All posts by jamie

Can Your Bar Inventory System Overcome the Fundamental Problems Created by the Different Units of Measurement Used for Selling and Inventorying Liquor?

When done properly, bar inventory is a valuable tool that can help you improve the performance of your bar and maximize profitability. Unfortunately, many bars struggle to take advantage of the numerous benefits that are possible as a result of their liquor inventory efforts. The main reason for these struggles stems from the fundamental challenge associated with reconciling two completely different units of measurement.

Drinks at your bar are typically sold to customers in the following serving portions:

  • Pints and bottles of beer
  • 1.5 ounce servings of liquor
  • 4-6 ounce glasses of wine

However, you receive deliveries of alcohol in much larger quantities than these single serving portions. As a result, when counting inventory, the following units of measurement are commonly used:

  • Kegs of beer
  • Cases of beer
  • Bottles of liquor
  • Bottles of wine

These fundamental differences in units of measurement create challenges when trying to devise an efficient bar inventory system.

Why Do Outdated or Ineffective Bar Inventory Systems Exacerbate this Problem?

Just about every bar owner understands the importance of establishing cost controls and processes that will guide their daily business operations. When sophisticated liquor inventory systems are used, bars achieve the actionable information necessary to more effectively run their bar.

But when an outdated inventory system is used, this turns into a task that is performed out of duty rather than because it is actually adding value to the business. In this situation, a lot of effort goes into the bar inventory process, but very little, if anything, is done with the numbers generated:

  • In the worst-case scenario, nothing is done with the data generated from the inventory process, or it takes so long to calculate the data that it is no longer useful once you receive it.
  • In the best-case scenario, you get an accurate liquor cost. Unfortunately, this figure doesn’t provide you with the actionable information necessary to help you improve your bar’s systems and profitability.

Either way, the results achieved by using an ineffective liquor inventory system create a negative feedback loop that breeds frustration over the pointlessness of the task. This ultimately impacts how inventory is performed. It becomes a task to be checked off a list rather than a useful management tool, causing employees to rush through the process. At this point, it is simply busy work.

How to Fix this Fundamental Problem with Your Liquor Inventory System

Using different units of measurement to quantify drink sizes and inventory supply makes it difficult to relate your back-of-house liquor inventory calculations to what is actually being sold. When you use an outdated bar inventory system, this incompatibility creates a scenario where you are only able to calculate your liquor cost. Unfortunately, this figure doesn’t help you understand how to improve the performance of your bar.

If the goal of performing bar inventory is to help you make more money, this system is clearly broken. If you want to gain valuable insight from this process, you need to use a more sophisticated bar inventory system that provides you data that compares servings sold to servings poured.

This kind of actionable data allows you to evaluate the performance of individual products sold at your bar. Ultimately, this leads to specific conversations, specific actions, and an ability to be reactive to your bar’s current performance issues.

bar inventory - Bar-iFor example, if you knew that Coors Light performed at a 95% yield last month, but only at 90% this month, you would naturally want to understand what caused this drop in performance. Perhaps your bartenders weren’t being careful when pouring this product. But this drop in performance could also potentially be caused by a problem with the temperature of your beer cooler.

Once you identify the cause of the problem, you can restore Coors Light performance to the 95% yield you are accustomed to. By measuring the performance of specific products, you are able to be reactive in this way.

What Are You Learning from Your Liquor Inventory?

Are you achieving the actionable data necessary to understand how each individual product sold at your bar is performing? If not, your liquor inventory system isn’t providing the type of valuable information that drives intelligent decision-making. Instead, your employees are simply going through the motions and performing this task for the sake of doing it.

By upgrading to a more sophisticated bar inventory system, you can use this task in a way that actually helps you run your bar more effectively.

To find out how our bar inventory system can help you streamline your processes and maximize profits, please contact Bar-i today to schedule a free consultation. We serve bars nationwide from our offices in Denver, Colorado.

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Examining the Adoption of POS Systems to Predict the Future of Bar Inventory

Overall, the bar and restaurant industry has notoriously been slow to adopt new technology. In fact, bars and restaurants often react to the introduction of new technology with apprehension and disapproval. But over time, more and more establishments eventually grow to accept and incorporate technological innovations once they see the benefits to their business.

POS systems - Bar-i Bar InventoryThis was certainly true of POS systems when they were first introduced, and these systems have since become the industry standard. In past decade, there has been a tremendous influx of advanced bar inventory systems and service providers. To date, these services have met with similar apprehension that was once directed towards POS systems several decades ago.

Just as POS systems eventually became universally accepted as a way to help establishments streamline their business and increase profits, it is likely that over time, the significant benefits of adopting a sophisticated bar inventory system will make them the industry standard as well.

A Look into the Rise in Popularity of POS Systems

Over the past 20 years, POS systems have become the absolute industry standard for all restaurants and bars. These days, only dive bars and bars located overseas still operate without a POS. It has become that fundamental to running a modern bar or restaurant, and failing to use one marks your establishment as out-of-date and behind the curve.

But when they were first introduced in the 1970s, POS systems were met with widespread skepticism. In fact, many establishments continued using out-of-date cash registers well into the 1990s.

So how did POS systems overcome this initial apprehension to rise to the status of industry standard? The answer can be summed up in one word – benefits. Eventually, restaurants and bars could no longer deny that using a POS system would improve their business in numerous ways:

Improved service times – Quicker service equates to improved customer experience, which will keep people coming back again and again.

Improved communication – When a server rings in orders, the kitchen gets a specially organized ticket providing valuable information such as standardized modifications. This is a significant improvement compared to older methods where kitchen staff had to decipher the shorthand scribbling of servers.

Increased management data – You can track everything that has been sold in your restaurant over a specific period of time. Your managers can also see valuable information such as average ticket prices and wait times for orders currently being prepared.

Happy Hour Specials - Bar-i Bar InventoryIncreased controls – This is particularly useful for timed events such as Happy Hour. You can program your POS to automatically apply Happy Hour prices during a set time period, preventing bartenders from giving out these discounted prices outside of Happy Hour or extending these deals a few extra minutes to increase tips.

Increased sales – POS systems make it easier to standardize the implementation of upcharges, ensuring they are for the correct value and used for all orders.

As early adopters saw their business flourish due to these benefits, those who were initially skeptical began to see the error of their ways and get with the times. Slowly, this led to POS systems becoming widely regarded as industry standard.

Bar Inventory Systems are Like POS Systems 20 Years Ago

There are quite a few striking similarities between the current acceptance of sophisticated bar inventory systems and the way POS systems were viewed 20 years ago, when they were still widely met with skepticism throughout the bar and restaurant industry:

Low rate of adoption – Currently, less than ¼ of U.S. bars have an effective inventory system in place.

Ability to increase profits – Just as early POS adopters quickly found out their new system would help them make more money, early bar inventory system adopters are making the same discovery. Most Bar-i clients get more than 3 times a return on investment by using our bar inventory system.

Discontinuing usage is rare – Similar to the trend with early adopters of POS systems, very few establishments that have made the switch to a sophisticated bar inventory system have discontinued using them, most likely due to the many benefits they are experiencing.

Just as POS systems offered establishments significant advantages over older systems, modern bar inventory systems provide several important benefits. These include:

Reduction in liquor cost – Most Bar-i clients typically experience a 3% drop in their liquor cost. For an average bar, that equates to a $900 savings for every $10,000 in sales.

Time savings – When you finish your inventory, you have a list of what you need to order, saving you time and improving efficiency.

Increased reactivity – Bars have more information and they are able to make smarter decisions due to the presence of actionable data that was never previously available. For example, you can identify specific products that are being over-poured or given away, allowing you to react quickly so that the situation doesn’t negatively impact profits.

Looking Forward: The Future of Bar Inventory

Bars already have lots of inventory options to choose from, and as the inventory industry grows, these options will likely become even more robust. While the variety of options may seem overwhelming, it actually works to your advantage. There is definitely a system that will work for the unique needs of each and every bar.

There are essentially four different types of bar inventory systems:

Full service – Everything is done for you by the third party bar inventory service provider
DIY – You purchase the hardware and software for your inventory system and do it yourself
Hybrid – Hybrid inventory systems, such as Bar-i’s self-count system, give you the best of what full service and DIY have to offer. Your costs are lower due to performing inventory yourself, but you still have a third party provider responsible for all data analysis.
Real-time – These systems track usage and sales in real time.

Regardless of which type of inventory option you choose, you will be able to identify the inventory shrinkage for each product at your bar. This is by far the biggest advantage over outdated methods such as the clipboard system, which only allow you to calculate liquor cost. By reducing shrinkage, your bar will see a significant increase in profits.

Why are Modern Bar Inventory Systems Likely to become the Industry Standard?

Just as the apprehension about adopting POS systems years ago proved to be unfounded, the apprehension regarding upgrading bar inventory systems is misguided. The bars that have been early adopters are making more money and seeing a more streamlined process for their business. As a result, they have continued using these systems. Several years down the road, it is likely that these modern inventory systems will become the norm, just as POS systems became the norm.

You may as well adopt this new technology soon and start enjoying the savings.

To find out how our bar inventory system can help you streamline your processes and maximize profits, please contact Bar-i today to schedule a free consultation. We serve bars nationwide from our offices in Denver, Colorado.
 

5 Reasons to Ditch the Clipboard and Upgrade Your Bar Inventory System

Bar-i Liquor Inventory SystemIn recent years, the traditional way of taking bar inventory using a clipboard has become very outdated. Advances in technology have made more sophisticated bar inventory systems much more effective and affordable.

It is common for bars utilizing the old-school clipboard system to experience approximately 20% inventory shrinkage. If your bar suffers from this much shrinkage, you are losing a significant amount of your profits. By working with a more sophisticated bar inventory system such as Bar-i’s, you can reduce your liquor cost by about 3% on average and significantly reduce your level of shrinkage.

5 Problems with using a Clipboard for Bar Inventory

At Bar-i, we believe strongly that using a clipboard for your inventory is highly ineffective and causes more problems than it solves. Here are 5 reasons why:

1. Using a clipboard yields subjective and inaccurate measurements.

The most common method of measurement used when taking bar inventory with a clipboard is the tenthing method. Tenthing involves visually estimating how full a bottle is to the nearest tenth. This measurement is then recorded on your clipboard.

There are several problems with the tenthing method:

Subjective – If two different employees measured the same bottle, it is very likely that they would estimate different levels for the bottle.

Inaccurate – This type of measurement is highly reliant on human judgment, making it difficult to receive an accurate reading.

Lack of precision – There are approximately 34 ounces in a liter of liquor. If you’re tenthing, your unit of measurement is in 3.4 ounce chunks. However, most servings of liquor are dispensed in 1.5 ounce servings. As a result, it’s difficult to track individual servings of alcohol. To get more effective results from your bar inventory, you need to use a system that is more precise.

Unusual bottle shapes are particularly challenging to measure – When you are taking inventory of an oddly shaped bottle such as Crown Royal, it becomes much harder to estimate the quantity of liquor in the bottle.

Bar-i’s system accurately measures bottles to 1/20 of an ounce. This level of precision allows you to audit individual pours.

2. The order listed on the clipboard doesn’t match the order behind the bar.

Products on a clipboard are typically arranged alphabetically, but products in your bar are typically organized by category. This makes the inventory process more time-consuming and significantly increases the chances for error when recording inventory levels on your clipboard.

Even if you take the time to arrange the products on the clipboard as they are arranged behind the bar, it is likely that the order of bottles in your storeroom will be different than what is behind the bar. So no matter what you do to try and correct this issue, you will most likely have a complicated inventory process.

Bar-i’s liquor inventory software allows you to “map” multiple zones in the bar to increase speed and accuracy. As a result, the order of products on the spreadsheet will match the order of products behind the bar. Also, by creating multiple zones, you can organize your products differently for taking inventory of the bar and for inventory of the storeroom.

3. Using a clipboard doesn’t allow for aggregate counts.

This is especially problematic in a big bar where you have multiple wells, several backup bottles behind the bar, and even more backup bottles in the storeroom. Adding inventory totals in multiple areas creates additional opportunities for errors.

4. Data must be transferred from the clipboard to Excel.

Once you finish taking inventory, you must manually transfer all your data from the clipboard to an Excel spreadsheet. This is a huge waste of time, and it creates additional opportunities for errors.

When you use Bar-i’s system, all data is automatically entered onto a spreadsheet as you take inventory in order to streamline the process and reduce your risk of errors.

5. Clipboards only help you measure liquor cost, not product accountability.

If all you learn from doing inventory is your liquor cost, you’re not receiving the type of actionable information that will help you improve the performance of your bar. You will never see what’s missing or know which products are underperforming. Most bars are typically missing more alcohol than they think. As we mentioned earlier, many bars using outdated bar inventory systems experience roughly 20% shrinkage.

Bar-i will do all of your data analysis for you and send you a detailed report discussing the performance of each individual product sold at your bar. This allows you to identify products which are being given away or over-poured. Ultimately, this will help you significantly reduce your shrinkage and maximize the profitability of your bar.

To find out how our liquor inventory system can benefit your bar and help you maximize profits, please contact Bar-i today to schedule a free consultation. We provide services to bars nationwide from your offices in Denver, Colorado.
 

7 Restaurant Service and Profitability Lessons from Tim Kirkland, Author of “The Renegade Server” (Part 2)

In our last post, we discussed several tips I learned from Tim Kirkland that will help your staff improve their service and maximize tips. Fortunately, Tim had so many great pieces of advice that we couldn’t fit them into one post. Below are 4 more ways to improve the customer service at your restaurant or bar.

4. Sell round 2 as soon as you notice someone is almost ready for another drink.

As I discussed in tip #1, timing is everything. This is just as true for when you ask your table about the next round as it is for upselling. Consider the following example:

Two people go out for a beer after work. When the first person finishes his drink, his friend still has half a beer left. The worst way to address this situation is for the server to wait until both people are done to ask if they want another round. Since they are both done, they’re more likely to say no and ask for the check.

However, if the server comes over to the table right as the first person is finishing his drink and asks if he wants another, the customer is more likely to say yes since he’s still waiting for his friend to finish. Now both people are ordering drinks at different times. This increases the likelihood that the second person will also order another drink since his friend will have a nearly full drink that was just delivered to the table.

Key takeaway: Timing is key. By paying attention to the timing of when you ask customers about the next round, it increases the chances that you can potentially get several rounds out of a table that might have otherwise bought one beer and left. This boosts the bar’s profits and helps the server make more in tips.

5. Find the decision maker.

This strategy is particularly useful when you have tables of work colleagues. In these situations, employees may take a cue from their manager regarding whether it’s appropriate to order an alcoholic beverage. If you ask the wrong person for their order first, you may find yourself with a table full of iced teas since no one will want to be the first person to order a cocktail.

In order to avoid this situation, your server should try and find the decision maker and let that person order first. Hopefully, this person will order an alcoholic beverage which will let everyone else know it is acceptable to order a cocktail.

Happy Hour Specials - Bar-i Bar InventoryThe best way to accomplish this is to tell the table about one of your signature craft cocktails (or list off your Happy Hour drink specials for the day) and ask the open-ended question, “Would anyone like to try one?”

Your server will need to pay attention to the delivery of this so that it doesn’t come across as being pushy (see tip # 1 about upselling). But by presenting the entire table with an option that is considered a house specialty and asking if anyone would like one, you are likely to have the decision maker respond first.

If the decision maker jumps on board with the server’s recommendation, others are likely to follow suit (or order their favorite alcoholic beverage). This will increase the tab for the table, get them having more fun since they’re drinking, and create a situation where everyone wins – the bar will make more money and the server’s tip should improve as well.

Key takeaway: Learn how to read your tables. The more effectively your servers can read their tables, the more likely they will be to adjust their actions in a way that increases alcohol sales.

6. Get and use names.

This suggestion is particularly useful for bartenders, but it can still apply to servers in the right situation. When a customer sits down at the bar, the bartender should introduce himself by name and ask the customer his or her name. The bartender can follow this up with a “Nice to meet you Bob. Just call me over anytime you need something.”

The bartender should then address the customer by name every time he walks by. For example, “How is your drink tasting, Bob?” or “Can I get you something else, Bob?” or “Would you like to see a menu, Bob?”

If your bartender uses the customer’s name three or four times during this interaction, it’s more likely that he’ll remember the customer’s name the next time he returns to the bar. Now this new customer may be on his way to becoming a regular.

Key takeaway: Be personal in a disarming manner.
By asking for the customer’s name in a way that isn’t creepy, such as by introducing yourself first and asking the customer to address the bartender by name when they need something, you make it a more comfortable interaction for the customer. By continuing to address the customer by name, you make him feel special. This may increase the chances they’ll return, and it may also result in a better tip.

7. Have servers introduce managers.

In a lame attempt to increase customer service, many restaurants require managers to engage in a forced interaction with every table. In most instances, the manager will simply walk up to a table with no knowledge of the customers or their current experience and ask how everything is.

Most customers will find this a bit creepy and intrusive, leading to a dismissive response such as, “Everything’s fine.” Handled this way, the manager-table interaction becomes a box checking exercise that is a waste of time for everyone involved.

A more effective way to handle the manager check-in is to have the server introduce the manager to their tables. In order to make this interaction more meaningful, have the server tell the manager something about the table at the time of the introduction.

This tactic instantly creates a more engaging conversation because the manager learns something about the interests of the customer. This conversation will eventually segue into the manager asking how the table is enjoying their experience, but due to the more natural way it comes up, it will likely lead to a better response.

As a side benefit, this tactic forces the servers to learn more about their tables. Ultimately, this improves the customer experience because your customers will feel like their server cares about them and is truly interested in engaging them.

Key takeaway: Make the customer feel special. This is yet another way that you can make the customer feel special by taking a few brief moments to engage with your tables beyond simply taking their order. These small efforts to make a customer feel more important than they feel at other establishments will help you create a great experience that will keep people coming back for more.

Leveling the Playing Field for Independent Restaurants and Bars

One interesting point made by Tim Kirkland is that the restaurant industry is somewhat unique in terms of the value of being a small, independent establishment. In many industries, there’s a big advantage to being a huge company or brand. This is somewhat true in the restaurant industry, but not nearly as much as it is in other industries.

The big advantage independent restaurants have over large chains is personality. By creating a unique experience that customers enjoy, you can cultivate long term success at your restaurant. This ensures small, independent restaurants will always have their niche in the restaurant industry.

However, there are some advantages that large restaurant chains enjoy:

• Cost advantages
• Process advantages

As a small, independent restaurant, you can level the playing field by partnering with the right service providers, including Bar-i. Working with Bar-i allows you to have the same control over your processes and your bar inventory as larger franchises enjoy.

Ultimately, this provides you with the best of both worlds – your restaurant retains its unique personality while enjoying the streamlined processes typically found only at larger establishments.

Please contact Bar-i today to learn how our bar inventory system can help you maximize profits and improve your operations. We provide services to bars nationwide from our offices in Denver, Colorado.
 

7 Restaurant Service and Profitability Lessons from Tim Kirkland, Author of “The Renegade Server” (Part 1)

Bar-i is a member of the Colorado Bar Owners Association, an organization that represents the interests of local bar and restaurant owners, as well as other businesses involved in the restaurant industry. Currently, there are more than 200 local establishments that belong to this organization.

Tim Kirkland - Bar-i Bar InventoryRecently, I attended the Colorado Bar Owners Association annual conference, where I had the opportunity to attend a presentation by Tim Kirkland, the best-selling author who wrote The Renegade Server. Due to the success of his book, he has become one of the preeminent national figures in server training.

I was quite skeptical going into this presentation. Like many people, I’m a bit cynical of the value that can be obtained by attending presentations led by self-help, motivational speakers, and I was a bit worried that my time would be wasted by generic “rah-rah” platitudes. However, nothing could have been farther from the truth.

During the presentation, Tim was able to win me over with the quality of his ideas. Tim is a very smart man, and he has really thought through interactions between servers and customers to a level of detail that is similar to the way Bar-i thinks through all of the issues associated with bar inventory. As a result, Tim provided great insight about how to maximize the server/customer relationship.

I left this presentation with a wealth of valuable tips regarding how to improve the service your staff gives to your customers. These tips will benefit everyone involved:

• Your customers will receive great service, be happier, and want to return to your establishment more often
• Your restaurant or bar will benefit from increased business since you will have more returning customers
• Your servers will make more money because the excellent service they provide will likely result in better tips

Key Concept of The Renegade Server – It’s all about the People

Tim Kirkland’s best-selling book, The Renegade Server, argues that the key to providing great service is to focus on the people. You don’t necessarily have to be the best server to make a lot of money. You just need to be good with people.

According to Kirkland, most restaurants usually have a few servers that make a lot more money than the rest of the staff. Typically, the best server(s) make about twice as much as everyone else, and it’s not due to better shifts. These servers are simply good with people.

The best servers understand how to interact with their tables. They know how to get their tables to like them, which leads to customers tipping them well. If you approach your job as a server with the goal of making a lot of money, you’ll typically fall short. Instead, the best way to maximize your tips is to approach your job with the goal of pleasing the customers you serve.

If you can do a good job at anticipating and meeting your tables’ needs while getting them to like you, then you’ll make a lot more money in tips.

7 Ways to Improve Customer Service and Maximize Tips at your Bar or Restaurant

The following 7 tips will help your servers provide a better experience to your guests. If they incorporate these ideas into their daily server routine, it should result in increased sales, greater profits for the restaurant, and better tips for the server.

1. Upselling is all about timing indecision.

Upselling is a common practice used by most restaurants and bars. It’s a sales technique intended to get customers to purchase more expensive items or upgrade to higher priced options in an attempt to increase their bill.

It’s important to think about the science and timing of how you can make more money. When done properly, upselling is a great way to boost your tips and increase revenue for your restaurant or bar. But when it is not done correctly, upselling can irritate your customers and negatively impact tips.

Most customers find aggressive selling to be annoying and creepy. It makes you feel as if you’re being sold to or bullied into ordering something as opposed to deciding you want it on your own.

A common example of pushy upselling technique would be when a customer orders a vodka soda and the server responds by asking, “Do you want Kettle One in your cocktail?” This is pushy. If the customer wanted Kettle One, he would’ve asked for it.

This kind of upselling behavior can ruin the customer’s experience, and it will most likely negatively impact their opinion of the server. This isn’t a good formula for cultivating return customers or for increasing tips.

In order to avoid this situation, you need to time your upsell correctly and do it subtly. Consider the following example:

A server comes to a table to take a drink order for a couple. The man promptly orders a beer, but the woman says, “I still don’t know what I want.” The typical response from a server is to say, “I’ll come back to you.”

This is an incredibly wasted opportunity. Since she doesn’t know what she wants, you have a unique opportunity to try and guide her towards her ultimate drink choice.

Instead, your server should use this opportunity to suggest something delicious that is also a high profit/upsell type of drink. If she really likes it, she may order another and your server looks great for the recommendation. If not, she has that entire drink to figure out what she wants next.

Key takeaway: Timing is Key. Looking for undecided customers gives you an opportunity to be less pushy with your upsell. You can engage the customer by asking what they like and recommending something that aligns with their tastes. This allows you to subtly engage in upselling while providing excellent customer service.

2. Dirty olive martini trick.

There is small margin for error when making dirty martinis. You never truly know how “dirty” a customer wants it, and if you don’t get this right, their drink is subpar. Fortunately, there’s an easy way to ensure you get it right every time while showing the customer you care about their needs.

When someone orders a dirty martini, be conservative and make it a little dirty, but not too dirty. When you serve the drink, bring a shot glass of olive juice on the side and explain to the customer that you brought some extra olive juice so that they can adjust the cocktail to their tastes.

This tactic represents no additional cost to the bar or the server, but it makes the customer feel special and appreciated by tailoring the experience of making the drink to their taste.

3. Don’t skimp on limes.

Vodka tonic and vodka soda drinkers typically like a lot of lime with their drink. However, most bars serve these drinks with only one lime. The customer will squeeze the lime on the ridge of the glass into the drink and need to ask for extra limes.

To avoid this problem, serve the drink with a single lime on the rim of the glass and bring a separate small plate with two or three extra limes on it. This shows the customer you are taking the time to make their drink special the way they like it.

Key takeaway: Make the customer feel special. In both the dirty martini and extra lime tips, a small effort by the server will go a long way towards making customers feel special. This will help servers get better tips, but it will also establish a reputation that your bar cares about providing great service to their customers. This kind of reputation can only help your business.

In our next post, we will discuss an additional 4 tips that will help your servers improve their customer service and maximize tips.

Please contact Bar-i today to learn how our bar inventory system can help you maximize profits and improve your operations. We provide services to bars nationwide from our offices in Denver, Colorado.

Is Your Happy Hour Cannibalizing Your Sales?

The bar business is extremely competitive. Most large towns with a bustling night life will have dozens of bars in a concentrated area. In cities, this figure can be much higher. When you add a high failure rate to the competitive nature of this industry, you realize that every decision you make regarding how you run your bar is crucial to its success.

Happy Hour Specials - Bar-i Bar InventoryFor many bars, discounting and promotions play an important role in their success. One common way that bars use price promotions to attract customers is by offering Happy Hour specials. When done properly, these specials can significantly improve your business. However, if you don’t avoid certain common pitfalls associated with Happy Hour specials, it could lead your bar on the road to ruin.

Benefits of Offering Happy Hour Specials

There are several reasons why it makes sense to offer Happy Hour specials:

Attract customers to your bar at quiet times – This doesn’t necessarily need to only be during the traditional after-work (4-7 pm) Happy Hour time period. Several of the bars that work with Bar-i have seen a significant increase in late night business by offering Happy Hour deals after the dinner rush is over.

Introduce new customers to your concept – Ideally, you will be able to use your Happy Hour specials to cultivate return customers. If people initially check out your bar for the specials but like the environment, they may begin to frequent your bar more often.

Key Concepts Associated with Happy Hour Pricing

Consider the following concepts when coming up with your Happy Hour specials:

Volume vs. margin – When you reduce price, you reduce the overall profit margin on each drink. This isn’t necessarily a bad thing since ultimately you should be more concerned with your overall profits and not your profit margin on each item. However, it’s important to make sure your promotions strike the proper balance between volume and margin that will help you maximize profits.

Incremental business generated – When done properly, Happy Hour specials should bring in business. There should always be some people that wouldn’t normally be at your bar coming in for your great Happy Hour.

Cannibalized sales – This is the risky side of running Happy Hour deals. There will always be some regulars who would show up at your bar with or without these specials. In this situation, your regulars benefit from cheap drinks, but you’re not experiencing an increase in business. In addition, some of your new business may only show up for the discounted prices and not order anything from the full-price menu.

How Do I Avoid Cannibalizing My Profits during Happy Hour?

Strategic pricing decisions are ultimately a balancing act. You want to set your prices at a level where the increased volume outweighs the loss of profit margin so that your overall profits are greater. But you also need to create deals that keep customers ordering items that yield a higher profit margin.

Cannibalizing Profits - Bar InventoryMany bars get this balance wrong by only promoting low-end products. Let’s evaluate what happens if you offer $2 PBR Happy Hour specials, but no deal on craft beers. PBR is already cheaper than craft beers – you can often find it for $3 while a craft beer may range anywhere from $4-6. As a result, your craft beers are now 2-3 times as expensive as PBR during Happy Hour.

This drastic price disparity between PBR and craft beers often results in the following chain reaction:

• Value-oriented customers will likely feel compelled to order PBR due to the great deal, even though they’d prefer to drink a craft beer
• A disproportionate number of people end up drinking lower priced items that have a very small profit margin
• Your bar achieves maximum cannibalization effect due to the fact that very few people are drinking higher priced/higher margin items

By structuring your Happy Hour beer specials in a way that promotes mid and high end products as well, you can reduce the level of cannibalization. Instead of only offering $2 PBRs for Happy Hour, you should consider offering $1 off all drafts.

Including beers at all price points in your Happy Hour specials will have two important benefits:

• The customer is happier because he gets to drink what he wants while feeling like he’s getting a deal
• Your bar makes more money since higher priced/higher margin items will be ordered more frequently

You can apply this same concept to Happy Hour specials involving wine and liquor. Don’t just offer discounted wells for Happy Hour; instead, include a few craft cocktails and higher end liquors to keep people ordering these.

Bar-i Can Help You Make Strategic Pricing Decisions

Remember, a successful Happy Hour special creates a fair deal for all products you sell instead of drastic differentials in value that will ultimately cannibalize your profits. Bar-i’s free liquor cost calculator can help you price your Happy Hour specials properly so that you maximize the value these promotions can provide to both your customers and your bar.

Please contact Bar-i today to find out how our bar inventory system can help you maximize profits and improve your operations. We provide services to bars nationwide from our offices in Denver, Colorado.

 

“Magic Clipboard” Inventory Systems: Do They Provide Value or Just an Affordable Price?

clipboardThere are more bar inventory options than ever. If you are still recording inventory data onto a clipboard and manually transferring it to a spreadsheet, you are spending much more time than is necessary without achieving any of the truly actionable data that can help make your bar more profitable.

While it should be clear that your business would benefit from using a more sophisticated bar inventory system, it may be less clear which system you should choose. There is a huge variety of bar inventory systems available with prices ranging from free to thousands of dollars. How do you compare the value provided by so many systems at drastically different price points?

Many bars and restaurants have chosen to go with inexpensive inventory systems such as “magic clipboard systems.” While these options provide important benefits and upgrades over the traditional clipboard method, they may ultimately be more expensive than you think. When you look at the actual value provided by these options compared with higher end bar inventory systems such as Bar-i’s hybrid model, the true difference in price may surprise you.

What Are “Magic Clipboard” Systems?

“Magic clipboard” systems have become very popular recently, mainly due to their affordable cost and ease of use. They essentially replace the clipboard by performing the same essential functions (counting inventory, calculating liquor cost, and assisting with ordering) using an app designed for a phone or tablet.

There are several features that make magic clipboard systems attractive:
 

  • Low cost – You can often incorporate this technology into your bar operations for as low as $100/month.
  • Faster way to count – Using technology cuts the amount of time it takes to count inventory significantly compared with entering data on a clipboard and manually transferring it to a spreadsheet.
  • Sexy use of apps – These systems appeal to many people who enjoy the conveniences provided by technology. Since they are run by apps for your iPhone, iPad, or tablet, they make use of technology that many people are already familiar with, increasing their ease of use.
  • Provide aggregate information – Magic clipboard systems eliminate the need to manually transfer data by automatically totaling up all of the information you record and syncing it with a spreadsheet.
  • Automatic ordering – You can set par levels with these systems in order to streamline and expedite your ordering process.

Why Should I Spend Money on a More Sophisticated Bar Inventory System?

Magic clipboard systems are great if you want to have a glorified clipboard, but there are certain important differences in the type of data you achieve compared with more sophisticated systems such as Bar-i’s. While you may spend more money on a higher end bar inventory system, you will receive a very important benefit for this added expense – increased profits.

The more sophisticated and expensive bar inventory systems do much more than just save you time and replace your clipboard with a fancy app. They also provide you with a way to make more money.

This is accomplished by providing greater accountability. Magic clipboard systems can help you calculate your liquor cost, but they don’t give you the data necessary to determine which products are underperforming. More sophisticated systems will take the extra step of comparing what is rung in vs. what is poured.

When you consider that most bars experience approximately 20% inventory shrinkage, this extra data becomes extremely useful. By providing this greater level of accountability, a more sophisticated bar inventory system can help you reduce shrinkage and boost profits.

What Tasks Are Required to Provide this Accountability?

There are several important tasks that are necessary to achieve this level of accountability which are not provided by magic clipboard systems:
 

  • Account for deliveries – You need to know how many bottles were delivered to determine precisely how much of a product was sold.
  • Product by product detail – Instead of indicating that 150 total bottles were delivered, you must itemize how many bottles of each product were delivered to provide the actionable information you need.
  • Integrate with sales data – Sophisticated systems such as Bar-i’s pulls sales data out for each specific product, giving you more granular, detailed information that compares usage to sales.
  • Error resolution – Errors in the inventory process are inevitable. You need a bar inventory system that anticipates errors and provides you with a way to identify and resolve them so that you end up with correct results.

In addition, working with more sophisticated and expensive bar inventory service providers adds a level of independence to the process. When you work with Bar-i, we account for all deliveries, perform all data entry, integrate with sales data, and take care of the error resolution for you. Magic clipboard systems don’t provide you with a third party to take care of these important tasks.

The Big Picture: Price vs. Value

So why should you spend the extra money on a more sophisticated bar inventory system? It depends on what is more important to you – price or value.

A more sophisticated bar inventory system will typically help you achieve a 2-4% drop in liquor cost. For a smaller bar doing $10,000 in sales per week, those savings amount to approximately $10,000-$20,000 a year. This figure will be even larger for high volume bars.

While a less expensive system is attractive due to the sticker price, you need to account for the additional profits you make using more sophisticated systems when comparing the actual value you receive for your cost.

If you are just trying to save time, then the magic clipboard system may be right for you. But if you are truly interested in making more money, you need to find a system that will provide accountability at a reasonable price. That is the only way to maximize the value of your bar inventory system.

To find out how our liquor inventory system can benefit your bar and help you maximize profits, please contact Bar-i today to schedule a free consultation. We provide services to bars nationwide from our offices in Denver, Colorado.
 

New Bar-i Licensee Completes First Week of Training

Over the past few years, Bar-i has grown into a successful liquor inventory business. While many of the bars and restaurants we work with are in Colorado, we are currently providing services to 60 clients nationwide. Recently, Jamie and Scotty felt it was time to take the next step in growing the company, and they’ve begun the process of franchising the Bar-i brand, just like Bevintel has done with their franchisees.

Bar-i expects to start offering franchise opportunities within the next 12 months. In the meantime, we are taking the intermediary step of licensing our software. This will allow some early adopters to set up their own business while we work out the legal requirements necessary to begin franchising.

We consider software licensing to be an important stepping stone to franchising, allowing us to learn by experience and move forward with the process until we can create a full franchise offering. The more experience Bar-i can gain working with licensees, the smoother the franchising process will be once it gets underway.

Working with licensees will also help Bar-i develop our training processes etc., which will be invaluable once we begin offering franchising opportunities. Ultimately, our end goal is to build a strong national brand that delivers exceptional service.

The Ideal Bar-i Licensee

While some of our licensing and franchising plans have similar in nature to the successful model established by Bevintel franchises, Jamie and Scotty have made important alterations to the process in order to reflect the unique nature of Bar-i’s services.

The cost to become a Bar-i licensee is ~$15,000. This covers all start-up expenses, including:

• All required equipment and software
• Licensing costs
• Initial training

There has been considerable interest in our licensing opportunity. Over 15 people contacted us about becoming a Bar-i licensee. After careful consideration, we chose Jeremy to become our first official licensee, and we’re excited to have him come aboard the Bar-i team.

There were several reasons why we chose to work with Jeremy:

Attitude – Jeremy possesses a go-getter attitude and has a strong presence. We felt that he is someone who can help Bar-i make good strategic decisions and help build the success of the company.

Sales background – Jeremy has a strong sales background, which should help him attract clients. In our experience, building a client roster is perhaps the most challenging element of growing this business from the ground up, so Jeremy’s sales experience will make this aspect of the job much easier and set him up for success.

Complimentary skill set – While Jeremy has some restaurant experience, his strengths lie in sales. We felt that his skill set provides a great complement to what Jamie and Scotty bring to the table, which is decades of combined experience in the restaurant industry. This restaurant experience is crucial to thriving as a liquor inventory service provider, and we can help round out that part of Jeremy’s skill set. Since Jeremy is an early adopter of the Bar-i brand, there is tremendous growth potential for him. Jamie and Scotty saw potential for this to evolve into a great collaborative venture, and they are excited about getting Jeremy involved in helping to build the Bar-i brand.

As a new licensee, Jeremy will be paying Bar-i a small licensing fee every time he uses our liquor inventory software. This allows him to build his own business while paying for the right to use our product to deliver his services.

Week 1 Training: A Comprehensive Overview of the Bar-i Way

Jeremy had his work cut out for him during his first week of training. It was an intensive, comprehensive overview of all aspects of our business. This included:

Reading the Bar-i operations manual – This is a lengthy process. Our training manual is more than 20,000 words. However, Scotty and Jamie feel it is an important part of the training process. The manual helps explain both what Bar-i does and why we do it. This provides a window into the thought process behind how the business is constructed and the way our services are provided.

Viewing training videos – Our training videos cover many of the basic concepts involved in our liquor inventory system. We prefer to use videos for time efficiency purposes. They allow Jeremy to learn the basics of the business on his own, ensuring the time he spends with Scotty and Jamie can be used to address his specific questions.

Reviewing Excel shortcuts — Bar-i’s liquor inventory software was custom-designed from the ground up, so there is a bit of a learning curve involved. This starts right away during the first week of training. Our software is Excel-based. This makes it flexible and allows for shortcuts and integrations with other software programs such as Dropbox. It is also fast and customizable, and it allows for the use of keyboard shortcuts which makes it the fastest liquor inventory counting software available. 

Invoice training – We set up a module on how to efficiently and accurately enter invoices after deliveries are made. One of the benefits of working with Bar-i is that we perform all data entry for our clients, so understanding this process is an important part of providing our services.

Recipe training – The Bar-i system looks at a bar’s POS reports and sees how many times each button was rung in. We can use this information to create recipes for these drinks, allowing our clients to more efficiently optimize their POS system, which will help in pricing decisions and achieving the actionable information necessary to maximize profits.

Completing self-count audits – Jeremy worked with Scotty on completing self-count audits for some existing clients. This provided him with an opportunity to apply what he had learned on actual clients. We felt it was important for him to work closely with Scotty on this to ensure he fully understands the process before performing audits on his own.

Out-selling – Jeremy scheduled his first trials. We have him doing a few free trials as he gets going and gains some experience in the industry. By the end of the first week, Jeremy was identifying a few bars to work with to set up these trials with the hope that they will eventually become his first clients.

Looking Ahead: Next Steps for New Licensee Training

Jamie and Scotty are currently at the National Restaurant Association (NRA) trade show in Chicago. This gives Jeremy an opportunity to review all of the information from Week 1 on his own before moving forward. Next week, training resumes and here is what Jeremy can expect to work on:

Count training – This will happen in Week 2 of training. Jeremy will get to work with some existing Bar-i clients and perform free audits for them. We consider this to be a win/win for everyone involved: our clients get free audits, and Jeremy gains valuable experience performing an important part of our services.

First trials – This will happen in Week 3. Jamie will work with Jeremy to set up his first few client trials, providing one-on-one support to him during the early stages of this process to set him up for success.

Post-training – After training is complete, Bar-i will use screen sharing software to ensure Jeremy is performing his first few solo audits successfully. This allows us to provide him with feedback and help him grow in his new role.

We are excited about working with our new licensee. We recognize that it is as much a learning experience for Scotty and Jamie as it is for Jeremy, and hopefully we can begin to refine the process in order to ensure all Bar-i licensees have all the tools necessary for success. Ultimately, we believe the people who will benefit most from this experience are our first franchise candidates, since the training process will be streamlined by that point.

If you are interested in learning more about franchising and licensing opportunities, please contact Bar-i today. We provide liquor inventory services to clients nationwide from our offices in Denver, Colorado.
 

4 Commonly Used, Yet Flawed Methods to Inventory Liquor Bottles at Your Bar

Not all liquor inventory methods are created equal. There are four factors which impact the effectiveness of a particular method. In order to ensure you receive the precise, actionable information necessary to determine the performance of each product sold at your bar, you will want to choose a liquor inventory method that is:

• Fast
• Accurate
• Objective
• Automatic

We will review four of the most common methods to inventory the liquor bottles at your bar. While these methods offer some benefits, they all possess certain flaws which prevent you from achieving the quality of data necessary to maximize your profitability. It is important to understand these drawbacks before choosing to move forward with one of these liquor inventory systems.

Standard Tenthing Method

The standard method for taking inventory of liquor bottles is to tenth them. This involves picking up or eyeballing the bottle to estimate how full it is to the nearest tenth. You will then record this estimated measurement on a clipboard. When you finish taking inventory of every bottle in your bar, you must then manually transfer this data from your clipboard to a spreadsheet.

In spite of its widespread use, the tenthing method is by far the least effective way to take inventory of your liquor bottles. It does not meet any of the four criteria mentioned above for an effective liquor inventory method.

The problems with the tenthing method include:

Subjective – It is highly likely that different employees may record a different reading for the same bottle.

Inaccurate – This type of measurement relies heavily on human judgment. This becomes particularly challenging when you are taking inventory of oddly shaped bottles such as Crown Royal, since it is much harder to determine how much liquor is in a bottle that doesn’t have a standard shape.
crown royal
Slow – In most instances, the product order in your bar won’t match the order on the clipboard. Typically, products are arranged in alphabetical order on the clipboard. However, the bottles are most likely arranged differently in your bar in order to make life easier for your bartenders. As a result, you will constantly have to scan the clipboard to find the product you are trying to inventory, making it a time-consuming and poorly designed system.

Manual data transfer – With this method, data transfer must be done manually. Not only is this very time-consuming, but it creates numerous opportunities for data transfer errors. There is always a chance that you may misread a figure or fail to transfer the right data for the right product.

For these reasons, Bar-i doesn’t recommend using the standard tenthing method under any circumstances.

Electronic Tenthing

Electronic tenthing is very similar to the traditional tenthing method, but technology is used to speed up the process. In this method, you will download software that will work with your iPhone or iPad. You then take a picture of the bottle using your iPhone or iPad and point to the level of the liquid left in the bottle on the picture. The software uses an algorithm to determine how much is left in the bottle.

partender

This method represents an improvement over standard tenthing. It is:

Faster – Bottles can be loaded into the software in the order you have them at your bar, speeding up the process significantly.
More objective – An algorithm is used to calculate the level of inventory in each bottle instead of the human brain.
Automatic – The software used with this system records all data and does everything for you.

In addition, the software used for electronic tenthing will generate a report that tells you exactly what needs to be purchased based on inventory levels that have fallen below the pars you set. Standard tenthing does not give you this kind of actionable information.

However, it is still very difficult to generate accurate data using this method. There are two problems with the accuracy of electronic tenthing:

• It is possible to put the line on the wrong spot on the bottle, which will give you an incorrect inventory level.

• This is still a tenthing method, which means you can never be confident in measuring individual pours. For example, rarely-used products such as Johnny Walker Blue may only sell one or two servings a week. This will not even equate to one tenth of the bottle, and as a result, this method will not be accurate enough to measure the amount of product that was actually used. Considering the point of your liquor inventory system is to provide precise data to make informed decisions, this lack of precision is a real problem. 

Sticker Method

The sticker method uses a special sticker to identify the amount of liquor left in each bottle. When you receive your deliveries, you place a sticker on the side of every bottle. Then when it is time to take inventory, you scan the sticker to find out how much liquor is left in the bottle.

scannabar

There are two important benefits to using the sticker system:

Automatic – Once you scan the bottle, all data is automatically entered into the inventory system for you.
Objective – The sticker system eliminates the human judgment errors that are common in the standard tenthing system.

However, there are also several problems with the sticker system that make it less than ideal as your liquor inventory solution:

Not accurate – This method is only slightly more accurate than the tenthing method, but not accurate enough to give you actionable data on rarely-used bottles.

Slow – The process of scanning stickers when you take inventory may be fast, but the overall process is slow and inefficient. Every time you receive a new bottle in a shipment, you must attach a sticker to it. This takes a great deal of time.

Expensive – These stickers are very expensive. Since you need one for every bottle that is used at your bar, these costs add up quickly.

Daily inventory responsibility – With this system, you must consider inventory issues immediately with each delivery because stickers must be attached to each bottle right away. Any time your inventory system requires you to do something every day, it increases the chances of a problem, and it also increases the amount of time you spend performing inventory-related tasks. With Bar-i’s liquor inventory system, you simply hold onto your inventory invoices and let us do all of the data entry for you.

Real Time Liquor Inventory Systems

Real time systems use stoppers that are placed on each liquor bottle to measure precisely how much liquor has been removed from the bottle. This represents an opposite approach from the other systems discussed above. In those systems, you are determining how much liquor is left in the bottle, but with real time systems, you are determining how much has been removed.

real time system

There are several benefits to using a real time liquor inventory system:

Fast – Since these calculations are made in real time while you are pouring drinks, the system is very fast. However, you still need to verify your results.
Objective – You will receive the same exact reading no matter who pours the drink.
Automatic – Calculations are performed automatically every time you use a bottle.

However, there are also several problems with this liquor inventory system that make it a less than ideal solution:

Inaccurate – You will get small inaccuracies with each pour, requiring you to verify that your theoretical inventory matches your actual inventory. Therefore, you must still perform a physical inventory, which is time-consuming and somewhat negates the efficiency of this system.

Unable to reconcile deliveries – Since real time systems only measure what is poured, they don’t provide the comprehensiveness to determine if whole bottles have been stolen or to spot an overcharge on your invoice.

High set up cost – You need to buy a stopper for every bottle at your bar. As a result, the set up cost can run you as much as $10,000 for a real time system.

Highly visible – Since your customers can see the stoppers on each bottle in your bar, real time systems are highly visible. This makes it obvious to customers that you are being very careful with every pour, which can create the impression that you have stingy pours for your drinks. Ultimately, this will be a huge turn-off to many customers.

There is one other liquor inventory system which addresses all four of the criteria for an effective system. We will discuss this method in our next blog post and explain why we recommend you choose it as your liquor inventory solution at your bar.

To find out how our liquor inventory system can benefit your bar and help you maximize profits, please contact Bar-i today to schedule a free consultation. We provide services to bars nationwide from our offices in Denver, Colorado.
 

Training

This page is currently in beta form. Please click the links below to watch our training videos: 

A guide to our performance reports: vimeo | youtube

Make changes to the counting map: vimeo | youtube

Enter a new product: vimeo | youtube

How to use the error tab: vimeo | youtube

Paste your POS report into the counting tool: vimeo | youtube

How to use the communication tab: vimeo | youtube

How to complete the variance report: vimeo | youtube

How to use the order guide: vimeo | youtube

How to change the keg scale setting: vimeo | youtube

How to manually enter scale weights: vimeo | youtube