Do you dread taking bar inventory? You’re not alone. Most restaurant and bar owners struggle with maintaining order of their inventory. It’s tedious and arduous, but when done right, liquor inventory management can decrease costs and increase profits.
Below, we reveal how to set up an efficient bar inventory system. We’ll cover the following topics:
- Liquor Inventory and Why It Matters
- How to Do Bar Inventory
- Calculating Your Liquor Inventory Usage
- The Best Liquor Inventory System
Are you ready to master your liquor inventory system? Let’s dive in!
1. What is Liquor Inventory and Why Does It Matter?
Liquor inventory is the entire list of liquors you have in stock in your bar. You should take inventory on a regular basis (weekly, bi-weekly, etc.) to ensure you’re not stocking too many perishable items and that your bartenders aren’t pouring too much or giving away free liquor.
Taking liquor inventory is important because poor management of your inventory can be detrimental to your bar. If you have too little in stock, you’ll lose sales and end up with dissatisfied customers. If you have too much in stock, you’ll run the risk of wasting ingredients and taking up too much storage space.
Here is why liquor inventory for your bar matters:
You can save money.
If you over-order liquor, this crowds valuable shelf space, making it difficult to store other inventory, like a crate of bottles. When there isn’t enough space, inventory gets misplaced or forgotten, and money is wasted. Taking liquor inventory on a regular basis can prevent this.
You’ll avoid excess waste.
Managing the inventory for your bar is a balancing act. On one side, you don’t want to run out of an ingredient, and on the other side, you don’t want too much. When struggling with a purchasing decision, err on the side of caution. Too much inventory can trigger profit losses, whether it’s from product expiration or taking up valuable shelf space. Start to calculate the cost of wasting items from the back end or front end, and keep track of where the inventory is located .
You’ll learn about your customers.
By performing liquor inventory, you can learn what items are more popular than others with your customers and adjust your stock and purchase orders accordingly. This is a great way to determine your most popular cocktail combinations and ingredients. Knowing what your customers like leads to great efficiency and less waste, as well as greater profit margins.
2. How to Do Bar Inventory
Having a functioning bar inventory system requires organization and consistency. This starts with when you place your purchase order, and continues during your actual inventory-taking process.
In this section, we’ll discuss purchase orders, the steps to take liquor inventory, and the best practices you should apply to the overall process.
Generate and Deliver Precise Purchase Orders
The first point of inventory management begins at the purchase order. When sending out a PO, it is imperative that you:
- Order precise quantities.
- Order the correct items.
- Send the PO to the correct supplier.
Order quantities should correlate to sales and, therefore, should include exact quantities. For long-term cost-savings, regular estimations should be avoided. Otherwise, you run the risk of ordering too much and having waste (or waste of storage space!), or ordering too little and impeding sales.
Keep in mind that new cocktail experiments are no excuse for estimating ingredient quantities. Before ordering new ingredients, first calculate the costs for a prudent amount of serving portions, enough to test out how popular the new cocktail will be. For example, if you want to try a new drink with fresh dragon fruit, which is a bit costlier than normal, keep the buying costs low enough so that the bottom line won’t be affected if the new cocktail menu item doesn’t sell.
Once you determine the quantity amounts and ingredient shelf-life, automatic POs can be scheduled. Purchasing routines allow suppliers to prepare for your order in a timely manner, and your buyer/vendor relationship will strengthen. Plus, this improves your chances of bargaining for a better deal down the line.
Maintaining clear vendor communications is an essential component to managing restaurant and bar inventories, and hiccups arise when sloppy purchase orders are delivered. Take care to avoid costly mistakes, like writing out the wrong items and quantities, or sending a PO to the wrong supplier. It takes time and money to rectify these mistakes.
How do you take liquor inventory?
Once you have stock from your purchase orders, it’s time to take careful inventory. There are multiple ways to do this, such as by using a spreadsheet or taking advantage of inventory management features in POS systems.
Liquor inventory can be taken by following these steps:
- Use a spreadsheet or inventory software. Though using software is a recommended way to track your inventory, it’s still important to understand the process of manually recording your inventory using a spreadsheet. If you choose this route, make sure your spreadsheet corresponds with the way your alcohol is arranged on the bar.
- Start at the front bar. Count the bottles the way they are positioned and take note of the alcohol type, brand, name, and bottle size. All of these categories should have an individual column.
- Record other places where you keep alcohol. Count the bottles in other areas where you store alcohol. This includes the back of your bar and storeroom. If you have a mixture of bottles and cases, make a separate column on your spreadsheet to account for those, too.
- Note how much liquid is in each bottle. Separate the bottle into tenths and determine if each liquid is half full, a third full, etc. Repeat this process for each bottle and record all numbers, separating them between categories (spirits, wine, etc.). Repeat this step for other areas where you store alcohol.
- Add up your totals. Add up the totals for each category. Once your inventory period has ended (whether that’s weekly, monthly, etc.), you’ll repeat this process and will end up with your beginning and ending inventory counts.
Learn all about how to take liquor inventory.
You now have the building blocks to determine your inventory usage, which we will discuss in more detail in a later section.
3. How to Calculate Your Liquor Inventory Usage
Once you have a bar inventory system in place, you’ll want to calculate your bar inventory usage to avoid profit losses caused by excess waste. To do so, take stock of how much inventory your bar really needs to function. To get these numbers, you’ll need the information that you calculated for your spreadsheet:
- The amount of stock at the beginning of your inventory period.
- The amount of stock at the end of your inventory period.
- The amount of stock received during this period.
With these numbers, calculate:
Starting Inventory + Received Inventory – Ending Inventory = Inventory Usage Amount
Knowing your usage amount gives you the data necessary to move forward. You can continue making those precise purchase orders. Not only will you save on costs, but you’ll also avoid excess waste
4. Best Practices to Maintain Proper Inventory Records
Inventory management starts by recording inventory on a frequent and consistent basis. Follow these best practices to set your bar up for success!
1) Take frequent inventory counts.
Fresh inventory that spoils quickly should be counted daily, and everything else should be counted once a week. It’s important to ensure you know how much you have of each perishable item and use this information to determine what may be going to waste.
2) Take consistent inventory counts.
Pick a time and day of the week to count bar inventory, and never skip or change it. It’s important to stick to the same schedule week after week to have accurate inventory counts. If you alter the days or the times, there will be fluctuations in your records and you will have a difficult time using the results. You should also count the same way each time. For example, if you start from left to right, you should always count from left to right.
3) Take inventory when the business is closed.
It’s impossible to count inventory while goods are being sold. This is to avoid distractions, which can result in a lot of wasted time because you have to keep starting over again. You’ll also avoid overlooking items that have been sold during the inventory-taking period. Most businesses choose to count inventory after closing to account for sales of the day.
4) Take inventory before shipments arrive.
If you count inventory during shipments, you run the risk of counting the same goods twice. Instead, take stock of what you have before shipments arrive, and then add new deliveries to the count.
5) Standardize inventory count sheets.
Have different count sheets for daily, weekly, and monthly counts, and standardize the units by which items are counted. For example, salt might be counted by the pound, and gin by the liter. Define the units clearly so there is no confusion when counting.
6) Shelf inventory with first in, first out (FIFO) method.
To lower waste, move older items to the front of the shelf so that they are used first. Be sure your employees are trained to arrange the items this way. This will be a visual reminder for your bartenders to use older items, as well.
7) Task a pair of employees to take inventory count.
There are two reasons to task two employees to take inventory count. First, it minimizes human error. Second, it reduces the risk of theft or manipulating numbers. Have each employee count alone and compare results after.
8) The same employees should take inventory count.
Practice makes perfect! Have the same employees take inventory each time. By repeating the process over and over again, these employees will become faster at taking inventory, maintain their accuracy, and offer more consistent results.
9) Calibrate scales weekly.
Be sure to calibrate scales or weight measurements regularly to ensure correct numbers are taken. If you have inaccurate numbers, you’ll throw off your entire inventory process.
10) Standardize your system.
Once the bar inventory system is set, don’t make changes. Consistency is key to accuracy. If you constantly change your system, errors will be more likely to occur and your employees may be confused and take inventory incorrectly.
NOTE: Be sure to record how much liquor you receive within your inventory period, which you can find in your invoices, as well as how much you sell, which you can find in your bar POS system.