As the country begins to re-open, consumers are flocking to bars to combat the heat and enjoy a drink with their loved ones. Many bars are only able to operate with patio seating, and some may have limited indoor capacity.
Operating under these circumstances presents many challenges for bar owners. It’s more crucial now than ever to manage pour costs effectively.
Here is how you can cut costs and optimize your revenue:
Take Inventory Weekly
Your inventory is your largest asset. You want to make sure you are accurately tracking and accounting for it regularly. Keep track of every single dollar you spend on your inventory, and make sure you always know how much of each product is on hand at all times. Make sure your POS tracks your inventory in real time, so that you can stay informed of discrepancies within your inventory counts.
This prevents over or understocking. You can maintain a firm grasp on your inventory, so you can identify when issues arise, like product loss from over pouring, shrinkage, or employee theft, and address these issues before they become major problems down the road.
Use Accurate Par Settings
Par levels are the amount of each item that you will need on hand at any given time to meet customer demands. Before you can set them effectively however, you’ll need to know exactly what your usage rates are. You can do this by conducting accurate and thorough inventory counts over the course of time. Once you have a firm grasp on what your usage rates are in the new normal, you’ll be able to set accurate par levels that will help keep you appropriately stocked.
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Price Your Beverages Carefully
80% of your revenue comes from your drink sales, so it’s important that you price these carefully. If they are too expensive, you will lose customers. If they are too cheap, your business won’t survive. Be sure to consider competition and profitability.
Start by calculating your current beverage cost, and compare it to the industry standard of 25-30%. Is your average beverage cost close to this range, or should you make some adjustments? Be sure to factor in variables like product loss or shrinkage in your pricing for a bit of a cushion.
Put Pour Policies in Place
With as competitive as the industry is already, there is no room for overpouring. If your staff is consistently overpouring, require them to use jiggers or precision-pour spouts. Your cocktails will be more consistent, and your bartenders won’t be overpouring and driving up costs.
If your staff is still using free-pour methods, make sure you train them thoroughly on the proper techniques. Evaluate them regularly to assess how accurate their pours are.
Make Sure all Spills and Complimentary Drinks are Recorded
Sometimes loss happens. A drink needs to be comped for a customer or a bottle spills. These things are inevitable in the bar and nightclub industry. You can’t prevent them from happening, but you can keep a log of these incidents to ensure everything is tracked and you see where all your inventory is going. Be sure to give each staff member set limits on the number of drinks they can comp. This can help ensure accuracy and clue you in on any other issues that may be causing shrinkage.
Keep Your Draft System Clean
Faulty or dirty draft lines can create too much or too little foam in your beverages. If you’ve been noticing excess foam, you’ll have to pour a decent amount of beer down the drain. Dirty draft lines can also make your beer cloudy, moldy, and off-tasting, leading to more wasted beer when you need to give customers free drink replacements. Worst case scenario: they’ll share their experience and hurt your reputation and your business. Make sure you clean these lines regularly and thoroughly.
Avoid Breakage Fees by Buying in Bulk
Distributors want to sell more, and prefer not to break up cases when they do. To incentivize bar operators to order more in bulk, many will offer buy-in-bulk deals and specials on bulk orders, which can end up saving you significant cash. Buying at least some of your inventory in bulk is the best way to keep your costs down, especially for popular items.
Don’t worry about purchasing more expensive items in bulk, however. Unless your establishment caters to high-rollers, these items likely aren’t flying off the shelves. It would take much longer to recoup this cost and make a profit off those products.
Hire Trustworthy People
At the end of the day, your staff is your most valuable asset. They run your day-to-day and can either be the cause of high pour costs, or your best strategy to prevent those costs. 20-25% of losses can often be attributed to employee negligence, manipulation, errors, and indifference. These are easily preventable causes of loss, but the only way to solve this is to hire trustworthy people, train them thoroughly, and treat them with respect.
Reducing your pour cost isn’t going to happen overnight. You’ll need to change some of your processes and implement some new policies and technology. It will take time and effort, but with the right inventory management system in place, it is significantly easier. Focus POS offers advanced solutions designed for this purpose.