It may not be fun, but taking inventory accurately is a critical part of running a restaurant or bar. Profit margins in the hospitality business are notoriously slim, and the product we bring in is often expensive. When you combine those two points, it’s easy to see the importance of proper inventory procedures. Unfortunately, inventory comes with its own uniquely dangerous set of pitfalls. Falling into these pitfalls can put you pretty far into the red, but don’t worry -- Provi is here to help. Today, we’ve assembled a list of common inventory-related pitfalls and how to avoid them.
Too Many SKUs
If your establishment is a particularly trendy or craft-focused one, you may find yourself bringing in a hugely diverse set of ingredients. Cocktails with five or six ingredients (or more!) are more normal than not these days. While delicious, these cocktails often fall into the ‘high maintenance’ category. They require specialized ingredients, purchased in relatively small quantities. This alone is going to shrink your profit margins -- the less you order, the more you pay. On top of that, we all know the absolute tedious pain that comes with counting these ingredients. Beyond that inconvenience, keeping track of 40 bottles presents much more opportunity for error than keeping track of 20. So, what do we do?
Fix: Re-Evaluate Your Menu and Get Creative
The truth is: great inventory practice starts with the menu. It’s the foundation of your entire beverage program, and it needs to be built with inventory optimization in mind. So, that’s where the fix for the ‘excessive SKU’ issue is going to happen. If you’re bringing in an expensive split case of one particular liqueur every three weeks, for the sake of one drink...it may be time to ditch that cocktail. Often, if you examine these drinks closely, you’ll find they’re doing more harm for your bottom line than good.
While radical change isn’t required, make sure the ingredients you’re using are practical. Generally speaking, bottles shouldn’t appear on your menu just once, unless you know that one drink is going to fly off the shelves.
For our money, this could be the greatest challenge in taking inventory. Inaccurate inventory can throw your numbers way off, creating a warped liquor cost analysis. If you run a particularly diverse bar program, inaccuracy is going to be doubly a threat to your operation. The more you have to count, the more opportunity for error. Given that inventory is often taken before or after business hours, the people counting may not be operating at 100% mental capacity. Thankfully, our quick fix is going to patch that right up.
Fix: Designate one person to Inventory, and Perform Spot Checks
Although it may seem fair to take turns on inventory, only one person should be in charge of the process. The same person should be counting each week/day that inventory happens, so they can learn the nuances and patterns of your inventory process. If your stock is too large for one person to handle, you may need to designate two people. But, make sure it’s the same two people every time. This type of consistency is going to greatly reduce errors and improve inventory efficiency.
It’s simply not possible for managers to re-take inventory every day. But on a daily basis, you should perform spot-checks on top sellers, perishables, and particularly expensive items. By keeping these spot checks rotating and random, you’re ensuring that inventory is always up-to-date and on-point.
Gut Instinct Ordering
We’ve been there. You know the restaurant like the back of your hand. You know what goes in and out of the bar each and every night. Heck, you could probably do inventory in your sleep at this point. Unfortunately, the universe isn’t always so reliable. There are ebbs and flows to business. Some nights you sell vodka, and some nights you sell whiskey. You shouldn’t try to do inventory from your gut instinct. While it may work fine some nights, inventory is such an important task, that it’s crucial to perform accurately each and every time.
Fix: Track Your Business
To fix this common mistake, you’ll just need to put your pride in your pocket. It may not be what you want to hear, but the solution is to stick to the script. Don’t think you can safely estimate any items without actually looking at them.We also suggest logging your business each week, though, so you can build a sort of ‘database’ that you can use to predict future needs. This way you can use your past data to inform your future orders, without improvising entirely.
Waste is going to destroy your inventory efficiency. Waste takes many forms, as you know -- be it overstocking, overpouring, or simple laziness. While the culprits behind waste are rarely malignant or ill-intentioned, we do need to be careful. Unaccounted-for lost inventory can leave us scratching our heads, and it can leave our already-slim profit margins shrinking down even more. While getting to 100% waste elimination is near-impossible, we can certainly take precautions against this ever-present issue.
Fix: Standardize Recipes, Re-Examine Your Menu
Luckily, there are plenty of ways to combat waste. One great way is to make sure all recipes are standardized, even the most basic, traditional cocktails. Try to avoid letting your staff ‘wing it’. Establish standard pours for every drink, from common G+T’s to your house specialties. This is going to ensure that your calculated liquor costs are being reflected accurately in your day-to-day operations.
Another great way to reduce waste is to re-examine your menu. Look to see where ingredients may be better utilized, or what you could do with so-called ‘waste’ products. For example, only use zested citrus for juicing -- you can juice a zested lemon, but you can’t really get the peel off an already-smashed lemon. Better still, some bars have begun using juiced lemons to create infused syrups and drinks. This type of outside-of-the-box thinking is going to dramatically cut down on waste in your establishment.
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