Maintaining a thriving bar or restaurant with a decent profit margin and happy customers involves far more math and data gathering than one might initially expect. You need to be able to keep a well-stocked inventory with an adequate number of ingredients to satisfy customer demand, while also remaining within a functional spending margin.
It is a constant balancing act. And what this looks like and how this may work can change from month to month depending on the season, revenue, incidentals, and whatever the hottest drinks on the scene might be. Initial instinct often tells us to over-stuff our stockrooms in the hopes that we will have exactly what we need right when we need it. In truth, this tactic usually proves too expensive, and too wasteful to be sustainable.
This is where the concept of par inventory can come in handy. With this idea in your back pocket, you should be able to stay within a realistic budget and minimize waste, all while meeting the needs of your patrons. Let’s talk about the par level meaning.
What are pars in inventory?
Think about “par” in golf terms. Most games involving a field, a club, and a dimpled white ball are won by making the hole in as few strokes as possible. Holes are ranked based on their difficulty, and a number of strokes is set to determine the minimum number of strokes it should take before you sink your ball. This number is what we call the “par.”
Par in inventory is similar to a golf par in that it defines the lowest inventory level you need in order to adequately meet the needs of your customer base. In other words, what is the fewest number of bottles you can get away with before you start turning customers away?
Your par level inventory can apply to inventory overall, or you might break it down into categories such as beer, wine, and liquor, or even specific brands: your par for well vodka may appear very different from your par for top-shelf spirits.
Your inventory par number should also extend to non-alcohol products like consumables, garnish, bar snacks, etc. And these numbers will differ from establishment to establishment, and even over time in the same establishment depending on service levels and other internal factors.
How to calculate and determine par level
Unless your customers never change and your menu stays always the same, you know that maintaining a satisfactory inventory is like trying to hit a moving target. There is no such thing as one-and-done in the bar and restaurant world, and you should approach determining your inventory par levels with this knowledge in hand. Your par sheet should be frequently updated.
Here are a few par methods you can use that will help you to easily calculate an actionable par for your bar or restaurant.
Keep a close eye on inventory usage and sales. Try to keep track of what’s moving, and what’s gathering dust on the shelf. What are customers buying on a daily, weekly, and monthly basis, and what is the minimum ml volume you need to keep in order to maintain these sales?
Pay special attention to the top sellers, and consider removing the beverages that no one seems to ask for from your menu. But don’t forget the customers who come in once a week and order a glass of that weird liquor no one else seems to want. In some cases your par might be a single bottle per month.
Determine your average weekly use across different bar products so you can better plan for their replacement. This use is also sometimes referred to as “depletion,” and describes how much of a given imbibable you sell within an established time period.
Here’s how you can calculate depletion for a specific product in your inventory:
Starting inventory + new intake - ending inventory = depletion.
If you begin the week with one case of Delirium Tremens, and receive a second case mid-week, and are left with half a case at the end of the week, your depletion rate for this particular beer is 1.5 cases. This number also defines your par.
If you don’t trust your own math, there are plenty of par measurement apps available online.
Establishments should consider keeping track of their inventory over the long-term in addition to weekly or monthly sales records. Doing so allows you to understand the seasonality of certain products, as well as to anticipate certain sales and plan your inventory well in advance.
This may also help you to predict the popularity of new items, take extra consideration around what they are replacing and why, and incorporate the habits of your patrons into some of your inventory decisions.
Once you’ve taken a good, hard look at your depletion rates both over the long term and within the past week, you can begin to budget, set goals, and define a par level policy for both inventory levels and sales that will allow you to reach a greater level of profitability.
Par calculation example
Let’s take a look at how to calculate the par of some of your higher-proof liquid assets.
Because liquor is rarely sold by the bottle as beer is, tracking its depletion can prove a challenge. The formula is the same, but the units are different. Here’s how it works.
Starting inventory + new intake - ending inventory = depletion.
Starting inventory + new intake - depletion = par.
340 oz (10 bottles) Svedka + 340 oz Svedka - 600 oz (19 bottles) Svedka = 80 oz Svedka
340 oz + 340 oz - 80 oz = 600 oz.
Provi can help
It’s a lot of math, a lot of data gathering, and a lot of spreadsheet balancing to effectively apply an inventory par. But with Provi, you can put your pencils down and get back to entertaining your favorite regular.
Provi is an all-in-one alcohol inventory platform that allows you to take a data-driven approach to inventory management without hardly lifting a finger. Provi’s solution tracks inventory and sales for you, and lets you know when it’s time to order again if something’s running low. Sign up for free today to see what else Provi has to offer.
See how Provi helps thousands of bars, restaurants and retailers save 200 hours a year with a single app for browsing product catalogs, ordering, and messaging your reps.
Comment to Tell Us Your Thoughts
Whether you’re a bar, retailer, distributor, or brand— growing your company is hard work. Success in the alcohol industry requires a lot of time, great relationships, and staying informed. Get access to all three and prosper using Provi.