POS profit-building tip #2: Control alcohol costs

Alcohol is expensive, especially if it’s wasted or stolen... and it very often is. All told, there’s an estimated 23% to 27% shrinkage on liquor and draft beer across Canada and the U.S.A.(Source: www.restaurantowner.com). That much shrinkage could mean the difference between profit and loss.

There are several ways to achieve better control over alcohol costs. The most important one that could have the biggest impact on controlling your costs and losses is to setup up your bar POS system in a way that no drink can be poured until a transaction is entered in the POS. Liquor control systems like Berg or Scannabar can interface with several bar POS software applications, and help ensure that not a single drink is poured without going through the POS register. Here are a few other actions you can take:

• Don’t let anyone use the “No Sale” key on the register
• Give bartenders a float jar for making change, so there’s no need to open the cash drawer without a sale
• Take frequent physical inventory counts -Managers should personally count all deliveries

Another important concept to understand is running regular reports on your “pour cost”: the amount of alcohol used in a certain time divided by reported sales of alcohol in that time. So if the alcohol on-hand is shrinking through free drinks, over-pours, pilferage, or spillage, your pour cost is going up... while your profits go down. Most restaurant operators look for a pour cost in the high teens, such as 18 or 19%. It’s important to monitor this ratio, and investigate any deviations of more than a point or two in either direction. A bar POS system integrated with inventory management features can generate a pour-cost report at any time. Running these weekly is not too often, especially if you are trying to tighten up your bar operations.

If your current POS system does not support pour-control systems, you are missing a golden opportunity for building profits. If you save even half the alcohol losses going down the drain, you may well boost your profits by 10%.

Stay tuned for Part 3: POS profit-builder #3: Reduce Theft and Shrinkage