing prices to cover "shrinkage." Owners need to question unwarranted price rises.
  • Pouring costs A common danger area. These costs need to be carefully monitored, especially in relation to bartender productivity.
  • Inventory records. This is one of the easiest areas for dishonest employees to "fiddle the books." Tighten up your record keeping. Never leave inventory control to one person. Double-check.
  • End-of-shift cash count. Another prime target area for insider theft. Never let a bartender reconcile the cash in the register at the end of his or her shift.

 

Bartender Theft: Top Ten Ploys

Controlling theft behind the majority of bars is no mean task; eliminating it altogether is virtually impossible. Temptation is a fine thing, and unfortunate­ly, the opportunity for bartender theft is overwhelming. However, in the interests of long-term survival, you have no choice but to tackle the problem head on. Be wary of the following top-ten common ploys:

  • Open theft. A bartender pours a drink, doesn't ring the cash register and puts the cash in a "holding" place, such as the tip jar.
  • Overcharging. Bartender pockets the difference. A variation is to charge regular prices but ring up "Happy Hour" prices and, again, pocket the difference.
  • Ringing "00" on the cash register. The bartender simply steals the value of the drink.
  • Overpouring. Bartender hopes to get a heavy tip.
  • Underpouring. Bartender keeps a mental note of the number of half measures poured throughout the evening and then thieves the equivalent value in drinks, gives them away or drinks them him-or herself.
  • Rounds of drinks. Bartender rings up for a "round" rather than separate items. It makes it easier to inflate the overall price of a round of drinks, particularly if guests are unfamiliar with individual prices.
  • Shortchanging. Common variations include: counting aloud while handing the customer less money, distracting the customer by sliding the change along the bar, and giving change for lower -denomination bills (while keeping the difference).
  • "Soft" inventory. Bartender neglects to charge for the mixer component of a drink.
  • Substitution - bringing in own liquor. This is often done with vodka because it is odorless and looks like water. Dilution is another similar ploy.
  • Padding the tab. The bartender pencils in an inflated total and later erases it, replacing it with the correct total. Warning! Ban pencils from behind the bar.

 

Less Common (But Equally Damaging) Employee Theft

The more experienced the dishonest employee, the better equipped he or she is to manipulate the system. Thieving members of staff are quick to detect exactly how much an owner really understands about the business. In the beverage industry, take nothing for granted. Alert yourself to the following, somewhat extreme, possibilities.

  • Reusing closed tabs. The bartender appears to ring up the drink price but, in actual fact, only halfway enters the tab into the register. He or she then hits "0" to give the impression of ringing it in.
  • Over-ringing. When the customer isn't looking, the thief over-rings an amount on the tab and then re-rings the tab for less than the amount charged.
  • "Paid outs." The bartender claims that the money was refunded for various reasons, such as faulty cigarette machines.
  • Jigger substitution. The bartender brings in his own shot glass that looks identical to the official jigger but is actually smaller. Several short measures over a shift add up
  • Changing shifts. It is easy for the thief to make, serve and collect several drinks during a busy "hand-over" period.
  • Deliberate mistakes. Drinks are then returned and resold or given to a friend.
  • Breaking empty bottles and pretending they were full. Full bottles are then requisitioned to replace the "broken" empty bottles.
  • Substituting water in the drip tray. The bartender pretends he or she had to waste a pint to clear the lines and then pockets the difference.

     

    This article is an excerpt from the Food Service Professional Guide to Controlling Liquor Wine & Beverage Costs, authored by Elizabeth Godsmark, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

    Atlantic Publishing Company
    Amazon.com

Topics: bar inventory levels, bar business, Bar Management, Reducing Costs, bar control, Control

Inventory Control: Safeguarding Against Theft

Posted by Nick Kaoukis on Mon, Jun, 13, 2011 @ 09:06 AM
By Chris Parry
Atlantic Publishing


Part 3: Theft-Reduction Procedures

Theft ReductionMore often than not, scams and thievery can be detected and/or prevented relatively easily. Strict enforcement of all employee rules is a must and vigorous prosecution of any offenders is essential. Employees must be made clearly aware of the dire con­sequences of flouting the house rules - every detail must be addressed.

  • Have a manager total the cash at the end of a bar shift. While the bartenders may feel distrusted, you can always point out that the rule is in place to protect honest staff.
  • House rules. All new members of staff should be required to sign a confirmation that they have read the house rules, fully understand the impli­cations involved and agree to follow the rules to the letter.
  • No drinking on duty. Prohibit all bartenders from drinking while on duty. Also, strictly regulate off-duty drinking. Off-duty drinking can see fellow bar staff overpouring, giving away free drinks or undercharging their colleagues, and while staff should be encouraged to socialize with patrons after hours, this should be closely watched.
  • Bartenders should not be involved in the
    stock-taking and inventory-counting process. Nor should they be involved in receiving, ordering or issuing inventory. It might be a painful process, but this really should be a management-only function.
  • High-value inventory. Strictly enforce all security procedures for liquor, wine, beer, spirits and any other high-value inventory. Only key personnel should have access to storage areas, and everything that comes out should be duly noted.
  • Require bartenders to record post-shift bar-
    par readings. This refers to the number of bottles left in fridges and behind the bar after a shift has ended. Engage in spot-checking of this count to ensure that no thieving is taking place.
  • Prohibit the practice of recording more than one transaction per drink ticket. If your bartenders are allowed to use a "running" ticket, they can easily neglect to record all the drinks they have actually sold and pocket the difference.
  • Strictly enforce voiding procedures. If an amount is rung up on the register, the bartender should not be allowed to void it without management approval.

This article is an excerpt from the Food Service Professional Guide to Bar & Beverage Operation, authored by Chris Parry, published by Atlantic Publishing Company. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company 
Amazon.com

Topics: liquor inventory, Bar inventory, bar inventory levels, Bar staff, liquor theft, Bar Management, bar control, inventory counting, inventory control

Better Inventory Management Equals a Better Bottom Line

Posted by Nick Kaoukis on Mon, Feb, 28, 2011 @ 09:02 AM
By Elizabeth Godsmark
Atlantic Publishing

Part 3 of 6: Good Liquor Inventory Management Improves Cash Flow and Maximizes ProfitsCash Flow

Inventory Levels Affect Cash Flow

The aim is to maintain that fine balance between J. running out and holding too much stock. Get it wrong, and you'll find that your working capital isn't working for you! Remember, the larger your inventory, the more difficult it is to control.

  • Keep inventory at a minimum level. But not so low that you risk running out. Recommended inventory for high-turnover brands is approximate­ly one to two weeks' worth of stock.
  • Jump in with special promotions. If you think you've miscalculated and overstocked, shift the inventory sooner rather than later, while it still has high value.
  • Get to know the drinking patterns of your regular patrons. This information helps you calculate the bar pars or minimum inventory levels for each bar and the main stockroom.
  • The perpetual inventory is a valuable tool. Keeping tabs on the flow of liquor, wines and beverages through your operation is probably the best way of knowing where to pitch inventory levels. Monitor stock daily.
  • Weekly deliveries. In the drinks industry, this is the norm. Work your inventory levels around these weekly deliveries and avoid the cardinal sin of running out.

Manage Your Stock Wisely and Maximize Profits

Your challenge, in a nutshell, is to order liquor, wine and other beverages in the right size and quantity and at the right time and price.

  • Inventory deliveries - timing. Schedule well liquor, beer and house wine deliveries for the same day each week, ideally a couple days after you place the order.
  • Well liquor quantities. Order items with a short turnover rate, such as well liquor, in bulk. Well liquor moves fast, offering you a great opportunity to boost cash flow. Take advantage of case discounts. Also, consider larger 1.75-liter bottles instead of the usual 1-liter bottles if you think your turnover warrants it. There are big savings to be made in this area. Use larger bottles for special promotions.
  • Beer is different. In order to sell beer at its freshest, arrange for deliveries on a weekly basis, or dally, if your establishment has the capacity to cope with the extra workload. Little and often is better when it comes to maximizing on beer profits.
  • Wine. Order house wine weekly, other wine bottles by the case once a month. Only buy special vintage wines once or twice a year. Take a specialist's advice before stocking up on expensive wines. They can cost you dearly.
  • Liquor and liqueurs. The following is a useful guideline: If it takes less than five weeks to turn a product, order by the case. If it takes longer than five weeks to sell a particular brand of spirits, order by the liter.


Topics: Bar inventory, bar inventory levels, Bar Management

Establishing Effective Purchasing & Receiving Strategies

Posted by Nick Kaoukis on Mon, Jan, 24, 2011 @ 15:01 PM
By Elizabeth Godsmark
Atlantic Publishing

Part 2 of 7: Buy Quality

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The quality of the merchandise purchased sets the tone and standards for the whole establishment. Don't leave quality to chance. Mistakes can be expensive. Word spreads fast and you want a good reputation!

  • Be up-front about quality. Make a conscious decision to purchase "quality" merchandise at the stage when the goals of the business are being established.
  • The products you are buying must be suitable for their intended use. Studies have proven that the more suitable a product, the higher its quality. Make sure that the quality of any product measures up to the needs of your establishment.
  • Quality must apply throughout the establish­ment. When it comes to quality, don't concentrate on alcohol beverages alone. Of course the types of wines, spirits, beers and liqueurs you sell are all crucially important; but don't forget the non­alcoholic beverages, such as quality coffee and soft drinks. Consumers in this sector of the market are a discerning and vociferous bunch! Something as simple as a poor cup of coffee can drive a customer away, never to return.
  • Don't compromise on quality. Don't be distracted by poor-quality "offers" or bulk buys that you think, on the spur of the moment, might just "do." They won't. You'll end up regretting the purchase.
  • Evaluate each product's quality in relation to cost. The most expensive product is not necessarily the best product for your enterprise. When making purchasing decisions, there is no need to sacrifice quality.
  • Look at quality from a clientele perspective. What level of quality do your guests expect? Meet their requirements.
  • Review your vendors for quality. Do you suffer from wastage due to poor quality products? Assess the quality level of potential vendors by first asking for samples. Document quality specifications to vendors. It is important to avoid misunderstand­ings.

 

Topics: liquor inventory, inventory managers, Bar inventory, bar inventory levels, liquor purchasing, bar business, Bar Management, Bar products, inventory control, managing liquor costs