How Effective Bar Inventory Management Can Increase Your Profitability

Accurate inventory management is essential to the operation of a successful and profitable business. Misplaced, stolen, or otherwise unaccounted for inventory is one of the leading factors that eat into a bar’s profitability and can account for anywhere from 10% to 20% of profit on average! This is why understanding and managing the stock levels of everything in your bar is crucial to maximizing profits and protecting your bottom line.

Remember your inventory is how you make money, so why would you not want to do everything in your power to make sure that you are understanding and utilizing all that your inventory has to offer!

Counting inventory is nobody's favorite task, and counting inventory in a bar can be quite challenging, especially when trying to count half-empty bottles and kegs. On top of that, depending on how much stock you keep on hand in your bar, it can often take many hours or even days to count everything properly.

Counting inventory takes up much of your staff's valuable time and resources. Afterwards, your staff then spends additional time comparing these counts to sales and purchases, often relying on error-prone spreadsheets that make it difficult to identify any variances and to find ways to improve your bar's profitability.

With all of this going on you may think to yourself is it really worth it? 

The answer is, absolutely! Having accurate and actionable data is absolutely essential to maintaining profitability, but sometimes obtaining that accurate and actionable data almost feels like it costs more than it actually gives you. This leads to quite a few businesses operating on the “once or twice a year is fine” principle.  Which is definitely costing you more than you might think. 

Here are a few good practices and procedures that can make this process a lot easier on you and your staff, allowing you to complete more regular inventory counts in your bar, more efficiently and accurately. 

Organizing Your Stock Areas

Organizing your stock areas is key to creating an efficient counting process. Stock areas that are organized ensure that all products are in a location that makes sense and staff will not need to spend time looking for products that are not in the correct location or finding products that are being kept in multiple locations. This also helps to ensure that your counts will be as accurate as possible, because staff will not be trying to add counts to products that have already been counted once.

Organizing your stock areas also allows you to create a count sheet that has all your products in the order you would find them while counting, which can speed up the process by a significant amount. This allows staff to simply count the items in order and write the total number counted, moving right onto the next item on the list. 

Categorizing Your Bar Inventory for Better Tracking

While you are organizing your stock you may want to consider also separating your stock into categories or count locations. This will give you the ability to break up your count, either by having staff count each location or category over the course of a few days, or by having each staff being responsible for counting their own count location or category.

For example, a great way to separate your counts is by separating your count locations by bar(s) and by storage locations. You can go further and keep your liquor, wine, and beer as separate categories and organize them in your storage location this way. Using this method you can have your bartenders take care of the bars, and have another staff member take care of counting the liquor in the storage room, and either have another staff member count the beer, or you can have them count each category on a different day.

This helps take some of the stress and workload off of your staffs’ plate and makes the process much more manageable and efficient. Meaning that counting inventory could even become a part of everyday tasks, instead of it being a daunting undertaking that (thankfully) only happens once a year. 

Establishing Key Inventory Items to Track Regularly

You may find that having a full inventory count for your business on a daily or even weekly basis is not necessary for your business, or that it is still too much of an undertaking. That is completely acceptable. It is not necessary to have a daily count of every item in your bar including everything in your storage area if you don’t feel the need for it. 

You may find however, that there are certain items in your bar that cause the most issues with accurate stock levels and you want to keep a closer eye on them. Separating these specific items into a specific group of items to be counted on a more regular basis is a great way to figure out what is happening to these items and how to resolve the issue, and ensure accurate stock is being maintained for all products. 

Creating a Consistent Inventory Schedule for Accuracy

After breaking up your products into organized categories, you may want to consider setting up specific inventory counting days. The key to maintaining accurate inventory is consistency. Creating an inventory calendar will ensure that inventory is being done on the same day every time. Now this can mean that storage gets counted every other Sunday, the bar gets counted every day, and everything gets counted on the first of every month. Whatever calendar you want to set up for your bar, that works for you and your staff, will work. 

The important part of creating a calendar is making sure that it is consistent. As an added bonus, creating a consistent procedure helps with forming good habits when it comes to counting inventory. Consistency ensures that things are being done as accurately as possible and makes it easier for you to recognize when something is not accurate.  

Investing in an Inventory Management System

Another way you can up your inventory management game is to consider investing in and utilizing an inventory management system. While switching to bar inventory management software can seem daunting at first, it will streamline inventory tracking, reduce waste, and provide actionable insights into your bar’s performance in the long run. 

Want tips on making the switch as easy as possible, check out our article How to Successfully Transition to a Bar Inventory Management System.

Even with processes in place, there will always be a transition period where staff will need to be trained and learn how to work with the new system. This transition period of going from no system to some complicated new system is what often scares people away. When it comes to inventory many people are afraid of change. We’ve all heard the saying, “If it ain’t broke don't fix it.” But are you sure the system you’re using really isn’t broken? 

Inventory management systems have the ability to streamline your inventory processes and make counting faster and more accurate as many of them even allow you to use a scanner or scale to scan and weigh bottles. This can eliminate the need for paper count sheets and significantly reduce errors. 

Inventory Management systems create one centralized tool that allows you to see and analyze all your data in one place and gives you actionable insight into how to utilize this data to maximize your profitability by uncovering larger issues you might not have seen. Including  problem areas that may need your attention such as if theft is becoming an issue.

Inventory management systems can even help to prevent theft, especially from staff. When they see that you are maintaining accurate stock levels of everything in the bar, they are much less likely to steal.  Creating a more honest work environment that keeps all your staff equally accountable. 

The Rewards of Your Efforts

With steps as simple as organizing and categorizing your stock, and creating a consistent counting process, you will start to see an immeasurable improvement in the data you receive. Gone will be the days of receiving data that you feel you can’t do anything with. With actionable data, you will be able to spend the time you’ve saved, by improving processes, to utilize the data you’ve received to maximize your inventory’s rate of return. 

Actionable data from counting inventory allows you to identify problem areas, such as theft, over pouring, and waste, and gives you the ability to know how and where you can improve processes or implement new processes to prevent or even eliminate these issues. 

With the addition of an inventory management system to your already improved inventory counting processes, you will be able to maximize your profitability like never before. While it will take some time to establish your new processes and have staff learn and adapt to them, the time and effort you save in the long run will far outweigh the initial time spent. 

Ideal Inventory helps streamline your inventory management process, providing actionable insights with minimal effort. Our software supports custom inventory counting methods, offers detailed reporting, integrates with your POS, and even includes recipe costing to boost profitability. Make the transition easier today with Ideal Inventory.