As a bar manager or owner, keeping track of liquor costs is a primary responsibility. Using these tips listed below, you can keep costs at an affordable low amount and set a strong foundation for growing your business.
Set Up a Lean Bar
Our first tip to keeping liquor costs low at your bar is to set up a lean operation. This would mean reducing your inventory to its most essential quantities. To achieve that kind of organization, you would have to establish your bar’s pars.
Pars settings are the minimum amount of product a bar must always have available. Once the pars are established, you can avoid purchasing excess product or sitting on too much inventory. Right away, money is being saved by not overspending. What’s more, pars will help you keep tabs on which ingredients need to be reordered.
To maintain accurate par settings, it would be essential to update them throughout the year. If you don’t have too many variations of cocktails or ingredients, then updating pars twice a year would be enough to adjust to fluctuating customer preferences. If your bar menu is influenced by the annual seasons and fresh ingredients though, then it’s advisable to update the pars quarterly or monthly.
Notate All Drinks on the House
To handle an unhappy customer, it’s a savvy service policy to allow bartenders to gift a drink. This gives them the confidence to handle a situation alone and shows customers that the bar staff are trusted employees. Whatever the reason might be for giving out a free drink (such as for birthdays or for an employee’s spouse), it’s important to record all free drinks that are given each shift.
If you don’t, there will be discrepancies in your inventory levels because your bar POS system is only tracking inventory according to sales. The same goes for drinks that are spilled or voided. Take the steps to keep records of all instances liquor is poured to reduce waste and keep track of inventory.
Sell Your Dead Stock
Dusty bottles and kegs are bad for business. Knowing your pars will reveal just how much dead stock you have in storage and how much needs to get removed. You might have been able to forget about its existence, but having excess stock could mean that you’re wasting money-making opportunities or ordering double quantities of liquor.
To lower your overall liquor costs, you need to sell your dead stock. Here’s how to sell the excess, and in the process, boost bar sales:
- Liquor stock: Selling your excess liquor is easy. Create cocktail specials! Promote them during your happy hours, on social media, and have your bar staff upsell these cocktails until you’ve used up all that you have. For drinks inspiration, check out these 2019 cocktail trends that customers will love.
- Beer stock: Beer never necessarily expires, but kegs and bottles take up a lot of space and it’s important to keep your inventory fresh. Plus, you must earn back the money that you spent when purchasing the excess stock. To sell through your extra beer, offer promos. Beer pitchers are popular go-to drink orders during sports games or events, and two-for-one deals are hard to resist.
- Wine stock: To move your excess wine stock quickly, upsell with a food and wine pairing menu. It’s ideal for not just selling through certain wines fast, but to also introduce customers to new grapes and wine makers, or new food dishes.
Set Pour Policies
Every bar has a different pour policy; it tends to depend on the bar manager and his or her personal preference for jiggers or free hand pouring. Because it’s easier to train new bartenders and keep track of liquor usage, it is becoming increasingly popular among craft bars to use jigger measurements.
Free pouring can be risky if your bar staff has different pouring styles. You risk aggravating customers with the lack of consistency, and in the case of keeping liquor costs low, it’s impossible to quantify how much product you’re giving away. (This is especially true if it’s common practice to top off drinks with an extra splash of liquor.) In this case, bars can rely on precision pour spouts to prevent overpouring.
Keep your liquor costs low by establishing clear pour policies at your bar.
Price Your Cocktails Right
Finding the sweet spot for your cocktail prices is when you earn the right revenue, and still consider the competition and clientele. It’s important to remain competitive without losing money, and to offer prices that customers can afford.
Today’s industry standard is to keep your beverage costs at around 19%. At this amount, you can account for spillage, comped drinks, rent increases, salaries, and revenue. If you find that your bar menu has been serving drinks too cheaply, roll out the new prices in stages so you don’t spook regular customers.
Invest in a Better Beer Draft System
To keep your beer costs low, invest in a better beer draft system. Faulty or dirty draft lines would turn beer cloudy or moldy (and obviously, less delicious). To appease the customer, you would have to replace the drink, and you run the risk of earning a bad reputation for serving bad beer.
An out-of-balance draft system would affect how much foam is created and waste considerable money in the process. If there is too much foam, the bartender needs to pour some out and add more beer to get the perfect pint. If there is too little foam, then more beer is poured out than necessary.
Over time, a poorly functioning beer draft system is costing your business more money than it would cost to invest in an improved system. Take the right steps to maintain your draft system to keep your beer costs low and affordable.
Take Inventory Often
This might be the most important tip of all to keep liquor low at your bar: Take inventory often! Knowing how much inventory you have is the best way to keep track of costs, understand your profitability, and make the right adjustments. Learn how to master your bar inventory system here.