How to Improve Your Bar's Inventory Management

A weekly glance in your back room to determine stock levels might seem like a simple way to manage your inventory, but the reality is that bar inventory is a much more complex scenario.

When you open a bar, good inventory management is critical. That’s why it is important to ensure you’re implementing best practices from the get-go.

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Why is managing bar inventory important?

Effective inventory management is the lifeblood of your bar, and poor management can be a problem. With too little inventory, your bar may miss out on sales, not to mention risk tarnishing your business reputation. On the other hand, too much inventory can sit on your business balance sheet, create the need for paying for unnecessary storage, and also increases the risk of waste.

How can you manage inventory at your bar?

You may intially feel that manual inventory management (pen and paper) might be the easiest solution, but this tactic can reduce accuracy and slow down other operations. Late nights in the back carefully counting stock can be tedious and take away other valuable time that could be better spent growing your business.

Inventory management software automates the process and minimises any negative impact on your schedule. Look for software that integrates with your bar’s point of sale (POS), as that will create a cohesive, integrated flow in your daily operations. With an integrated POS and inventory system, the software can automatically track inventory when a bartender rings up a drink and you can benefit from an accurate view of stock on hand (SOH) in real time.

Benefits of a successful inventory management system

Here are five benefits an effective inventory management system can bring to your bar:

  • Reduce drink shortages

Regular customers will remember when you were out of their favourite . beverage the next time they are deciding to go for after-work drinks. Running out of stock could actually result in the loss of future business. A comprehensive inventory management system can help you better forecast materials needed, prevent shortages, and maintain a high level of customer satisfaction.

  • Optimise alcohol order size and purchasing frequency

Rather than ordering a product as soon as it runs out, you can strategically plan a bulk order of materials that will minimise purchasing and shipping costs.

  • Avoid rush orders

When you run out of bar materials at short notice, it forces you to arrange overnight or expedited shipment of products and supplies. This can be a costly proposition, particularly because of the size, weight and care required when shipping alcohol cases — which can put an unexpected dent in your carefully planned budget. Enhanced inventory management and smarter planning planning reduces the need for rush orders and saves you from unexpected costs.

  • Reduce waste at your bar

Bars lose a good amount of sales from theft, spilled drinks, and free drinks. Often bartenders don’t even realise how much they’re wasting when they’re busy on the job. An effective inventory management system helps you showcase this data, as well as determine some waste-reduction measures.

  • Increase profit

If your goal as a bar owner is to make a profit, then real-time inventory data can help you make decisions about sales and future purchasing. Tracking inventory and monitoring customer demand enables you to identify trends that help predict what to order (and what not to order). It can also help you with smarter demand-based pricing — where you could possibly price drinks based on their popularity.

7 ways to improve your bar inventory management

  • Do a stock check before your bar opens or after it closes, ensuring you keep it at a consistent time every day. Bar owners who don’t follow a set schedule aren’t getting an accurate measure of the inventory and how levels fluctuate on a daily or weekly basis.

  • Calculate inventory usage each month by first adding the starting inventory to the materials purchased throughout the month. Then subtract that from your ending inventory. This will give you an accurate representation of the volume of inventory your business is going through.

  • Determine what minimum inventory you require for each material and set up stock shortage alerts in your inventory management system. This will enable you to optimise a purchasing pattern and minimise your costs. Alcohol turnover is dependent on the demand for different beverages (which each have a different set of ingredients), so make sure your minimum stock level is custom to each material.

  • Apply a first-in, first-out (FIFO) method to your inventory. This means that the oldest inventory items are sold before newer inventory is received. This will help you minimise the chances of perishable products expiring before they are used.

  • A supply-savvy bar continuously reevaluates their safety stock every three months. Safety stock is an additional stock of products that run the risk of selling out if demand increases rapidly, acting as a buffer to mitigate risk. On the other side, keep in mind that too much on your shelf can cost your bar significantly on the balance sheet.

  • Involve your staff in a manual inventory auditing process. Have two individuals audit inventory separately, then compare. It can help prevent clerical error, as well as demonstrating to your team that your business takes inventory management seriously.

  • If you find that a specific material isn’t being used, look for ways to integrate it into popular drinks so that you can use it before it goes to waste. Alternatively, reduce your future orders for that material.

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