December 2017: We’ve created a new and improved version of this blog post, Bar Inventory and Usage for Beginners. Check it out now!
There are few tasks in the restaurant and bar industry more dreaded than liquor inventory. It’s a long and tedious process, full of headaches and late nights in the storeroom, involving the hands of several team members, but it can be made easier.
Having an efficient bar inventory system in place—whether it be through bar management software, with our free inventory spreadsheet template, or with traditional pen-and-paper methods—is crucial to running a successful beverage program. And, believe it or not, there are several things you can do (aside from calling Jon Taffer) to make bar inventory management easier.
So, for all you bartenders, bar managers and bar owners out there, let’s get to it—what’s the best way to do liquor inventory?
Bar Inventory Basics
Sufficiently stocking a bar with alcohol is just the beginning. Inventory is important for maintaining enough liquor, of course, but it also identifies:
- How your bar is performing financially
- What your product variance is and where your shrinkage is coming from
- How to set pars for each product
- What your pour cost should be for each product
- Which products sell well and which don’t
The ultimate goal is to calculate your inventory usage for a certain period.
Many factors play a part in this process, but here is the basic method.
You’ll need to know:
- How much stock you had at the beginning of your inventory period
- How much stock you have at the end of this period
- How much stock you received during this period
You’ll take these numbers and use the following formula to determine your inventory usage: starting inventory + received inventory — ending inventory = usage.
When you know your usage amount, you can move on to the next step and turn this information into useful data to better manage your bar. But we’ll get to that in part 2 of this series.
First, let’s look at what needs to be done to find the information that will help you answer this formula.
How to do Liquor Inventory
In order to determine your inventory usage, you need a beginning and an ending inventory count, taken once at the start of the period and once at the end, respectively. Here are some inventory tips before we get into the details:
- Take your count the same way every time; if you start counting from left to right, you should always count left to right.
- Keep your inventory periods consistent (i.e. weekly, bi-weekly or monthly).
- Find a method that works for you. Some bar managers have one person shouting out names of the liquor while another replies with the count; others have individuals do the counting and recording alone.
- Take inventory while the bar is closed so that no product slips in or out while the count is in progress.
- Properly train your employees in inventory counting. This includes things like keeping an eye out for specific issues, or recording significant spillage or breakage of whole bottles.
Now, let’s go through a step-by-step example of how to take inventory at a bar.
This imaginary establishment has a front bar, a back bar, a storeroom, and a walk-in cooler. This first count will take place at the beginning of our inventory period.
- If you’re still using spreadsheets to take inventory counts, we understand, but at least make sure it’s a spreadsheet that works for you (like this free, downloadable inventory spreadsheet).
- Arrange the spreadsheet according to the way your alcohol is set out on the bar. This will save you from having to pull all the bottles on top of the bar and arrange them alphabetically.
- Start at the front bar. Count the bottles the way they’re positioned and, if needed, filter them alphabetically on the spreadsheet when you’re done. Include the alcohol’s type, brand, name, and bottle size. Also include a column for your bar back, storeroom, walk-in, or any other parts of the bar where alcohol is kept.
- The easiest (and most commonly used) counting method is to visually take note of how much liquid is in each bottle, separating it into tenths. Take a look at where the line of the liquor falls, and estimate if the bottle is half full (0.5), a third full (0.3), etc.
- Repeat this process of “tenthing’ for every bottle, and enter the numbers onto the sheet, separating them into spirit, wine, and beer categories.
- Repeat this process for the back bar, walk-in, and storage room. Your counts will likely vary here, based on a mix of cases and bottles, rather than bottles only, so you may need to add another column to your sheet to account for this.
- Finally, take your sheet and add up the totals for each category.
- At the end of the inventory period—whether it be a week, two weeks, or a month—you’ll take all these counts again, repeating the exact same process. This will leave you with a beginning and an ending inventory count.
Over the course of this period, you’ll sell and receive liquor. Keep a record of how much product you take in (this should be in your invoices from the week before), and the product you sell should be recorded in your POS system (we’ll look at that more in part 3 of this series).
In a new excel sheet, enter the totals of all your liquor categories into three columns:
- Starting inventory
- Received inventory
- Ending inventory
Take the simple formula from before: starting inventory + received inventory — ending inventory = usage.
You now have your inventory usage for this period.
Once you determine your usage, you’ll be ready to do your pricing and ordering, which we’ll cover in part 2. We’ll look at how to incorporate costs into this sheet in order to identify total prices of both purchases and sales, and then we’ll look at things like pour costs and invoicing.
Check out the next two articles in this series:
But here’s the thing.
We can try our best to help with pen-and-paper inventory, but it’s still going to remain a complicated and tedious part of bar management.
You know what will make it all easier?
There will be no lining up bottles on the bar, no more late nights in the storeroom, no more headaches. It’s the best inventory software out there.