Why Bar Inventory Management is Crucial to Post-Pandemic Success

Why Bar Inventory Management is Crucial to Post-Pandemic Success
Restaurant Inventory, Bar Inventory - July 07, 2021 Written By: Krista Dinsmore

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Since the beginning of the COVID-19 pandemic, bar owners around the world have learnt a number of lessons about managing their businesses during challenging times. Perhaps no lesson, however, has been as important as understanding cash flow.

With bars having limited guests during opening hours or being completely forced to close during lockdowns, owners have had to learn how to adapt and optimize their business so that they could remain in business during periods of lean, or no, business.

One of the best ways to do just that, is through successful bar inventory management

Inventory management helps your bar to reduce costs, improve profitability, prevent liquor waste and shrinkage, make smarter order decisions, understand what’s selling well, along with so many more valuable insights that make your business more profitable.

With that in mind, we have listed four reasons why bar inventory management (through the use of bar inventory management software) is crucial to the success of your business as we come out of the COVID-19 pandemic. 

1 - Gain the insight you need into deadstock, and sell it to maintain a positive cash flow

Bars are frequently left with old stock that either you no longer need since you no longer sell it on your menu, or it’s simply not shifting. With cashflow tight in the post-pandemic world, every item that’s sitting on your shelf not moving is liquid cash.

Inventory management will give you complete visibility into which products behind your bar aren’t selling, and you can use that knowledge to come up with creative solutions to sell deadstock and drive up revenues. 

Maximize this deadstock and improve your profitability by coming up with new ways to shift it. That could include creating new ‘limited time’ drinks that use up the liquor that’s not shifting, or perhaps coming up with new, innovative cocktails to make a profit off of those bottles that simply aren’t selling.

2 - Get a clear picture of your inventory usage, for smarter ordering processes

Keeping cash flow tight in the post-pandemic world is crucial. With liquor costs one of the biggest expenses that your bar has, ordering too much stock can be hugely detrimental to your profits. On the flip side, not ordering enough stock could impact your guest experience - leaving customers visiting a competitor next time.

With that in mind, it’s important that your bar orders exactly the right amount of stock to optimize profits, without being left with deadstock. To do that, you need to know exactly how much inventory you are using each accounting period.

A beverage inventory management system will suggest ideal purchase orders, based on your actual inventory usage data. By providing you with a periodic automatic replenishment (PAR) level, you’ll know exactly how much of each specific product you should order to optimize your bar’s profits.

3 - Improve profitability by reducing waste

Just because you have sold a certain amount of inventory, doesn’t mean you’ve used the same amount. Liquor shrinkage, also known as variance, is an all too common problem that significantly impacts the profitability of bars. 

Liquor shrinkage is calculated by first conducting a physical count of your inventory, calculating your usage and total goods sold for the given accounting period and then using the below calculation:

Variance (shrinkage) = total goods sold - usage.

This gives you clear visibility into which specific products in your bar are suffering from shrinkage. 

The use of a beverage inventory management system that features a variance report will show your bar exactly where you are experiencing variance within your theoretical inventory usage vata vs your actual usage data

Once you know where there is a discrepancy between inventory usage and sales, you can make process changes that stop liquor shrinkage. The result? You will maximize your inventory for optimized profits. 

If you want to learn more about liquor variance, read our blog Bar Inventory Management: How to Reduce Liquor Shrinkage.

4 - Understand what’s driving your bar’s profits

There’s no point having items on your menu that aren’t making your business money. Having complete visibility into your inventory will give your insights into your top revenue-generating products.

That means you can customize your menu to include the beverages that are truly driving profits at your bar.

Want to learn more about how successful inventory management, and bar inventory management software, can help your bar be successful as we come out of the COVID-19 crisis? Contact Sculpture Hospitality today. Our team of specialists would love to answer your inventory management questions. 

Contact your Local Inventory Consultant Today


A Complete Buyer's Guide to Food & Beverage Inventory Management Systems

With around 25 to 35 percent of a restaurant’s operating budget dedicated to purchasing food (that’s not even taking into account beverage inventory costs for the bar), proper inventory management can significantly improve expected revenue.

To maximize profits you need to improve visibility and control over your restaurant or bar’s inventory. 

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