How to do liquor inventory correctly is something that crosses the minds of all new and experienced bar managers. That being said, if we asked a room full of managers to raise their hands if they enjoy doing inventory, there would most likely be zero hands raised.
The truth is, the alcohol inventory process takes a long time. It’s incredibly complicated, repetitive, and full of potential pitfalls that can lead to mistakes, miscounts, and lost revenue. The bad news is that liquor inventory just plain sucks. The good news is that it can be sustainably improved with a few simple tweaks to the way you go about it. Believe it or not, you’ll be raising your hand to loving liquor inventory in no time.
First and foremost, establishing an efficient restaurant inventory system that works well for you and your staff is critical. It’s the first building block you must have in place to run your bar or restaurant successfully. We’ll lay out the steps and tools you need to ensure you know how to do liquor inventory, the best way possible.
Bar Inventory Management 101
The first and most obvious goal of liquor inventory is making sure you have enough liquor, beer, wine, and other supplies to satisfy your customers. However, the real value of an efficient liquor inventory system isn’t just keeping your bar’s doors open and having everything in stock. It’s actually in the ability to calculate inventory usage.
With a successful inventory process, you will get to know much more about your business and where its potential profits lie.
To explain, conducting liquor inventory provides useful information, such as how well your bar is doing financially, which products sell well, and which provide the best return on investment (it’s not always the same thing). Overall, you’ll get a clear understanding of how often you need to place purchase orders and how much of your liquor stock goes unused. This is also known as “dead stock”. With this information at your disposal, you’ll be able to cut costs by reducing product waste.
Beyond logistical concerns, the inventory process tells you what your product variance is and where shrinkage is happening. In addition, you’ll be able to set the perfect pars and know what your pour costs are for any given product. Evidently, knowing how to do liquor inventory provides many benefits.
How do you calculate liquor inventory?
At first glance, inventory management seems like a fairly easy process. Knowing how to count liquor accurately is the first step in this process. To do so, you need a few key terms:
- Starting Inventory, or how much product your establishment had at the beginning of your inventory period (which might consist of the previous week or the previous month, depending on your preferences).
- Ending Inventory, or how much product you have at the end of your given inventory period.
- Received Inventory, or how much product you received during this period through purchase orders.
With these three factors, you can effectively count how much liquor your bar owns. All you have to do is plug the numbers into the formula below:
Starting inventory + received inventory — ending inventory = usage
After using this formula, you should know what your liquor usage is. This simple calculation gives you the power to unlock all the knowledge mentioned above. Before we get to the end product, though, we’ll answer a few more questions about the process to get there.
How does liquor inventory work?
Let’s discuss what processes you can use to find your bar’s starting, ending, and received inventory.
Before diving in, we’ll review some fundamental practices. It’s best to implement these prior to starting to avoid falling into bad habits that can wreak havoc on the results of your inventory counts.
1. Count your liquor stores using the same method, every single time
Start in the same part of the bar and track each factor in the same order. While we’re on the topic, you can really make your life easier by always taking inventory when your restaurant is closed. That way, there is less likely to be confusion or miscounts.
2. Develop a schedule and stick to it
How often should a bar take inventory? As mentioned above, your inventory schedule depends on your preferences. The best rule of thumb is to take inventory at the same rate throughout the year and know what will work best for your bar and lifestyle.
3. Involve the whole team
Unsurprisingly, you’ll need to train a few employees on how to do liquor inventory by themselves. While all employees might not be involved in the whole process, you should train everyone to look out for potential inventory risks such as over-pouring, excessive free drinks, and spillage.
4. Know your own management style and staff
This, above all, is the key to establishing a beverage inventory system that works for your business. If the system you choose causes friction or holds up the other functions of your bar, don’t be afraid to reevaluate and tweak it where appropriate.
How to Take Liquor Inventory: The Basics
Armed with the tips above, picture yourself in your establishment and imagine the places where your liquor is kept. Then, decide where your ideal inventory process will start. Whether you’re using old-fashioned pen and paper or bar inventory software, make sure your tools are laid out in a consistent and sensible way.
Now, you’re ready to start counting. Include the alcohol type, brand, name, and bottle size. Create different columns or categories for product stored in different areas of your bar, or at different locations. If your software comes equipped with a liquor scale app or integration, make sure to use it. Lastly, measure each bottle consistently and don’t switch up your methods.
Repeat the same process for all storage areas of your bar. Your units of measurement might vary based on cases vs. bottles, so account for that in the organization of your spreadsheet or system. Once you’ve completed counting and measuring every product on hand, add up the totals for each category you created.
At the end of the inventory period you decided on, you’ll recount everything. Repeat the exact same process, counting in the same direction and with the same scale. Now, you should have your beginning and ending inventory count.
During the inventory period your restaurant will, of course, sell and receive various bottles. Make sure to account for that product by keeping a record of how much you receive through saving and tracking invoices. It’s important to keep a record of the product you sell through your POS system.
This covers the basics of how to do liquor inventory. But, whether you’re an inventory newbie or long-time pro, any inventory management process can use an upgrade. Next, we’ll lay out a few tips that you can use to tweak and perfect your current system.
5 Ways to Better Manage Your Liquor Inventory
1. Know your customers and how to keep them happy
The happiest customers are the ones who get what they want. In fact, it’s important to collect as much information about them as possible. By knowing their favorite drinks, you can significantly reduce drink shortages.
Are your customers the type who want a beer on draft or the next trendy cocktail? If they are the cocktail-type, which liquor is consumed most frequently and how can you optimize the brand you use for popular menu items? Use the data at your disposal to get to know your customers and keep them coming back.
2. Place purchase orders strategically
Placing rush orders for product because you didn’t realize the bar is low on stock is an easy way to waste a lot of money. Consistent and thorough inventory, as described above, helps prevent rush orders, as does using a liquor inventory scale.
On the flipside, ordering too much of any given product leads to dead stock sitting unused in your back room, and can be equally as harmful to your business. Strategic purchase orders, using valuable information from an effective inventory management system, will go a long way toward preventing either extreme scenario.
3. Recognize where your money goes
In other words, identify areas where you’re wasting liquor. Excessive pours, improper storage, employee theft, inventory miscounts, or general negligence could all be causing your bar to lose out on profit when it isn’t necessary. Knowing where that waste is happening, measuring it, and taking steps to reduce it is the best way to protect the health of your business.
4. Get smart about how you use existing product
There are several practices to facilitate better use of the product you already have on hand. The “first in, first out” method is an industry favorite that involves selling old product before selling your brand new product. This helps reduce the amount of stock that goes bad without ever seeing the front of your bar and is a great way to reduce waste.
Investing in safety stock is another option in which you order excess product in anticipation of customer preferences or changing seasonal demands. Along the same lines, use your sales data to optimize deals and promotions to move product quickly when needed. Finally, creatively use low-selling product by crafting new menu items that pair unpopular product with popular product to move it out of your back room.
5. Invest in a time-saving liquor inventory app
All of these methods to better your bar inventory management hinge on having a robust inventory process. The easiest way to level up your inventory is to invest in an app that can fit your bar’s needs and automate your processes for faster, painless sessions.
But it’s not just speed you want, it’s effectiveness and efficiency too.
Why an Efficient Bar Inventory System is a Game Changer
Most importantly, an efficient system will protect your carefully planned budget. Efficiency in your inventory process will cut down on employee hours and the amount of time you spend counting liquor. More than that, it will help prevent last-minute orders, wasted product, unforeseen costs, and revenue loss.
If the health of your bottom line isn’t enough to convince you, a more efficient inventory system will also boost employee morale and customer happiness. With better organization and foresight of seasonal demand, you’ll be less likely to run out of popular ingredients, making your customers more likely to return again and again. With better knowledge of your business and what areas need work, you’ll be better able to build a trusting and transparent work environment. Efficiency is a win for everyone involved.
Bar Inventory Software, a Better Solution
Learning how to do liquor inventory is bad enough as it is. So, don’t make it any harder than it needs to be. Instead, choose a bar inventory app made by restaurant owners, for restaurant owners. It’s crucial to pick one that can accomplish everything a busy bar needs to succeed.
From beverage analytics and recipe costing to easy inventory and ordering, WISK does it all. When you go with a software that includes 24/7 customer support and features that cut your inventory time by 80%, you know you’re in good hands. We believe that’s what you deserve.
So, cut it out with the pen and paper, spreadsheets, and other ancient tools. Instead, get in touch. We’d love to hear from you.
For more details, check out https://wisk.ai/bar-restaurant-inventory-software/.