Expert Advice on Hospitality Topics

Better Inventory Management Equals a Better Bottom Line

Posted by Nick Kaoukis on Mon, Feb, 21, 2011 @ 09:02 AM
By Elizabeth Godsmark
Atlantic Publishing

Part 1 of 6: Establishing Good General Inventory Procedures Can Reduce Costs

General Inventory ProceduresLiquor inventory costs

Minor overall changes can result in major cost reductions. Take a fresh look at your existing inventory system. In every establishment, there is general room for improvement. For minimum effort, you can get maximum value out of your stock.

  • Timing. Move all drinks to a designated storage area as soon as they arrive. Don't let stock hang around. Drinks (and wine especially) need to be stored in an ambient environment, or their quality can deteriorate rapidly - and so can your profits! Also, unattended drinks, languishing in receiving areas, present a great temptation. Liquor is high on any thief s hit list.

  • Faulty goods. When receiving merchandise, look out for cracked and chipped bottles, mislabeled boxes, outdated or cloudy beer, correct type and vintage of wine, raised corks, leaking and weeping bottles, damaged labels and wrong-size bottles. Contact the supplier immediately about any dis­ crepancies.

  • Storage area. Your storage area must be fit for its purpose. Poor storage conditions can result in poor quality, breakage and escalating costs.

  • Security. Basic, but obvious. A good security system removes temptation and reduces the risk of external break-ins.

  • Rotate stock. First in, first out. This is important and avoids wastage, overstocking and running out. Pay special attention to beers: their shelf-life is limited. Most beverages, also, have no longer than a month before the sell-by date.

  • Control. Large or small, every drinks outlet needs some form of control procedure. Track your products from the moment they arrive at your premises to when they are sold. While this doesn't have to be complicated, the key to any good control system is to make sure that all the liquors, wines and beverages are located in the right place at the right time and are being rotated properly.

Make the Most of Your Storage Areas

Where and how you store your liquor, wines and beverages can make a big difference in turnover and profits. Once you have taken delivery, treat your inventory with respect - it has the potential to make or break your business.
  • Location. Define storage areas. Are you using the most convenient areas for storage? Rethink. Centrally located storerooms and walk-in coolers make ideal storage areas. Easy access saves time and money.
  • Other storage areas. "Storage" means more than an area for dumping received goods! Storage locations include shelves, workstations, reach-in refrigerators and behind the bar. Keep all these areas accessible and clutter-free. It speeds up your operation and reduces breakage.
  • High-value wines. Consider separate cellaring for prestige wines, somewhere away from the busy "shop floor" environment. As turnover of such wines is slower, accessibility is not top priority. More important is security and perfect storage conditions (even vibrations can affect the quality of good wines!).
  • Extra security. All drinks should be stored in a secure area. Organize the layout of storage areas to offer maximum security for liquor and high-value wines. Only personnel who need keys should have them.
  • Quantity. Drinks can be stored in bulk in the main storage area. Drinks in general storage areas, such as behind the bar, are better stored in the units or quantities in which they are sold.
  • Environment. Know your product and store it accordingly. Maintain proper temperatures, humidity and ventilation. Wine is particularly sensitive to environmental influences. It can easily absorb odors from nearby food storage areas. Poor storage practices can quickly reduce the quality of stored inventory - and nothing affects profits like quality!

Topics: Bar inventory, Liquor cost, inventory counting