July 2005 Edition
Business Behind Bars

The bar can be a lucrative part of any foodservice operation, but it is also vulnerable to shrinkage. Bar owners are painfully aware of the many ways that cash, liquor and employees can combine to form waste, mismanagement and theft. Keeping a closer eye on the first three can help avoid the last three.

Calling the shots

First, make sure a shot really is a shot. There are many ways to pour a drink, so make sure the method you’re using is accurate. Free pouring—even if the bartender is skilled, experienced and honest—really can’t match controlled systems such as bottle-top dispensers and liquor guns. Many systems can even be interfaced with your POS system.

Then make sure you know where those shots are going: if it gets poured, it gets recorded. That means tracking all complimentary drinks, and documenting all spillage and any alcohol used by the kitchen for sauces and cooking.

Finally, know exactly how much you have and how much you’ve sold. Taking a regular, accurate and

thorough liquor inventory not only identifies how much is unaccounted for, it makes it harder for stock to fall

into the profit vacuum known as shrinkage. If you’re depending on a simple bottle count for your inventory, you’re missing half the picture.

“You don’t get a feel for what’s physically on the shelf,” says Barry Driedger, founder and president of Bevinco liquor inventory control service. “There’s somewhere between 120 and 150 bottles there. So even if they’re all half full, you can have a significant amount of inventory that’s not being accounted for if you’re just counting empties or counting the fulls. That could represent, over the course of the week, half of your sales volume.”

A bottle count also offers no control over servers, while an independent liquor inventory offers a strong deterrent for theft behind the bar.

“The staff would know that someone is there

just keeping a closer eye. It’s a third party, so it’s impartial,” Driedger says. “It’s just the facts, so the owner can then make decisions and move forward based on those facts.”

Driedger estimates the typical rate of shrinkage inCanada at around 20%. Bevinco can reduce that to below 5%, he says.

“And that will affect their pour cost by several basis points,” he adds. The cost of the service varies depending on the size of the establishment, but the average operation could expect to pay about $200 per week. Driedger says that’s a fraction of what customers save by using the service.

Weighing profits

Bevinco takes extremely accurate inventory by weighing every open bottle in the bar. Every week, Bevinco takes stock of every drop of every type of liquor, compares it to how much was there a week ago, and how much of each type of liquor was sold.

Driedger says shrinkage can often be linked to a lack of accountability.

“Most people are relatively honest, so if they’re being checked they will do the right thing,” he says. “It’s like in

a bank: if they never counted the money at the end of the day, I’d probably be tempted. It’s kind of the same thing here. We’re dealing with cash and booze, and if nobody’s counting it on a consistent basis, you can’t help but have some of it disappear.”

People will take advantage if an opportunity to steal is staring them in the face, Driedger says.

“We’re just trying to block that hole,” he says, adding that one of the first ways to improve accountability and reduce shrinkage is to make sure the person doing the stealing isn’t the same person who is doing the inventory.

“If you’re trusting your staff to account for themselves, you’re really looking for trouble,” he says. “It’s sort of like the fox guarding the henhouse.”

It’s not unusual for a bartender or bar manager to be responsible for a restaurant’s liquor inventory from ordering stock right through

to ringing in sales.

“That’s unheard of in any other industry,” says Driedger. “It’s very unusual, because in every other business there’s an audit procedure where it isn’t the same person who orders the goods, receives the goods, stocks the goods, sells the goods, does inventory,

takes the cash.”

Finally, remember that no liquor inventory system will deter theft, track volumes and decrease shrinkage if it

isn’t implemented. A bar owner or a bar manager has many other responsibilities—some of which may seem urgent, and may result in an inventory getting skipped

or postponed.

“This is all we do,” Driedger says, highlighting one of the key advantages to using a service. “It’s going to get done consistently and accurately—on time, every time.”

'The typical rate of liquor shrinkage in Canada is 20%'