According to a survey done by the California Restaurant Association, the average bar or restaurant loses simply loses 25 percent of its beverage alcohol. One-quarter of the wine, beer and spirits in the average restaurant or bar simply disappears, due to spillage, over pouring, mistakes and outright theft.
“Most people seem to think, ‘There’s nothing I can do, 25 percent of my booze is going to go down the drain,'” says Dave Grimm, partner at Accubar, a company that produces an automated system for keeping track of a bar or restaurant’s beverage inventory.
Jim Cantrell, ceo of CS Technologies, maker of the Azbar America system, agrees. “Even the water going into the restaurant is on a meter,” he says. “Everyone is up in arms about gas being $2.29 per gallon, but here’s alcohol at $300 per gallon, at $5 to $6 a drink. People are free-pouring it and want to know why they’re not making any money.”
According to makers of inventory-management systems, the restaurant industry has been one of the last to embrace current technology designed to make their businesses more profitable. Part of the reason is that inventory management is so difficult in restaurants and bars. It’s not like at retail, where doing a physical inventory might mean counting pairs of socks. Every head of lettuce is a different size. Those eggs are perishable. How many ounces of liquor are left in that open bottle of vodka or rum? In the meantime, the establishment might receive ten to 15 deliveries of multiple items each day, while making hundreds of sales, all of which need to be accounted for: deliveries added to inventory, sales subtracted and everything matched up.
When it comes to the beverage side of the business, establishments need to account for open bottles of liquor and wine and for the amount of beer in its draft system. It can easily stock hundreds of different spirits, each one of which has a different cost and retail price, and use them in varying amounts in different cocktails.
Bar Beverage Control’s system weighs up to
nine bottles at a time on a scale (above); the
weight of each bottle is then entered into the
palm pilot (right).
On top of that, the bar business is notorious for loss and theft. It’s a cash business involving an expensive, desirable product, handled by high-turnover employees who are working for tips. Losses can range from the delivery guy stealing entire kegs of beer to bartenders over pouring every drink they make. And then there’s the problem of making sure the money for each drink sale actually makes it into the cash register. “That’s what really costs: when it doesn’t get rung up,” says Azbar’s Cantrell.
It is little wonder that, faced with the prospect of trying to track their beverage business with paper and pencil, many operators throw up their hands and hope for the best.
Yet, now, with the advent and acceptance of new technologies, especially handheld computers such as Palms and Pocket PCs, which can be equipped with scanners, and wireless communication between devices, the inventory management of beverages can be easier than it has ever been before.
EASIER SAID THAN DONE
Inventory management experts say that one figure most bar and restaurant operators depend on pour cost does not give them a complete picture of their business. Pour cost, the cost of the beverages used divided by how much they sold for, may tell operators how much they made, but not how much they should have made. The figure, in essence, factors in waste and theft.
Inventory management – knowing exactly what you’ve got in inventory, what’s been sold, what’s been poured and matching all those figures up – pinpoints where losses are occurring and helps operators weed those losses out.
“It’s a real simple concept,” says Paul Barnes, president of iBar Controls, an inventory software company, “but it’s hard to put into practice.”
Indeed, at least one company, Bevinco, started out selling a beverage-inventory software system for operators to use themselves, but switched, in 1991, to offering a service in which Bevinco franchise owners, using the Bevinco software, visit a bar or restaurant weekly to take the inventory for the operator.
When it comes to the inventory management of beverages, there are two main areas that systems focus on. One aids operators doing physical inventories, including checking that they receive what they have ordered. The other tracks what is sometimes called “perpetual” or “virtual” inventory, knowing what was poured so that it can be matched up with what was sold.
Doing a physical inventory can be a time-consuming task. Some operators report spending as much as eight or nine hours simply trying to count what they have. Because it is so daunting, many operations don’t do physical inventories as often as they should.
This is where a system like Accubar, Scannabar or iBarControl, comes in. These systems use handheld devices, such as Palms or Pocket PCs, equipped with scanners to make taking inventory easier and quicker.
“We believe that you should count your stock at least once a week,” says iBarControl’s Barnes. “Using [our system,] you can take inventory and generate all your reports in about one hour for an average-sized establishment.”
Another company, Scannabar, hopes to make the process so easy that an operator will do it on the open bottles behind the bar at least after every shift. The Scannabar system uses its own barcode labels so that each bottle has its own unique code. It also employs special ribbons that the operator holds against the bottle, scanning at the level of the liquid inside. The bottle’s barcode identifies it as a specific bottle: Jack Daniels in a 750-ml bottle, for example. Then, when the ribbon is scanned, the system, already loaded with the specific dimensions of thousands of brands and their bottle sizes, calculates what’s left in that particular bottle.
AccuBar’s palm computer’s software calculates how much product a bottle contains.
The Scannabar system has, in effect, applied technology to one of the traditional ways of estimating what is left in an open or partial bottle behind the bar. The “tenth method” is basically eyeballing the bottle and estimating, to the tenth, how much is left. Another system using handhelds, from Accubar, does it this way: when a product’s barcode is scanned, the handheld displays a silhouette of that brand’s bottle. The user draws a line with the stylus indicating the level of alcohol left inside. The system then calculates what that amount is.
Another traditional way of dealing with open bottles is to weigh them. After factoring in the tare weight, or weight of the empty bottle, the operator can determine how much liquid is left inside. Many beverage-inventory systems allow a user to simply key in a weight or a tenth-method estimate. Some, such as the system from iBarControl, can be outfitted with a wireless scale that automatically sends the weight to the system, eliminating that extra data-entry step.
The system from Bar Beverage Control does the inventory of open bottles at the bar using a handheld and a scale, but focuses on producing a different “take” on the data. “What’s more important to you: how much Crown Royal versus how much Jim Beam you used or how accurately did your bartenders ring what they poured?” asks Nick Carroll, president of Bar Beverage Control and the owner of two bars himself. “We shifted the focus from brand usage to bartender performance, which is where the money is.”
Alcohol Controls’ Shot Glance inventory gauges.
To do this, the Bar Beverage Control system has to be able to tell an operator how much a bartender poured during a shift. Therefore, inventorying the bar has to be quick. Carroll claims that his system, which weighs bottles, can do that, for a bar with 100 open bottles, in ten minutes.
To be that fast, the system does not weigh individual bottles but weighs all the bottles at a certain price-point at once, such as all the well brands. The system can then produce a report of bartender accuracy, listing the bartenders in order of how closely what was used during their shift corresponds to what was sold through the restaurant’s POS system. Currently, the operator enters the sales information manually, but Bar Beverage Control is planning to release a version in which that data can be downloaded from the POS system.
“When I opened my first bar in 1993, my sales were excellent. I was exceeding my sales goals. But I had no profit,” Carroll explains. “I realized I needed to be watching, not my costs, but my margins, my bottom line. I don’t care that I sold 200 Captain Morgan drinks. I can see the empties, my system tracks those, so I know that brand is popular. What I need to know is that $200’s worth of sales is missing from that shift. The cash is more important. That’s the report I need.”
And by being able to do an audit of what was poured during every day or shift, the missing sales can be pinpointed to a specific bartender, allowing them to be held accountable for ringing what was poured.
POOR CONTROL OR POUR CONTROL?
The second kind of beverage-management system has a similar goal: to track what a bartender is using and ensure that it is actually being sold. These are the “perpetual” or “virtual inventory” systems that record drinks as they are being poured.
These systems often control portion size. When a drink order is entered, the liquor gun, the cocktail tower or the pour spouts in the appropriate bottles will only dispense a certain amount of each product.
According to Berg, the largest and oldest supplier of portion-control systems for the bar industry, only about 10 to 15 percent of all restaurants and bars use such systems, though that number is growing.
Operators can be concerned about their customers’ perception of the technology. “And customers do notice,” says Mark Flaschner, president of Alcohol Controls, a company that sells several different kinds of systems. “Every operator who has bought a portion-control system from us has had that concern.”