Liquor Inventory Case Study #7

Bar Inventory Control by Murray

This one is a great example of bar inventory control. This client is one of our favorites partly because his bar always gets great numbers but mainly because the owner is hilarious. Look at the figure below and you see (in the “Accountability trend during last 5 cycles” graph on the top right) that bar inventory control is very tight at this bar with consistent Accountability scores of 98% or higher. This means that 98 percent of the produce being poured is being sold with only 2% liquor inventory shrinkage. In most bars it’s more typically around 20%. The one blip of the five audits we completed for them is the middle one (completed on 5.22.2012) where they scored 95% Accountability (5% of product poured was missing). The owner’s description of how he fixed the problem was one of the best things I’ve heard in a while. He has some doubts about a particular bartender and the low score was the final straw when he decided that the employee had spilled their last drink. The owner Murray was interested to see if his results had sustained the improvement from the previous cycle today and when he saw they had he commented, “My bartenders are like cows. They stand happily in the field until they realize one of the other cows is missing. Then they wake up and pay a little more attention for a while.” Whether you have Murray’s way with words or not, having bar inventory controls is about having detailed information you can use to monitor the performance of your bartenders. Look at the bar graph on the right in the middle and you can see that during the period when Accountability was ‘low’ at 95%, it caused the bars liquor cost to be 1.9% higher than it could be (based on pricing and product mix). This bar has sales of around $100,000 per month so over the course of the year, the Liquor Cost being 1.9% too high is worth almost $23,000. Consider also that $23,000 is the value of the missing product lost to shrinkage not the effect on the bottom line. The bottom line suffers worse due to missing sales revenue so $23,000 is an underestimation. Having this quality of information is what we mean by ‘bar inventory controls’.

bar inventory control

bar inventory control

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Posted in Bar Liquor inventory case studies