Knowing the Life Cycle of your Beverage Stock Helps Efficiency

The 6 Steps in the Life Cycle of your Beverage Stock
By: Michael Molloy m.molloy@bevinco.com

In this fickle economy, especially with the summer season quickly approaching, restaurants, bars and nightclubs of the Southwest Florida area are beginning to focus more intently on trying to find alternative ways to cut corners in hopes to recover losses due to beverage stock mismanagement, theft and overpourage. Lets face it, normally during the “busy” season when the revenue is high and there’s standing room only, the drinks are flowing and the register is full. Lost cost is thought of an unavoidable loss and often accepted as the inevitable cost of doing business. But what happens during the dreaded summer months? Bad habits with the handling and preparing beverage stock continue. The profit to loss ratio inversely divides leaving sales revenue dropping and lost cost climbing. Now forget about gadgets, devices and complicated time intensive inventory programs that require staff or management to operate and compile accurate beverage data necessary to produce accurate variance reports. What basic method could be followed to help the efficiency of your beverage management? Are there basic steps or a formula to follow to help get this loss under control? The answer is “Yes”. Instead of focusing on just pour cost alone, staff overpourage or cutting down on order volume, let’s take a look at the big picture and what I like to refer to as the six steps in the life cycle of your beverage stock.

Step 1- Order it:
The first step in the life cycle of your stock is to order your stock efficiently. Adjust par levels to accommodate the higher or lower volume of usage during different seasons. Avoid purchasing items that will end up on the shelf and slow down operational cash flow. Try to only order stock items that have a high turnover rate in case volumes. Remember that although some deals are very enticing it is more important to not order anything that will be shelved and end up collecting dust in your stockroom. Set up a complete par/order sheet of your current stock and try to follow similar branding from delivery to delivery. Eliminate similar items of different brands. Streamline on hand stock.

Step 2- Receive it:
When deliveries come in who checks it in? Make sure that there is a designated receiver to be waiting attentively there when the order enters through the door. The person checking the delivery should have a list of what to expect in. Check the order. Is everything there? Are there any broken items? Is everything received the correct size (1L vs. 750ml.)? The delivery checker should sign off on every invoice for verification that it was not only checked in but it was checked in accurately.

Step 3- Store it:
Often proper storage of stock is overlooked. How do you know how many bottles of Brand X-liquor you have on hand during a busy night if they are all mixed in with under stock behind the bar, on two different shelves in the stockroom area and under the desk in the office? Make sure that all categories of stock are organized in groups. Vodkas together, rums together, gins together, etc. all grouped together in easily located areas. Labeling, although not necessary, is often helpful so that over time designated areas don’t end up shifting around to alternative places. Always keep liquor, beer and wine stock under lock and key when unattended.

Step 4- Prepare it:
Be conscious of proper pour sizes. Is it 1.25oz and a rocks pour of 1.75oz or is it 1.5 oz pour with a rocks pour of 2.0oz? How many ounces of wine go in the wine glass? How much head is acceptable on the draft beer? Overpouring consistently by as little as .25 ounces / (liquor) drink can quickly escalate lost volume to case amounts of lost stock in just a one week period. If you pour 7,500 cocktails in a week, and all are overpoured by an average of .25 oz you’re looking at 1 case of volume lost. What was the lost cost of this lost stock or even worse, what was the lost revenue that the lost stock could have generated? This is un-recoverable cash out of your pocket.
A key factor in the preparation of your stock is also streamlining your drink mixes assuring that one bartender makes the same Long Island Ice Tea with the same liquor as the bartender at the other end of the bar. Is there a drink recipe book for everyone to study and follow?

Step 5- Ring it:
Misringing is an easily curable issue that can be avoided by keeping up with both POS maintenance and staff training. Misringing happens when one item is rung up and another item is given out. When this occurs lost costs could be masked. For example, when a well is rung up and a premium brand is given out the volume of loss appears to be correct but the lost cost rises causing an increase in pour cost. To solve misringing misfortune make sure all items sold have corresponding PLUs. Promo items, spillage or kitchen use items should all be rung up and accounted for. Make sure that there is there a button or a log sheet to account for these usages. Make sure the money makes it to the register.

Step 6- Count it:
The final step of the life beverage stock life cycle is the analysis of the stock usage. We know this by the dreaded “I” word… Inventory. The inventory process consists of taking an initial inventory count, next crediting sales, adding purchases and comparing what is left over it to the ending inventory count. The product missing is the variance. Inventory is usually done over monthly, bi-weekly or weekly period. When done in a monthly basis variance reports often will show that there is an issue with stock lost but usually long after the problem has already been occurring for the month. In the meantime, the overpourage/ theft problem can continue increasing blindly from month to month. Some establishments prefer to conduct bi-weekly in-house inventories of their stock. Although bi-weekly audits are more effective for nipping problems in the bud, they do tend to become quite a bit more labor and time consuming. The ideal scenario is to conduct weekly audits. Conducting weekly audits are the best cure for eliminating lost cost increases and fluctuations. Many establishments turn to hiring an unbiased outside inventory consultant company to achieve maximum inventory control results.

As times grow more competitive in the restaurant, bar and nightclub business try to remember that by practicing a little prevention, understanding the life cycle of your stock and implementing misusage safeguards to guard your stock will help you achieve ideal goals of lost cost retention.