Today we are going to go over one of the most important steps in bar inventory analysis for all bar and restaurant owners.
This blog is about the most important aspect of sales and inventory control.
Don’t get me wrong, there are a lot of important steps and procedures a manager or owner must do and put in place to make sure his or her inventory and sales are correct and nothing is missing. And if I want to be literal, clearly locking the doors at nighttime is the most important step!
A wise bar operator once told me, “any schmuck can put together a liquor order, but a smart bar manager knows the fine line of ordering enough so they never run out of anything, but never unnecessarily purchase too much inventory and have money tied up in stock that does not sell.”
When I was given this advice, I was managing a bar with approximately $150 to $200K in liquor, draft and bottled beer sales a week. My weekly liquor order would vary from $30 – $50K a week depending on what was going on. It was one of the biggest expenses of the bar. The raw size of the liquor order made it a huge concern for the owners, who wanted to make sure it was done right every week. Every week was challenge to find a balance between making sure stock was always where it needed to be so we never ran out of anything, but also not to over spend. Over spending could have meant thousands of dollars tied up in inventory that the business could have used elsewhere.
With constantly increasing prices on beer and spirits, many operators are expanding upwards into their supply chains to keep their costs in check, and profits high. This strategy is largely dependent on the rules local governments have over the production, control and sale of products produced in house. In Alberta, the province I reside, recent changes in the laws regarding minimum brewing requirements have opened the door for producers to become producers for very little start up costs from what they were in the past.
Growing nightclubs and bars with complex product needs require managers with above-average skills in the areas of organization, communication and judgement. When a busy venue has multiple bookings, and each booking has special needs that must be met, a liquor manager who is tuned into the requirements of the business is absolutely vital. Keeping track of a busy venue’s liquor inventory requirements can be extremely challenging.
As a bar owner or manager, the key to turning a profit is turning over your inventory. While you need to have a certain amount of inventory on hand to make sure that you can serve customers their favorite drink and keep the spirits flowing, too much sitting inventory will cost you. There is no point in having all your assets tied up in inventory that has been sitting on your shelves for over a month. All those dusty bottles represent money that you could be investing back into your bar. Have you yet to master the balancing inventory costs? Welcome to Purchasing 101 for Your Bar.
Stocking a bar requires a delicate balance between having enough product on hand and not tying up resources in inventory that ends up sitting on the shelves collecting dust. The more bottles that sit unused, the less money you have to put back into the business. This is one of the main challenges that bars face when trying to become or remain profitable. In fact, there are 4 important facts about sitting inventory that you need to know in order to operate a successful bar business.