Expert Advice on Hospitality Topics

At the end of each month, it is important to close out all expenses and sales and balance all accounts. This process ensures that finances are being monitored and helps prevent financial problems down the line. It also lets you, the bar manager, see whether the bar is making a profit or not and what changes (if any) need to be made to operations.

Closeout actually depends on what goes on financially in your bar all month. It is essential that all expenses are recorded each day. Not having a reliable list of expenses incurred is sure to result in inaccurate bookkeeping and many problems at audit time. You need to record all expenses—including those that are prepaid or those for which you get a bill.

Monthly Audit Procedures

On the last day of the month:

1. Gather the completed inventory forms for food, liquor, wine, and operational supplies.

2. Using current invoices and past inventories, cost out the Inventory Form. The unit cost (or price) entered on the Inventory Form must correspond to the item and unit in the actual inventory. Correct prices are ensured by continual evaluation of invoices and/or contact with the suppliers.

3. Ensure that the employees organize and clean the storage areas and walk-ins so that the ending inventory may easily be taken the following morning. Combine all containers and bottles. Organize and label all shelves.

4. Schedule the bookkeeper and the employees involved in taking the physical inventory—the assistant manager, kitchen director, bar manager, and general manager—to arrive early in the morning prior to the start of business on the first of the month.

5. Schedule the preparation cooks to arrive an hour after the inventory crew so that you may inventory the food areas without disturbing them.

On the following morning, the first of the month:

6. The bookkeeper should arrive as early as possible in order to complete all of his or her work prior to management's completion of the inventory:

A. Reconcile and record all the transactions from the previous day, as
usual.

B. Enter the information on the Daily Sales Report Form. Total,
double-check, and verify all the columns.

C. From the employee time cards complete, total, double-check, and verify the Labor Analysis Form.

D. Ensure that all purchases are recorded in the Purchase Ledger. Complete, total, double-check, and verify the Purchase Ledger for each company. Total the purchases in each expenditure category: food, liquor, wine, and each individual operational category.

Ensure that all paid-outs entered on the Cashier's and Bartender's Reports have been posted into the appropriate Purchase Ledger categories. Total the cash paid-outs. Add this figure into the purchase total for each expense category.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

By Bob Johnson

Part 1 of 2: Do Bartenders Steal?

Do 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.

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

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

Industry 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.

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

The nightclub business can be a rough. With a plentitude of competing venues, and with customer tastes in constant flux, the average half-life of a bar or nightclub is all too brief. Survival can depend on your ability to stay ahead of the curve and be in tune with your customers’ ever-changing demands. In short, you need to be constantly aware of what’s in  and what’s not in order to remain vital. Here is a brief compendium, in three parts, of some of the emerging and continuing trends in the industry, just a few things to look out for in 2012 and beyond:

Part 1 of 3: DRINKS

Cocktails and Spirits

Herb-infused spirits. Whether they be whiskies, vodkas or gins are gaining herb-infused drinks are gaining in popularity. Expect gin, especially, to continue to make a splash as both large producers such as Bombay and a slew of new micro distilleries continue infuse this old stalwart with fresh and interesting botanicals.

Flavored tonics. Tonic  water is a simplest mixer  there  is, and an obvious staple to anyone serving drinks. A variety of new tonics are hitting the market, however, which can transform the most basic of mixers into something more sublime. Look for new tonics to elevate simple drinks like gin and tonic into something for more interesting and complex.

Cask-aged cocktails. Drink mixes aged in wooden barrels for added nuance continue to gain popularity in major urban centers from New York to San Francisco.

Cocktails on tap. Cask-aged or not, expect mixed drinks to come out of a tap. For speed and consistency, many bars are starting to produce a selection of well-crafted cocktails in large

Solid summer cocktails. Remember the Jello shot? Expect to see it re-emerge, as mixologists exercise their creativity to concoct artistically-layered versions of an old party favorite. With the use of lecithins and other ingredients—which can alter the consistency and texture of fluids--becoming more widespread, expect solid-form cocktails to gain traction. You can also expect to see more and more cocktails turned into sorbets and popsicles when summer rolls around.

Super-premium beverages. Spirit enthusiasts and wine aficionados seem prepared to pay top dollar for a small taste of luxury potables. While they may not be willing to spend $300-$1,000 for a bottle of top-top-shelf cognac or premier-cru, more and more enthusiasts are showing a willingness to pay a premium for an ounce or two.

Smoked spirits. Flash smoking is making a move from the chef’s kitchen to the bar top. Still a relatively new phenomenon, bar-top smokers—used to infuse spirits with, you guessed it, a mild smokiness—are beginning to be found in a number of popular bars in most major cities.

Combination drinks. More and more bar owners are discovering the benefits of marrying two drinks and selling them together in order to boost sales. Whether it’s the classic shot with a beer chaser, or a more inspired combination of two cocktails with complementing flavors, double-hitters promise to become a hit among bar patrons.

Return to the classics.Cocktail menus have become chockfull of creative concoctions and signature drinks. More and more drinkers, however, are starting to embrace some of the

classics. It may be a good time to make room on the menu for the old standards—Daiquiris, the Manhattan, the Sidecar….

Skinny drinks. Expect cocktail menus to offer more and more low-cal beverages—whether lighter versions of standard fare or entirely new concoctions. Popular among the ladies and health-conscious patrons wanting to limit the number of “empty calories” they consume, skinny cocktails are a good way for drinking establishments to cater to this growing segment of their clientele.

Ingredient Trends:

Bitters—celery, whisky, lemon

Zwack, an herbal liqueur from Hungary made with a secret blend of 40 herbs and spices

Rye Whiskey

Honey Liquor

Beer

Vintage beers. A variety of aged, vintage beers are becoming available. The Modern in New York for instance offers a 1999 J.W. Lees Harvest Ale to drinkers wanting a taste of the past. Meanwhile many microbreweries are offering a variety of interesting, higher-alcohol beers meant mellow with age.

Lower-alcohol beers. While higher-alcohol beers continue to be popular, expect a rise in demand for flavorful, lower alcohol beers. Rather than nurse a pint of high-gravity, high-alcohol beer, many patrons will opt instead for high-flavor, lower-alcohol beers that they can drink in greater in quantities. Patrons’ taste for quality, low-alcohol beers is good news for bar owners, as they present an opportunity for increased sales.

Seasonal and flavored beers. While nothing new, seasonal and/or flavored beers are starting to gain traction.

Wine

Local Wines.The movement towards locally-grown wines—from a variety of regions, including New York, Michigan, Texas, Virginia, Ohio, Ontario—c ontinues and is expected to accelerate in 2012.

Lower Alcohol Content. The popularity of big, fruit-bomb wines with high alcohol content is waning, while more classic –style wines—e eegant and more structurally balanced, with alcohol levels below 13% or 14%--are beginning to gain favor.

Burgundy Wines. With Bordeaux wines commanding huge prices, consumers are more and more turning their attention to the more affordable Burgundy region.  As reason wine auctions have shown have shown Burgundy wines are rising stars.

Organic Wines. The movement towards organic products has extended to the wine  world, where more and more wine makers are beginning to explore natural wine-making techniques. Expect consumers to start embracing these “sustainable” wines in coming years.

Value. After several years of economic recession, consumers have acquired a taste for value wines. They are seeking bang for the buck—not cheap inferior wines, but good, well-balanced, flavorful wines at an affordable price. With many of these wines coming from Spain and South America, expect Spanish, Chilean and Argentinian wines to continue to grow in popularity.

Alternatives to Champagne. In keeping with consumers’ growing thirst for value, high-quality sparkling wines from regions other than Champagne are gaining popularity.  Sparkling wines from Germany, Austria, Portugal, the U.S. and Italy are expected to gain ground. Consumers are discovering that a nice, quality Prosecco can be just as enjoyable as a Champagne, often at a fraction of the price.

Non-alcoholic Drinks

Coconut water.  Already popular in cities like New York and L.A., coconut water will continue to gain popularity. With strong celebrity backing, and with major investments from the likes of Coca Cola, we should begin to see coconut water available everywhere, including the nation’s bars and nightclubs.

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:

• 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

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

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