How to inventory liquor: Liquor inventory systems compared

Let’s be honest: Nobody likes doing their liquor inventory at their bar each period. While liquor inventory an important task to complete, it’s not typically one that owners or manager look forward to. The primary reason people dislike taking liquor inventory is that it’s a time consuming and boring task: Take an hour or so recording inventory levels onto a clipboard followed by another hour or so entering these counts into Excel and running sales reports. The final result should be an accurate liquor cost for the period but often errors create unexpected results which yield the results meaningless. In the best case, an accurate liquor cost is calculated but the lack of detail which liquor cost provides means it’s not easy to understand what caused changes to your liquor cost or how to improve performance.

So let’s imagine a better way. If you were to design a liquor inventory system, making a system which is both fast and accurate would be high on your list of aims. In today’s post I evaluate the different data input methods employed by liquor inventory systems in order to consider their relative strengths and weaknesses.

Option 1: Tenthing

The majority of bars still take liquor inventory by picking up open bottles, estimating how full each bottle is to the nearest tenth, and recording that information onto a clipboard. In step two the counts which were recorded onto the clipboard are entered into excel so that liquor inventory values can be calculated.

Judging by our two metrics of speed and accuracy this method is pretty poor: Users are constrained by having two hands since with a clipboard, a pen and a bottle, you are always one short. The system is slow since counts are entered once onto paper and then a second time into Excel. The additional step of copying inventory counts into Excel also creates further opportunity for errors. There is a reason people don’t use clipboards very much these days!

Option 2: “Tenthing with technology”

One of the liquor inventory systems available on the market basically provides a higher tech way to ‘tenth’ your bottles. After scanning each bottle’s barcode, a picture of the bottle pops up on the screen and allows the user to use a stylus to indicate how much is left in the bottle. The benefit of this system is that since the data is entered into specific liquor inventory software, once you are done counting, there is no need to manually transfer information into Excel. This makes this system quicker but it still suffers from being inaccurate since it still relies on visually estimating how much is in a bottle. The problem is compounded if more than one person takes liquor inventory since there will always be differences in their judgment.

Option 3: Magic labels and scanning

Another liquor inventory system on the market requires that you stick a special label on every bottle in your bar upon arrival. Labels in place, to take inventory you use a special scanner to scan each bottle and the special labels allow the scanner to estimate how much is in each bottle. If this method of taking liquor inventory sounds quirky and cumbersome, you are not alone. The most obvious objection is that sticking labels on the hundreds of bottles which pass through your simply adds a time consuming and boring task to a time consuming and boring task.

Option 4: Weighing liquor bottles

The most popular data input method used by third party liquor inventory software systems is weighing. Weighing your liquor bottles has a number of advantages over other methods with the most obvious being a high level of accuracy and objectivity. The high degree of accuracy is useful since it produces more granular and useful information such as tracking the size of individual pours. Liquor inventory systems based on weighing also remove the second step of transferring counts into excel (though this is true of all liquor inventory software systems). The final advantage of weighing bottles is speed: Modern scales take around two seconds to ‘settle’ which is actually faster than you can ‘tenth’ your bottles and manually record the reading. Our liquor inventory software is based on a mapping system which saves the additional step of having to scan the barcode of each bottle you inventory.

My final point is a reminder that the crucial goal for any liquor inventory system is to move away from measuring your liquor cost and into tracking the performance individual products. Counting your inventory is only part of this process so you’ll also want to consider important elements such as overall ease of use, independence of results and ease of integrating with your POS system. The good news is that it’s worth the effort since when our clients switch over from liquor cost, they typically realize a 3% fall in their liquor cost.

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Posted in Libation Information