Control IssuesMarch 1, 2009 By: Michael Harrelson Night Club and Bar Magazine
An aggressive sales policy is only half a strategy in gaining more revenue on-premise. Along with selling more beer, food, wine and spirits, better control of inventory is just as vital in avoiding the excessive costs, lower returns, outright theft and poorly served customers that often result when this perpetual task is mismanaged in a bar setting.
While purveyors routinely go the distance to add to their bottom line in the first instance, few bar professionals can honestly say that the inventory controls in place at their respective establishments receive the same level of consideration. Even for operators religiously implementing inventory control procedures, some gaping holes can remain in the form of excessively high pour costs, fragmented data gathering and analysis and overstock in the storage room, just to name a few of the more egregious examples.
In less competitive times, venues could get away with lax inventory accountability, but no more. Increasingly, beverage and food managers are paying equal attention to the cost and supply side of the revenue equation through technology that accentuates the positive aspects of the human component driving the hospitality trade while reigning in the less desirable elements of human nature.
Saved from the Drain
One bar owner who admits to the likelihood that he was essentially being mugged by shrinkage before he installed his Maitre D’ POS Touchscreen system three years ago is Jack Weeks, the proprietor of Hush, a popular nightclub in Victoria, B.C. Rather than ringing up cocktails with beverage category keys such as Martini, vodka or tonic, Weeks says his bartenders were able to cheat the system by entering the drinks with a “No Sale” key that might typically be intended to open the register at the end of a shift or give change to a customer.
Unlike the previous POS/IC technology that he employed in his 210-person-capacity club, the Maitre D’ Touchscreen system does not allow any drinks to be entered into the system using the No Sale key.
“Man, it is beautiful,” Weeks says. “It won’t let you ring in anything with a zero.”
From a security standpoint, he says the technology is flexible enough to meet the requirements of a variety of venues and operational setups.
“It allows me to use cards or numbers for bartenders or waiters to swipe through,” he says.
Even the back-of-the-house end of the technology has a code/access requirement that allows an operator the discretion of setting different levels of access for different employees. Both virtual security walls are important to the integrity of the numbers and the inventory at Hush in real time, Weeks says, particularly the back end of the system with its reach into beverage inventory itself.
“If somebody who is not staff is trying to steal from you and gets into your inventory, they can steal a lot of product (without this protection).”
The front-of-the-house security feature does more than watchdog the till, Weeks says. “You can actually do your staff wage management through it. They clock in on the system and clock out at the end of their shift. You can do payroll through it as well.”
Weeks has his Touchscreen programmed to give him a daily update of what’s sold at the bar — from premium highballs to shooters — broken down by liquor categories and cocktail divisions. “It will also give you the percentages of sales,” he says, “providing a better understanding of just where the night’s receipts were netted.”
The case for tighter inventory control across the retail channel is written in bold by way of statistics on wasted and lost liquor, wine and beer.
Shannon Arnold, director of marketing for Posera, maker of Maitre ‘D software, puts the shrinkage rate for bars, clubs and restaurants in the United States between 23 and 27 percent annually.
“It can make the difference in profitability when you are looking at those kinds of loss rates,” she says.
Even establishments with presumably efficient POS/IC systems and conscientious management in place are not immune to loss, Arnold says.
“In evaluating their inventory control systems, operators may want to consider the fact that 3.4 drinks served from the average bottle of liquor never go through a POS system. Typically, bar managers will not think about the importance of telling staff not to use the No Sale key to ring sales. When it occurs in a bar, managers will generally report it as waste.”
With 21 locations in the western United States and annual sales of draft beer, wine and spirits measured generating upwards of 30 percent of total sales, according to market research firm Technomic, Yard House Restaurants is one chain that is anything but casual in its approach to inventory control.
For Yard House beverage director Kip Snider, prompt and reliable inventory control and reporting is at the forefront of maintaining an advantage over the competition and keeping costs low. To accomplish that in real time and across great distances, Yard House relies on AccuBar technology, which utilizes Pocket PC PDAs to scan the barcodes on the labels of liquor, beer and wine bottles, as well as any other items that a venue has in inventory. Snider says AccuBar inventory control modules enable him to walk the thin line between having enough product on hand for customers and not having overstock in the storage room.
The system allows Yard House to adjust its beverage usage levels up or down based on past usage for a specific week, thereby keeping costs down.
“Most people just order a regular set amount, and they have an overabundance of product on the shelf,” Snider explains.
While ordering an extra case or keg here and there might not seem such a travesty at a small bar or lounge, Snider says the consequences are magnified in a chain operation such as Yard House. “When you look at just our beer side, you are looking at 130 to 180 brands in house,” he says. “We could have 500 kegs in a keg room. With this system, we get away from human errors and let the machine do the work for us.”
Whether it’s stocking the premium and classic draft beer that makes up 52 percent of Yard House sales or the 32 percent from spirits and the seven to eight percent derived from wine, Snider says reordering is easy, almost automatic.
“Let’s say that my minimum bar level for Absolut Vodka is eight bottles. Every time I use one, the system retrieves the information, and when I get down to eight, it automatically prompts me to order more.”
Snider says the weekly chore of taking inventory also is much more manageable and far less time-consuming. “It does not necessarily save on labor costs as much as it frees up our management staff,” he asserts.
“The old way, it could have taken five to seven hours per store to do inventory. Now, it takes about three hours.”
With the technology that links all 21 Yard House locations in California and other western states, Snider says he always has the information necessary to make sound ordering decisions at his fingertips.
“I can look up the history of inventory usage up to three years ago. I can look at the reports from all 21 of our locations, and I can use the system to place beverage orders for a bar manager who may be out sick,” he explains. “I could pull up the information from our corporate office and still have the orders sent out to the stores for the next day.”
It’s impossible to run a tight ship if you can’t keep track of every unit and every dollar. Today, it pays to let the latest technology ease the burden of doing so. NCB