WHO’S WATCHING THE STORE?
Beverage control systems aim to tackle the oldest bar problem
BY ROBYN CAMPBELL-OUCHIDA
You’ve heard a story like it a hundred times. A hot bar was humming, yet the owner couldn’t understand why he was losing so much money. As Pat Blair, vice president of marketing for control system provider Vital Link tells the tale, after some investigation, it was discovered that one of the bartenders was pouring his own alcohol as soon as the manager left the operation each evening. The cagey bartender was pocketing the money for himself and replenishing bottles with his own supply purchased at a nearby liquor store.
Consultant Phil Raimondo tells about a few familiar liquor theft techniques. “Bartenders will pour doubles but only ring singles, which doesn’t seem like stealing to them because the customer is paying. Many bartenders overpour to friends and guests who complain that the drink isn’t strong enough. Another problem is what we call ‘padding the drawer.’ This is when the bartender pretends to ring up the drink but actually pockets the money.”
“Many bartenders are also in cahoots with cocktail servers and have theft systems worked out where they each get to keep a share of the money. Another thing that I have seen and this only works for cash transactions is bar employees adding an automatic tip. Not enough where the customer would really notice but enough that it adds up for them at the end of their shift.”
WHICH WAY IS UP?
There’s a little bit of Dickensian “best of times, worst of times” going on right now in the foodservice industry. While the stock market has seen disastrous downfalls, energy costs have skyrocketed in the West and labor costs have risen, customers still seem to be flocking to bars and restaurants. Although the casual restaurant market has seen decreasing growth levels, fine dining is growing and, in the midst of all this, the bar business seems to have emerged virtually unscathed, indicating that people are still willing to pay for their favorite drinks, whatever they are.
Given this “best and worst” case scenario, adopting effective cost controls would seem to be more important than ever. To that end, bar distribution systems have become much more sophisticated over the past ten years, helping to account for losses with greater precision. While some operators still rely on good old-fashioned employee honesty, others have an appreciation of more technical methods to keep profits in the till.
David Alphonse, director of beverage operations at Legal Sea Foods, uncovered employee liquor theft at one of his units electronically. “Through our electronic inventory system, we learned that some inventory was missing. We found out that employees were sneaking drinks out of darkly colored bottles like Myers’s Dark in the storeroom. Our system enabled us to see that stealing doesn’t just happen behind the bar.”
Hands-on management and modern systems controls are a winning combination in the fight against employee theft
If beer, wine and spirits sales are the foundation upon which many food service operations are built, that bulwark is often under siege by employees running their own clandestine operations. New systems are being touted as cures to this age-old problem, and sometimes it seems as if the days of pouring from a bottle have nearly vanished only to be replaced by what manufacturers claim are more “accurate” systems.
ON THE RIGHT TRACK
One of these systems is Beverage Tracker by Vital Link Business Systems. Only on the market for a few months, this product claims to help bar owners lower their liquor costs by monitoring how much is actually poured. Microchips are embedded in plastic pour spouts and, as drinks are being made, pour quantities are transmitted via radio frequency to a computer where the information is consolidated into data reports. Pouring statistics divided by bartender shift are then accessible.
“Vital Link provides small business owners with managing technology,” said Vital-Link’s Blair. “Many of these operators own multiple locations and can’t be in all places at once to monitor what goes on behind the bar. Our system is a web-enabled platform which owners and employees can access through a website. In addition to our Beverage Tracker product, we offer other interfacing products, including video monitoring technology, so the owner is able to see what is going on at any location anytime.”
Another auditing technology is Bevinco, a beverage profit control system that originated in Toronto in the late 1980s. Ian Foster, the regional vice president of Bevinco in the San Diego area, explained how the system works. “Once a week, early in the morning, our auditors go into bars and take inventory,” said Foster. “They weigh open containers and count full bottles in order to know exactly what’s been used in the bar over the past week. They match that number to the sales report number, giving the owner a snapshot of what is going on in the bar.”
Foster said that the main question that should be asked is why do these problems exist? “Shortages exist because the business is not being evaluated correctly. If you only measure your success by pour cost, it can be misleading. Otherwise, employee theft is probably occurring,” he said.
Dave Dronkers, a restaurant and bar consultant based in southern California, believes that the only way to stop employees, specifically bartenders, from stealing is to have management heavily involved in the education and training process. “Many bartenders buy into the belief that because they are bartenders, they are immune from management. However, it rings true that when the cat’s away, the mice will play,” said Dronkers. “Management needs to monitor the bar area as much as they do the dining room.”
Under the program Dronkers recommends, as much time should be focused on the bar area as the dining room. Hiring the right people, checking their references, promoting from within and product knowledge are all important. “Outback Steakhouse is really good about promoting from within. Nobody there becomes a bartender unless they have first been a waiter,” said Dronkers.
“The answer to bar control is simple. Bartenders need to be educated on the effects that they have on the bottom line spilling, giving away drinks, etc. They also need to experience both visibility and participation by management. It’s important for management to get behind the bar often, open the register, and do other spot checks for visible signs of stealing.”
Dronkers believes that items in the bar need to be priced competitively. Research should be conducted to make sure the bar’s prices are on par with similar establishments. Dronkers said that when the theoretical bar cost does not come near the actual cost, either someone is stealing or the alcohol is priced incorrectly.
Alphonse of Legal Seafood said his company’s inventory system includes taking a physical count every Sunday at each unit. All items are associated with drink recipes and the system allows Legal Sea Foods to see exactly what is missing, down to the ounce. “Our inventory control system lets us see if less expensive brands are being rung up when more expensive stock is actually being poured.”
MANAGE THE LOSS
Legal Sea Foods uses a fully integrated inventory management system. “We originally started using this system for its food portion control capabilities but took it to a new level with our bar operations,” said Alphonse. “It works well for us and we know that there are other systems that would not be as beneficial.”
Similarly, Phil Raimondo, who consults with bars and restaurants on control matters for Houston-based Patrick Henry Creative Promotions, stressed the importance of conducting weekly inventory and weekly ordering. “We believe in using a requisition system,” said Raimondo. “We tell our clients to hold the empty bottles and count them at the end of the night. Compare this to the forecasted numbers. Also, don’t have more liquor brought in than you will use in 30 days it’s a target for theft.” Like Dronkers, Raimondo believes that management, accountability and training are the keys to running a successful bar operation with minimal loss.
Large facilities with many bar outlets look at things a little differently than independent bar owners. Tim Herman, director of food and beverage for the Venetian Resort-Hotel-Casino in Las Vegas, was in the market for a controlled dispensing system a few years ago before the resort opened. “We looked at the different products’ capabilities, price, and the space related to the equipment compared to how much space we had allocated for it.”
“We needed to know how the systems interfaced with our POS systems, how many brands could be dispensed with the system and the reliability of the various systems. We needed to know that we had something foolproof in place that wasn’t going to fail when the place got busy.”
The Venetian ended up purchasing a system that could integrate with its approximately 25 stations and track 48 brands of alcohol. There are three guns per bar and each gun holds 16 brands. “Our system entirely prevents theft by bartenders,” said Herman. “Each drink automatically rings up on the cash register and we also have an interface to our casino’s surveillance room. We haven’t had any problems in the two and a half years the Venetian has been open and we don’t anticipate that we will.”
Robyn Campbell-Ouchida is a Las Vegas-based business writer.
(As Cheers prepared to go to press, the attack on the World Trade Center stunned the world. As part of this article, Robin Campbell-Ouchida had interviewed Windows beverage director Inez Holderness. Holderness was apparently not in the building at the time, but at least 70 other Windows employees were, and all are presumed dead. A fund has been set up for family members (see page 13), and to remember those who perished, we publish Holderness’s comments. JR)
Windows on the World in New York City is a bar that believes in its employees. “Management is in our bar at all times and they’ve had success with that,” said beverage director Inez Holderness. “I think that our hands-on management and extensive training programs prove that honesty is the best policy. We don’t use any electronic tracking programs to keep tabs on the bartenders here. Management does encourage bartenders not to have their friends frequent the bar and that seems to work. It may sound a little old-fashioned but we believe in our policy.”
“We pride ourselves on traditional bartending,” Holderness went on. “All of the bartenders at Windows have been here at least five years and each of them started out as a service bartender.” With cameras behind every bar, including the service bars, Windows on the World has bartenders do spot checks every morning and evening to ensure no bottles are completely empty. The bar also conducts a monthly inventory and counts everything by hand.