Liquor Inventory Experts

Taking Control of your bar inventory management

If you have recently made the purchase of a bar inventory management system, you must now understand how the features and benefits your system offers are best suited to your business.

The first thing you must decide on is the frequency at which you will be taking liquor inventory, beer inventory and wine inventory. One thing that cannot be dismissed is the fact the smaller the intervals between inventory periods, the more effective your bar inventory management system can be.

If you own a restaurant, bistro or country club and your liquor, beer and wine sales represent less than 50% of your sales, inventory periods can weekly, bi weekly and potentially monthly.

But if your liquor, beer and wine sales representative a majority of your sales, taking weekly if not daily inventory of your most prized assets should be an automatic. Consider the following; you would be ready to pay a cook and a dishwasher for a full eight hour shift to cook a single hamburger and French fries on a slow business day.

Doesn’t it make sense to pay an employee eight hours to count how much liquor was used from your bar so you can compare this figure to sales and determine if there are any losses? Once you have the information in front of you that is when the real bar inventory management begins.

You can analyze what sells more, are we pouring top shelf and ringing up call brands? Do I have a vodka crowd? Do we have a whisky crowd? Information is gold and proper bar inventory management will give you the edge you need.

Single Malt Whisky is a whisky made from only one type of malted grain and distilled at one particular distillery. Single malts are traditionally made from barley cultivated near the distillery concerned, although there are some single malt rye whiskies. Most single malt whiskies are distilled using a pot still. Single malts are typically associated with Scotland, though they are produced elsewhere, notably in Ireland and Japan. All single malt goes through a similar batch production process, as outlined below. At bottling time various batches are mixed together or vatted to achieve consistent flavors from one bottling run to the next. Some variation does occur.

Water is first added to the barley to promote germination and then mixed with ground barley grist to create a mash. Water is also used later in the production process to dilute most whisky before maturation, and added once again before bottling.

Most distilleries use different water sources in the various steps, and this becomes a crucial part of the character of the end product.

Barley, yeast and water are the only ingredients required in the production of single malt whisky.

The barley used to make the whisky is "malted" by soaking the grain in water for 2-3 days and then allowing it to germinate to convert starch (which is insoluble in water and not available for fermentation by yeast) to fermentable sugars.

The malt is milled into coarse flour (grist), and added to hot water to extract the sugars.

Yeast is used to ferment malted barley in washbacks. Yeast is added to the wort in a large vessel (often tens of thousands of liters) called a wash back. Wash backs are commonly made of Oregon pine or stainless steel. The yeast feeds on the sugars and as a by-product produces both carbon dioxide and alcohol. This process is called fermentation and can take up to three days to complete. When complete, the liquid has an alcohol content of 5 to 7% by volume, and is now known as wash. Up until this point the process has been quite similar to the production of beer.

Source: Wikipedia (http://en.wikipedia.org/wiki/Single_malt_whisky)

If we perform inventory in our establishment, the question of proper inventory scheduling is one that has certainly arisen. Inventory scheduling in the most part should be consistent with specific events that occur in your business. For instance, if your accountants prepare monthly profit and loss statements, inventory scheduling should reflect a need for monthly data collection and analysis.

If you feel that to place the proper and adequate supplies order to bring liquor, beer and wine inventories up to par require, inventory scheduling should be reflected before the order process commences. Your business will dictate how often inventory should be taken.

If you are a high volume nightclub and a majority of your sales are liquor, beer and wine inventory related versus a restaurant that mainly serves food, proper and more frequent inventory scheduling may be in order. What is also important to achieve proper inventory scheduling is to be able to foresee any specials events or holidays that may delay or increase the need for inventory taking. Another key is to stay the course; if your business does a full liquor, beer and wine inventory on a weekly basis, you should not skip a period.

Inventory scheduling involves planning of personnel thus it is important we can see and understand how many people we need and how many hours that are budgeted to make sure a proper inventory is done quickly, accurately and with consistency.

 Hotel inventory software

The hospitality industry is a vast one with many segments; country clubs, nightclubs, restaurants, bar...and of course hotels. We normally associate hotels with rooms and room service. But the hotel industry offers much more. Banquets play a major force in a hotel success, be it conventions, wedding, private parties...and in these functions, there is a common thread: the sale of liquor, beer, wine and food.

With the exception of pre paid parties, there still is what we call "cash" bars. Basically what happens here is a customer asks for consumption and pays the bartender, normally cash.

• Question is how many beers were sold?
• How many ounces of liquor were poured?
• Did we sell wine by the glass or by the bottle?

Luckily, technology of today has introduced hotel inventory software that will allow not only for proper receiving, fulfillment of requisitions, but also the ability to count what the bars begin and end with.

The hotel inventory software of today is designed to manage an unlimited number of fix, portable and banquet bars and not only update your perpetual liquor, beer and wine inventory, but also give you the important data you will need to properly invoice your customer, analyze the profitability of a function and increase the accountability of the bar staff by eliminating the opportunity for shrinkage and waste.

A complete hotel inventory software package should be designed to help hoteliers be in line with the liquor, beer and wine pour cost targets set forth at budget and address any areas that prevent us from reaching these cost control goals.

Beer systems need to be broken down in two sections, bottled beer and draft.

There are some beer systems that will take away the pen and pencil and help you count how much bottled beer is received and update your beer inventory value.

Help you manage how much bottled beer is moved from storage to the bars and finally help you count how much beer the bar started and ended with. Bottled beer systems that offer all of these features will speed up what can be a long and tedious process and in turn increase both accountability and profitability.

Draft beer systems on the other hand can be more mechanical and designed to measure the exact quantity of draft beer being poured at the taps. Draft beer systems come in several varieties: weighing kegs, flow meters, stoppers in the tap head.

What is very important to understand here is that some beer systems will only count the flow of beer through the lines while other will actually portion control the quantity of beer poured in the mug or glass.  Beer systems also vary in costs and maintenance.

There are some draft beer control systems that are relatively maintenance free and quite affordable and offer many of the features needed to better manage our "golden" liquid assets.

Whichever of the beer systems that are available on the market, it is important you begin by pin pointing the needs and the compatibility of the systems your are considering to both the business environment and the existing technology that may already be in place.

Wine inventory software

If you a re considering a wine inventory software, it is important your start from the basics and move up. Simple questions you should ask yourself:

• How extensive is my wine list?
• Will I serve wine only by the glass or also by the bottle?
• Does my wine inventory software need to manage multiple wine storage cellars?
• Can the wine inventory software I plan to purchase offer a feature that allows and suggest the best marriages between wine and the meal that is being served?
• Can my wine inventory software not only manage wines by region, color and grape varietal, but also by vintage?
• Can my wine inventory software flag me when a specific variety in inventory has reached its peak and ready to be served?
• Does my wine inventory software consider the purchase price of the wine and with age its update value?

Wine inventory software is a tool that can help you increase sales and decrease shrinkage. Simply know what needs to be ordered and how much needs to be ordered can avoid the sometimes embarrassing scenarios when we are out a variety, but it also helps us control the quantity we are buying. We must consider the following when buying wine, ordering to much wine of a certain variety or vintage can lead to overstocking and that creates a situation where our money is tied up in inventory and not working for us.

That being said, there are some wines that can appreciate in both flavor and value over time, that is where a strong inventory software can help you better manage what can be the most important and profitable facet of your business.

 

Inventory count

An inventory count can be best described as a  physical inventory of what is currently in stock in the storage areas, comparing that count to what the liquor, beer and wine inventory count software thinks is in stock, and making any necessary adjustments to get the liquor, beer and wine inventory count software to match the storage area counts.

Taking an inventory count on a regular basis will not only help us have a tighter control over our liquor, beer and wine inventory but also flag us of any discrepancies. Some inventory count software will also make you aware of any product that may have gone missing like a bottle of wine or liquor. Inventory counts will also help you better asses if you are potentially carry to much inventory that can expose you to shrinkage and tie up valuable cash flow.

Inventory counts can also be indicators of low stock levels that could lead to customer dissatisfaction and lost sales. It is important that inventory counts are performed on a regular basis. Precise inventory counts can you give you the valuable information you may need to make some decisions in your business that you may otherwise not have taken.

A perfect example can be volume rebate purchases; if you are inventory count show you are carrying too much of a certain product already, it may be prudent not pursuing a special deal, on the other end of the spectrum, an update inventory count may actually encourage a large volume purchase due to the product popularity and the need to replenish low stock level.

An alcohol inventory system can cover many facets of your business and secure the profitability of each. Are you a high volume liquor bar?

Than your liquor inventory should be a priority and your focus should be on accuracy, speed and strong data that will create accountability. Maybe you sell more beer, both bottled and draft. If so, there are alcohol inventory systems that not only make counting bottled beer simple, but also help you track draft beer consumption.

If you can start counting how much draft beer is lost to spillage, foaming, waste...you will be in a better position to take the corrective actions needed to raise the profit margin bars. Wine is another component your alcohol inventory system must be able to manage. In today's hospitality industry, wine can be served by the bottle, but also by the glass and in certain concepts, wine tasting are offered as a means to increase interest and sales.

The system you choose to implement must be able to give you the information you need to take decision that have an effect on purchasing, human resources and ultimately sales. A good alcohol inventory system puts everything into perspective and gives you the tools to better manage your business today but also long into the future.

Profile of the week: The Beverage Director/Beverage Manager

Does your hotel, high volume restaurant, nightclub or country club have a beverage director or beverage manager? If the answer is yes, do they know what their job description is?

The beverage director/manager is put in place to oversee the entire beverage operation. As a member of the management team, they are in charge of hiring all beverage related personnel, negotiating and purchasing all of the beverages and beverage equipment needed by the business, creating and maintaining the standards in regards to the beverage operation.

Another key area is establishing proper inventory levels and the controls required to keep the company's profit objectives in line. In most cases, the modern beverage director/manager will work with the technology the industry has now come to embrace. Liquor, beer and wine inventory software programs help the collection and analysis of information to make the sound decisions the company needs to stay in line with their profit goals.

A beverage director will normally report to the director of operations or chief financial officer of the establishment.  The prior experience a beverage manager has is typically experience in the industry. At some point in their careers, they have worked as bartenders, servers or even been responsible for the actual inventory taking of a hospitality establishment. A management background or experience is a great asset as they will have to position themselves between the beverage staff (waitresses, liquor runners' bartenders...) and upper management. They must be able to take or report certain delicate situations which may arise with the beverage personnel with the ultimate goal of keeping the liquor, beer and wine pour cost percentages in line with the budgets created by the management team.

The relationship between cost and price

 A question we often ask ourselves and our liquor, beer and wine inventory consultants is; what should my pour cost percentage be? The answer can be quite simply calculated if we understand and adopt the proper formula.

To start, we need to establish the net cost of our product and divide this by the selling price of the item in our business. The cost percentage portion pays for the ingredients needed to make the drink and the profit percentage is the gross margin we make when a drink is sold. The cost percentage should be in line with the beverage cost percentage that has been established in our budget. Generally, liquor costs run at 20%-25%, while wine and beer can run anywhere from 32% to 50%. Please keep in mind this may not be the right cost percentages for your business. If your establishment is in a high tourism area and you can sell your drinks at a higher price, your pour cost percentage should be lower. Another factor that will have an impact is your cost of goods sold. If you purchase in higher volumes than your typical bar, hotel or restaurant, you may benefit from reduced pricing which will in turn reduce your pour cost percentage.

Here is an examples on how to make sure our selling price and cost percentages are in line with our budgeted expectations.

Selling Price:  Cost divided by Cost % = sales price

                          1.5 oz vodka cost $0.95/15% = $6.35              

When it comes to price mixed drinks, the easiest and most widely used method is using the cost of the prime ingredient. This of course is not as accurate as costing out the whole recipe, but to arrive to a sound price structure, we must look at each drink by itself to establish a cost/price relationship in line with the overall price structure of our business.