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Sitting Inventory Costs Money: Purchasing 101 for Your Bar

Bar Management, Stocking a Bar - November 23, 2016 Written By: Sculpture Hospitality

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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.

What Should My Turnover Rate Be?

This is the big question at the heart of inventory. Let's say that you purchase $40,000 worth of alcohol and it has a a turnover rate of 4 weeks. That is pretty good and you would be in line with industry standards. But what if you started purchasing every three weeks instead? That would mean a full $10,000 of your budget wouldn't be tied up on your shelves. You could use that money to invest back into the business or just pay rent on time. Typically, the longer managers can put off taking inventory, the better because it simply isn't fun,

Less Inventory Means Less Lost Inventory

When it comes to inventory costs, you can often start losing money due to generous bartenders. If they know that there are plenty of more bottles under the bar and in the stockroom, they are more likely to hand about freebies and heavy pours with abandon. Excess inventory also makes you more prone to theft and accidents that result in broken bottles. 

It is important to think of your inventory as real money. You wouldn't leave a bunch of cash just sitting around for weeks on end. The same rule applies to your inventory.

But I Hate Taking Inventory

Even if you are the master of counting and recording, taking inventory simply isn't fun. It ties up your time when you could be managing other aspects of your business, and it is just straight up tedious. Just think: If you sped up your turnover, you could take inventory weekly or bi-weekly, but there would be less to count. While you might be doing it more often, it will actually go faster and you can get back to enjoying the fun parts of your job or simply catching up on sleep.

It is Time to Invest in Technology

The single best thing you can do to bring down inventory costs is invest in inventory technology. The market is filled with excellent apps and programs that allow you to scan and weigh bottles and place orders online. You can even generate charts that track how you are doing, where you are seeing losses and how certain brands are performing. These tools take all the guesswork out of the equation and streamline the entire process. Whatever inventory program you decide on, it is well worth cost and will yield excellent returns on your investment.

Figuring out the best way to handle purchasing for your bar does come down to staying organized and not procrastinating. Using an inventory app (as shown in the video below) can help make the entire process a lot less painful, which means that you are more likely to stick to a weekly or bi-weekly schedule and enjoy the benefits of having extra cash in hand and not tied up in your inventory. You can work smarter, not harder while also saving time and reducing risk of loss. 

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