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In the last few years, bars and restaurants have seen a huge increase in demand for their inventory management services. From bar-top software to specialized apps like My Bar Inventory, some establishments are finding new ways to keep up with this growing market.
“to-do bar in outlook” is a task that many people find difficult to do. This blog will teach you how to do bar and liquor inventory in four steps. It also includes a free template for your convenience.
The complete quantity of beer, wine, spirits, and mixers in your restaurant or bar is known as bar inventory. The procedure of physically counting that supply is sometimes referred to as “bar inventory.” Inventorying may seem like a month of Mondays to restaurant staff, but it doesn’t have to be that way with proper preparation.
How to Use a Point-of-Sale System to Do Bar Inventory
Restaurant owners may utilize a cloud-based point-of-sale (POS) system to keep track of liquor and bar inventories. To keep track of liquor inventory, most large restaurant chains use POS systems or third-party integrations. This approach may be too complex for restaurant proprietors who simply have one location. If that’s the case, have a look at the spreadsheet technique below. However, if you want to grow, it’s a good idea to familiarize yourself with this feature since it’s the most effective approach to manage expenditures across numerous locations.
1. Enter items from the bar inventory into the POS.
You must first inform your POS what to track before you can receive a good inventory picture. Connecting your POS to your vendor accounts allows you to place and receive orders straight from your POS. Revel Systems POS, for example, has an inventory management feature that enables restaurant owners to make orders with suppliers directly via the POS, monitor inventory from the time it is ordered, and deplete virtual stock in real-time as goods are rung into the POS.
You may input things separately if you don’t utilize your POS for ordering. Some POS systems let you scan bar codes from goods to enter them into their tracking system, while others let you import vendor and ingredient data through spreadsheet. They all offer the option of manually entering each item. If you’re a new restaurant starting from scratch with your inventory management system, your POS partner will normally assist you with the first data entry.
You must enter new merchandise into your POS as soon as you get it to maintain your virtual inventory correct.
This procedure might take a long time. It’s important to remember, however, that any time you spend inputting goods into your POS is time you’ll save later when it’s time to manually count your inventory. Another advantage of this method is that you will unavoidably get well acquainted with your product offering.
It is critical that you either place your orders via the POS or spend time every week to update the information from current invoices into your POS system in order to keep an accurate real-time inventory in your POS. Consistency is crucial when utilizing a POS for inventory. Your virtual inventory will never be accurate if you do not maintain the information up to date.
2. Make a link between the items and the drink recipes
Ready-to-drink beverage bottles and cans are easy to monitor; a case of 12 bottles equals 12 items in inventory. However, the POS must be instructed on how to handle 750-milliliter bottles of wine and spirits offered by the drink. It’s as easy as adjusting the unit size and pricing per unit in the item description for wines served by the glass.
Create beverage recipes in the POS for spirits that are components of cocktails so that when a bartender rings in a martini, the system knows to remove 2 ounces of vodka from your virtual inventory. This, like inputting all of your items into the POS, takes time. These hours, on the other hand, will allow you to report quickly and accurately.
You can monitor inventory utilization in real time by linking your inventory to recipes in your POS.
Analyzing reports to determine the health of the company is an important job of restaurant management. Keep in mind that the results your POS generates are only as accurate as the data you provide. You must edit the recipe if you increase the amount of rye in your trademark Manhattan from 1.5 ounces to 2 ounces. If clients often alter a drink with a different spirit, it’s a good idea to create a separate recipe for it so your bartenders can correctly ring it in when your bar is busy.
3. Physical Bar Inventory Count
Navigate to the inventory section in your POS dashboard. There is a “physical inventory” or “physical inventory count” option. From there, the selections are mostly self-explanatory. For example, with Revel, you may immediately enter physical counts into the iPad that holds the POS. Although the inventory app, which allows you to count actual products on a smartphone for an extra cost, is available.
Even if you use a POS inventory management system, you must personally count your bottles. Pixabay image courtesy of Chris F.
There are certain important practices to remember while completing a physical count:
- Count when the pub closes: You don’t have to count until the early hours of the morning. The inventory count in many bars is shared between teams. The rear storage and walk-in coolers may be counted by the closing manager and bartender. The next morning, the opening manager and bartender can count the stock in the bar and reach-in refrigerators.
- Distribute the workload: Perform the count on many workstations. Many POS systems feature a smartphone app for counting that allows you to give various people access to count different parts of your inventory.
- Count inventory before upcoming deliveries arrive: To compare invoices for the same time period, you’ll require a static inventory count. As a result, a tight cut-off point is critical. Your sales and expenditures must both be completed within the same time limit. It’s important to avoid scheduling deliveries on days when you’re counting inventory if you use your POS to accept deliveries.
- Count in pairs: Counting with two sets of eyes improves accuracy. Counting in pairs, on the other hand, avoids possible theft or the appearance of it.
- Use the same team to count inventory: Have the same team execute the physical count at each inventory interval. They will become more efficient and speedier.
4. Check the POS Report for Errors
This is where all of your hard work at the office will pay off. You should be able to generate a report that shows your projected inventory with your actual inventory after your physical count is completed. Look for any unusual statistics and take a minute to recall any elements that seem to be alarming. The majority of the time, substantial variances are attributable to human error. Overages may occur as a consequence of an invoice not being received at the POS. Deliveries that were inappropriately refilled might cause shortages.
On a basic report, a POS that records inventory may show you actual vs. predicted inventory counts.
Using a Spreadsheet to Do Liquor Inventory
Without linking your purchases and recipes into your POS, you can obtain an accurate inventory count. It only takes a little forethought. Many small pubs and restaurants rely on a complex set of spreadsheets to run their business. The most essential thing is that all of your managers be aware of and utilize the same system, regardless of the approach you choose. Inventory management that isn’t up to par costs your company money in the long run.
1. Keep a record of your bar purchases.
Your merchandise was evident when you initially opened your doors as a bar or restaurant. It was plainly noted on all of the invoices that came with your shipments. You must continue to monitor your invoices and keep your product prices updated to maintain your inventory current. Many restaurants keep track of this using an invoice monitoring spreadsheet that includes the vendor’s name and invoice number, as well as the expenditures assigned per revenue center (for example, liquor, wine, and beer).
Invoice Tracking Sheet Example
It shouldn’t get overwhelming if you set aside time at the conclusion of each shift to enter your bills into a tracking sheet. This is also a great moment to double-check that the invoice price of the things you bought corresponds to the amount you anticipated paying. This will guarantee that your inventory count accurately represents the exact worth of your product.
Google Sheets | PDF | Google Sheets | Google Sheets | Google Sheets | Google Sheets
2. Make a list of what you have on your inventory sheet.
Don’t toss those bills in the trash just yet. If you don’t have an inventory sheet yet, your invoices are a good place to start. This sheet is distinct from the invoice tracker. This is the document you’ll use to keep track of your physical stock. It should contain product details such as pricing and unit size, as well as a thorough product description. Make categories for your document, such as beer, wine, spirits, and nonalcoholic drinks.
Nonalcoholic drinks like tea and coffee are included in the food inventory of certain full-service restaurants. If you consider these things to be food, it’s crucial to avoid adding the cost of nonalcoholic mixers to your kitchen budget. If you use lemon juice to produce lemonade, that may be considered a food expense, but if you use a gallon to make lemon drop martinis, that should be considered bar inventory.
After you’ve sorted your inventory sheet by product category, take a minute to arrange each area in the same manner you’d organize your bar or storage room’s contents to make counting easier. Counting will go quicker if you organize all things alphabetically on the shelf, in all storage spaces, and on your inventory sheet. The template provided here is a great place to start.
After you’ve sorted your objects in an orderly method, double-check that you’ve included a column for each of your storage sites. It’s a good idea to have numerous storage facilities in your institution for spirits, the majority of which should be locked. Liquor is especially susceptible to theft due to its high cost and propensity for addiction.
3. Count the number of storage locations
You’re ready to begin your physical inventory count now that you’ve updated your inventory sheet. Counting inventory might take many hours depending on the quantity of your inventory, the size of your bar, and the number of storage sites you have. It is critical to set up sufficient time. When you haste, you are more likely to make mistakes. At best, errors during a physical inventory count will lead to an erroneous analysis of your business. In the worst-case scenario, you’ll have to start counting again.
A lead bartender is an excellent choice to assist with inventory counting.
To guarantee an accurate inventory count: Whether utilizing spreadsheets or a POS, the procedure of counting physical inventory is the same. Each is subject to the same recommended practices outlined in step 3 of the preceding section. When using spreadsheets, however, uploading your inventory sheet to a tablet or laptop and entering your counts straight into the spreadsheet, rather than printing out inventory sheets and filling in counts by hand, can speed up your procedure.
4. Add up the totals on your inventory sheet
It’s time to calculate your totals once you’ve put all of your stuff into your spreadsheet. Verify the cost of each bottle against the price listed on the invoice to ensure that your totals are correct. Tally the combined dollar amount of your complete beverage inventory to generate one figure for your overall inventory after you’re confident the line items are right.
You’ll need two additional data to complete the page in the form above: your total purchases and total sales, sorted by product type. Your total sales may be simply calculated using your POS or the sales totals from your end-of-shift management reports. The total purchases will be calculated using the invoice tracking sheet.
To keep everything in one place, add sales and purchase statistics from invoices and sales reports to your inventory count sheet.
Fill in the blanks on your inventory count page using these figures. You can start to evaluate how well your bar program is functioning after you’ve calculated your total inventory, total sales, and total purchases. The remainder of the arithmetic becomes much easier once you have these values.
Counting Your Liquor Inventory
Regardless of whether you use a spreadsheet or a point-of-sale system, you should be looking at two numbers: total inventory and total transactions. Two additional metrics are needed to gain a good picture of the health of your bar program: initial inventory and total sales. The entire inventory from your last physical count is your starting inventory. Whether or whether you utilize your POS to manage your inventory, you can simply retrieve total sales from it. With these figures in hand, you may start calculating your expenses.
Calculate the Costs of Beverages
Actual and theoretical beverage expenses are the two types of beverage costs that a bar or restaurant owner should be concerned with. Both of these figures are distinct from the beverage expense objective of 20% to 30% of sales that you and your team may already have in mind. The figures, on the other hand, are linked. The actual and theoretical expenses indicate how near you are to meeting your goal and may help you identify areas where your bar program can improve.
Cost of a Beverage in Theory
Based on your purchases, sales, and the per-drink cost of all of your beverage goods, the theoretical cost is what your beverage cost should be. This amount will display in a beverage cost report generated from the manager dashboard if you handle your invoicing and inventory via your POS or an integrated third-party app.
You may determine potential cost manually if you don’t utilize your POS to handle your inventory and invoicing. To begin, figure out how much each beverage on your menu costs per drink. To obtain a single figure, combine the costs of each element together. This computation should have been done when you priced your beverage menu.
Don’t forget to include in the cost of garnishes when calculating the price of each drink.
The cost per drink for a vodka martini may be as follows:
2.75 oz. vodka $2.75 oz. dry vermouth 2 olives for 20 cents 2 olives for 25 cents 5 cents bamboo skewer The cost per drink was $3.25.
For the time period you’re inventorying, you’ll need the per-drink cost as well as the quantity of drinks sold. It’s a good idea to keep track of these numbers on a spreadsheet as you go through this procedure. This seems to be quite a bit of arithmetic, and it is. Which bar and restaurant operators spread their workload out throughout the months leading up to their opening? If you’re playing catch-up, know that after you’ve completed this core work, your future costing procedures will be significantly faster.
To figure your Cost of a Beverage in Theory manually, you need to multiply the per drink cost of each drink sold by the number of units of that drink that sold in the timeframe you are inventorying. So, if you count inventory every week, you are looking for the number sold in the previous week only. Any POS, whether or not you use it for tracking your inventory, will have a product mix (p-mix) report showing itemized counts.
The fundamental equation looks like this after you have all of the numbers you need:
[[(Drink A drink cost × Drink A units sold) + (Drink B drink cost × Drink B units sold) + (and so on, until all drinks are included)] / Total beverage sales] × 100 = Cost of a Beverage in Theory
Cost of a Beverage
After figuring Cost of a Beverage in Theory, figuring the Cost of a Beverage is easy. For the Cost of a Beverage, you need four numbers. First, you need the value of the total inventory you started with at the beginning of this inventory period. If you are inventorying weekly, this number would be the total inventory number from the previous week. This is your starting inventory.
The total purchases you made during the current inventory period are the next step. That would be the amount of all the beer, liquor, wine, and beverage bills for products delivered this week in a weekly inventory format. These are the totals of your purchases. Then, during the same time period, you’ll need total beverage sales, which we’ll refer to as total sales. Finally, you’ll need the total inventory value for current inventory items, such as the total dollar worth of all the bottles you and your team just counted. This is the last of your inventory items.
The arithmetic is simple once you have these four numbers:
[[(Starting inventory $ + Total purchases $) – Ending inventory $] / Total sales] x 100 = Cost of a Beverage
Every bottle in your bar has two costs: a theoretical cost and a real-world cost.
Figure Variation in Beverage
Now it’s time for the big one: variance. Your variance is the gap between your real and theoretical expenses. The number that will tell you the most about how well you’re managing your bar program is variance. You may take a breather if you’re expecting more tiresome arithmetic.
Variance is straightforward:
Cost of a Beverage – Cost of a Beverage in Theory = Variance
The less variance there is, the more efficiently your bar operates. It’s OK if your variance never reaches zero. What matters is that you consider what the number could be telling you. Let’s assume you want to save 25% on beverages. You included that margin into the cost of your drink menu as well as the rest of your menu. As a result, the $3.25 vodka martini is now priced for $13.
Suppose after your inventory count, your Cost of a Beverage is coming out at 30%. Before starting to look for broken or stolen bottles of your top-shelf spirits, consider your variance. If your Cost of a Beverage in Theory is 29.4%, then your variance is only 0.6%. This might indicate that you over-ordered this week and are carrying a heavy inventory. Maybe a large party that you were preparing for canceled after your deliveries arrived, so you are left holding more wine than you expected.
Locate the Sources of Excessive Costs
We’ve previously examined how a large inventory load might cause your organization to exceed its goals. If your variation is less than 1%, missing your goals isn’t that bad. If your variance is considerable, say more than 5%, it might imply shrinking. Shrinkage occurs when things you purchased for go unsold from your inventory. Spillage, breakage, and theft are the three most common causes of shrinkage.
Spillage may include drinks that are returned to the bar because consumers didn’t like them, drinks that spilled on the way to a customer, or beverages that are given to clients for free. Breakage refers to bottles that have broken after you have paid for them. It may be caused by inattention, a lack of training, or fear. If a bartender spills a couple of bottles of top-shelf booze and is afraid of being fired, he or she is unlikely to notify you.
Theft isn’t always as obvious as it appears. It isn’t always malevolent, either. When employees overpour drinks or spend a slow afternoon experimenting with your spirits to create several variations of a new cocktail, they may not realize how their actions affect the bottom line.
“Perhaps you can’t account for ten cases of rum over the course of a summer weekend.” That week, mojitos were in high demand, so you went through a lot of stock, but where are those ten cases? Rick, your ace bartender, would never steal since, after all, he is an ace. He even refers to himself as such. Rick has been free pouring for years and considers himself an expert. If you pour test our buddy Rick, you’ll see that his ten-year-old six-count 1.5-ounce pour has evolved into a six-count 2-ounce pour, and he’s overpoured each of your top-selling cocktails for the week. “How much rum did you smuggle out the door?” —Will Benedetto, IGC Hospitality’s Director of Bars
It might be difficult to pinpoint the particular cause of excessive variance unless there is an evident data input problem. Often, the best answer is to design mechanisms that prevent it from happening in the first place.
Reduce Variance in Your Bar Operations
Training is the most effective way to prevent spillage and breakage. A bar manager may educate a barback a more effective manner to stock or obtain a bar cart for the employees to utilize if he is overloaded boxes to carry to the bar and dropping some in the process. If clients are returning cocktails to the bar because they aren’t to their liking, it may be time for bartender training or a refresh of the cocktail selection.
The solution to shrinking may often be as easy as portion management. Pexels photo by Magda Ehlers.
Theft is a difficult crime to solve. Many innocent errors might seem to be stealing. If your order is mistakenly shorted by a delivery driver, it may seem to be theft. It’s generally a genuine blunder. When delivering to a variety of locations on a daily basis, it’s possible that someone may take the incorrect package from his vehicle.
This is why a manager or lead bartender must inspect each delivery as soon as it arrives to verify the invoice appropriately represents the delivery. If any bottles are damaged, unsealed, or of low quality in any other way, they should be declined and the difference indicated on the invoice.
Shrinkage, on the other hand, may also be the result of theft, whether from consumers or personnel. Employees, however, are more likely to be the perpetrators. If you’re worried about staff theft, a good inventory management system should be enough to keep crooks at bay. You might also implement a system in which bartenders are only supplied with full liquor bottles if they hand over the empty ones to a management.
If you have a lot of shrinkage, installing security cameras in or near your liquor storage facilities can be a good idea. For example, SimpliSafe sells high-definition security cameras that send footage through a Wi-Fi or cellular network. When there is movement, a motion sensor on the front of the camera informs you, and you can see the live video feed on your smartphone, tablet, or computer. Apiece is a cost-effective alternative to a professionally installed camera system, costing $99 each.
Reduce Inventory by adjusting your bar’s operations.
It’s ideal to maintain your inventory as slim as possible without running out of products to keep your expenditures in check. This is sometimes easier said than done. Maybe you purchase and sell one case of sauvignon blanc at $120 per case per week. This week, there is a special offer: 10 cases for $20 off, or $96 a case. It seems to be a fantastic value. Maybe it is if you had the room to keep that many boxes for that long and don’t need the $960 elsewhere.
With your current traffic, selling those ten cases will take 2.5 months. Meanwhile, a floor drain may need to be repaired, or one of your bartenders may get sick, requiring the rest of the staff to work extra to cover their shifts, boosting your payroll expenditures. In the long run, you saved $240, but in the short run, you spent $840 more than you would have in a single week.
Before agreeing to transactions with big upfront fees, it’s a good idea to think about all of the possibilities. Slow-moving things, on the other hand, are sometimes inescapable. To stay competitive, high-end bar programs may need to have slow-moving bottles of rare spirits on hand. Try combining a slow-moving, high-cost item in a recipe with a lower-cost item if you have an excess of spirits and need to clear space in your inventory area. Drink deals are an excellent method to do this.
“I received a vatted rye whiskey with a stronger call appeal than I expected.” I sold it in an American Trilogy after a few weeks of not selling it (rye, apple brandy, orange bitters, and a Demerara sugar cube). The apple brandy helped to make up for the rye’s high price. I generated a nice profit, got rid of that stock, and introduced a new drink to my clients and employees that would be a simple call and upsell.” —Alexander Barbatsis, LA Bartend Consulting Mixologist
Trends to Watch in the Bars
It’s critical to know what to keep in your inventory now that you’ve started recording it. These are some of the bar trends we expect to see in 2020.
- CBD (cannabidiol) will be big: CBD-infused food and drinks were named as the top two trends to watch in 2019 by members of the National Restaurant Association, and the trend is only likely to expand in 2020.
- There will be more nonalcoholic beverage options: It’s a huge thing when the company that owns Guinness and Johnnie Walker invests in a nonalcoholic spirit.
- Robots may become bartenders in the future: maybe not in restaurants, but perhaps in casinos and airport lounges. In 2019, the MGM Resorts in Las Vegas tried out an automated system. With the introduction of Keurig’s Drinkworks Home Bar system to the consumer market, an automated bartender for small businesses may not be far behind.
Bar Inventory Frequently Asked Questions (FAQs)
These are some of the most often asked questions concerning managing and monitoring bar inventory. If your question isn’t answered here, post it in the comments area.
How often do bars take inventory?
At least once a month, bars and restaurants should do a physical inventory count. Although weekly inventory is a normal operational routine for many of the top bar programs. Weekly inventory provide a more accurate picture of how well your bar program is running than any other modification you can make. A weekly check of your physical inventory is required to determine where you need to shore up your operation if you are failing to maintain your expenses in line and meet your objectives.
When it comes to bar inventory, how do you weigh bottles?
When counting inventory, some bars prefer to weigh bottles rather than estimate the percentage of alcohol left in them. Weighing is more precise, but it might also take longer. Make sure you have a well-calibrated scale when weighing bottles. Then, to keep your counts correct, calculate the tare weight of each bottle. Check that all of your inventory records and prices are based on product weight rather than volume to ensure consistency.
How much money do bars earn off of alcoholic beverages?
This is when calculating the total cost of booze comes into play. There is no hard and fast rule, but assuming all of your expenditures are on track, a well-managed bar program should anticipate to earn 30% to 40% profit on spirits once costs and expenses are taken into consideration. However, since the prices of liquor licenses and rent vary greatly depending on region, each bar may be unique.
Conclusion: How to Conduct a Liquor Inventory
In a well-run restaurant, keeping track of bar inventory is a must. It requires meticulous attention to detail and constant engagement from your whole team. Physical inventory counts might be time-consuming, but the good news is that the more you do them, the quicker they get. The most crucial thing you can do if you don’t already have a good inventory system in place is to start one.
A well-integrated POS, such as REVEL, may be an invaluable asset in helping you keep track of your inventory. A POS’s reporting capabilities may enhance accuracy, save time, and give extensive data that would be difficult to create on your own.
Pay a visit to Revel
The “to do bar outlook mac” is a free template that will help you to do your inventory in 4 steps. The template includes the fields for the cost of goods sold, gross profit, and net profit.
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