Do you have inventory sitting on your bar’s shelves that are taking months, or even years, to move on? Even worse, do you have inventory that isn’t moving at all?
Slow-moving stock and deadstock can have a significant impact on how profitable your business is. In fact, your inventory levels in general can have a huge effect on your profit margins.
Holding too much stock each month prevents your business from generating the revenue it truly deserves.
The problem is, keeping your inventory levels as low as possible without compromising on service is a difficult balance to find. Too much stock and your profitability are impacted, but too little stock and there’s a good chance your bar will sell out and you’ll fail to meet customer expectations.
The magic formula to any successful bar is finding the perfect inventory level - the balance between investment into your inventory and meeting your customers’ expectations.
With that in mind, here are some tips and best practices that will help your bar reduce its inventory, while at the same time enhancing your company’s profitability and ensuring that you’re able to deliver a superior guest experience.
What’s the first step when it comes to optimizing your inventory levels? Well, you can’t find the right balance between inventory levels and customer service if you aren’t undertaking consistent and accurate bar inventory counts.
Whether you conduct weekly, bi-weekly, or monthly counts, a bar inventory management system will help your business conduct accurate and consistent inventory counts. From this, you’ll gain insights that help your business reduce liquor waste, design more profitable menus, improve ordering processes and optimize stock levels.
When you have clear visibility and control over how much inventory you are using each month, your business will have the data it needs to make more strategic ordering decisions that optimize your inventory levels.
The most effective way to improve your ordering is to set bar inventory PAR levels. Period automatic replacement level, or PAR level, is a number that represents the minimum amount of each product your bar should keep in stock to meet customer demand.
By finding your bar’s PAR level, your business will be able to keep the minimum level of inventory needs (with a small buffer) to meet your customers’ expectations. This can help reduce your investment and boost your profit margins.
Did you know that, for most bars, 80 percent of sales come from just 20 percent of their product range? It’s important that the emphasis for stock should be on ensuring the 20 percent never runs out, and that the 80 percent only have a minimal holding in the case that a customer does order it.
Use your inventory data to ensure that you aren’t overordering dead stock and slow-moving inventory. Overspending on these items will reduce your cash flow and impact other areas of your business.
Having a broad cocktail menu will mean your bar has to stock a range of different ingredients. To use all those ingredients up, you’ll have to sell a large number of cocktails - so you’ll probably end up with waste.
To avoid this, focus on designing a cocktail menu that uses the same ingredients across multiple drinks. Use ingredients that can be used across multiple drinks, and then consider alternating your cocktail menu every so often to offer customers something new,
You can also use your cocktail menu to help your bar use up slow-moving products and deadstock.
Accurate inventory counts are crucial to your bar’s ordering decisions, but you can’t take accurate inventory counts if you are losing products. Inventory counts are so much more difficult when you aren’t organizing and categorizing your inventory.
Taking the time to keep your inventory organized will ensure your bar is able to accurately count its inventory, and, as a result, you’ll be able to gather the insights you need for strategic ordering decisions that keep your inventory levels low without sacrificing customer service.
Want to find out how a bar inventory management system can give your business complete visibility and control over its inventory? Talk to the Sculpture Hospitality team of inventory management experts today.