Some of the most common reasons for loss of beverage alcohol revenue in bars, restaurants and nightclubs have to do with bartender behavior. Barmetrix, LLC, a consulting company that helps increase profits in the hospitality industry, estimates that on average, a bar loses 10 to 20 percent of its inventory on a weekly basis.
To a proprietor, those percentages can mean large monetary losses.
It’s a problem that makes bars particularly tricky to manage, as owners always have to strike a delicate balance between surveillance and presenting a friendly face to customers and employees alike.
Customer expectations can compromise efforts at inventory control, too. If a consumer is ordering a gin and tonic, chances are he or she will be happier if it tastes more like Tanqueray than quinine—and they’ll be more likely to return. Smaller bars in particular often buy their customers’ loyalty with heavy pours and the occasional freebie.
“Beverage programs are a major source of profitability for any operation. Without proper tracking and systems in place to regulate them, the bottom line can be severely impacted,” says Alex Cauchon, director of wine and spirits at BR Guest Hospitality, which owns bars and restaurants in New York, New Jersey, Nevada and Florida, including the upscale Mexican eatery Dos Caminos.
For many on-premise venues, putting together a program designed to identify and resolve beverage alcohol loss can mean a substantial increase in revenue.
James Nicol, vice president of marketing at EasyBar, says that not only can his company’s pour-control technology help prevent outright theft, it can provide small business owners with objective data to aid personnel decisions by providing a computerized system to deliver preset amounts of beer or liquor, and keeping tabs on who is selling what and in what amounts. “Owners get a different point of view from the data that we provide. It’s all up to the management,” he says.
Another manufacturer, Berg, has added wireless technology in cooperation with BarVision that can notify the owner by text whenever a spigot delivers a particularly heavy pour for a given drink—providing vital, real-time information to owners. Terry Black, a Berg dealer at Chicago’s LCSI, says, “The system even tells the owner how many dollars should be in the cash register,” so there are no phantom drinks poured.
Berg’s wireless systems are entirely in the spout or beer tab; once flow rate has been calibrated, there’s no extra equipment to remind employees that their job performance is being monitored.
Washington, D.C.-based Barmetrix offers its clients a variety of solutions including inventory management, staff evaluation and training, staff management software and management workshops. More recently, the company launched Pulse, an e-learning platform that incorporates social learning, communication and collaboration between suppliers, their customers and their employees.
Barmetrix, which operates in the United Kingdom, Australia, Canada and the United States, reports that loss in the U.K. and Australia, for example, is much less than in the U.S. In the Australian and the U.K. market clients are typically losing less than 8 percent of their inventory, says Ray Walsh, COO, Barmetrix. “That is because of the difference in culture and how people manage their inventory,” he explains. “Also, it has to do with the way staff are remediated in terms of how they are paid. The tipping culture exists in the U.S. market, but it doesn’t really exist in some of the other Western markets.”
The company was contracted by Diageo a few years ago to service 500 of the supplier’s accounts in Australia and conduct bartender evaluation sessions using POURTrainer, a bar simulator software designed to test bartender skills in a pressure situation, says Walsh. Bartenders are measured in five areas: pouring accuracy, service speed, technique, drink quality and serving and price.
“It’s a great way to evaluate any bartender and you can see very quickly who are your best bartenders from a skills perspective,” says Walsh. “If it’s an issue with over-pouring spirits, then you have to make sure that your staff is trained to pour properly. If they are not able to free pour then we suggest using things like jiggers, which are far more common in the Australian and the U.K. market than the American market, but it’s a point of preference for many owners.”
At BR Guest Hospitality, Cauchon notes that with 24 restaurants and bars throughout the U.S., training is a continued effort. “Proper training and continued reinforcement of this training is truly the only way to ensure flawless execution,” he says. “We spend a great deal of time and resources to train our bartenders and managers to be able to help monitor portion control. We pour test our bartenders, not only for portion control, but also quality control. All new drinks that are introduced into our programs are measured out using jiggers for at least the first week to ensure consistency.”
In addition to pouring accurate cocktails, pouring a proper beer is equally important. “Draft beer is a 70 to 80 percent gross profit category,” notes Bob Fenley, chief sales officer of TapDynamics.
TapDynamics, based in Dallas, Texas, is a provider of draught beer management solutions to the hospitality industry and offers its TapAdvisor tool designed to increase profitability, quality and visibility of draught beer poured by capturing the flow of beer from the keg to the tap in real time. Among the company’s clients are Applebee’s, Ruby Tuesdays, TGI Fridays and Dave and Busters. According to TapDynamics, within the first two weeks of using TapAdvisor, Applebee’s reduced its draught beer loss by 20 percent. Since the implementation in 2009, beer loss has been reduced by more than 50 percent across its nearly 400 U.S. locations, the company reports.
Fenley says that most of the clients he works with see a return on investment in the first 35 to 40 days. “We don’t have a single client today who doesn’t recover more revenue than they pay us,” he says. “Operators are much more attuned to delivering every penny they can out of the category.”
The bottom line, says Fenley, is that in today’s market where people are dining out less and spending less money not only in the restaurant, but also at the bar, operators are more attuned to delivering maximum profits, and tracking the flow of alcohol is necessary.
“We are driving incremental revenue back to their bottom line,” he says, “that they may have just basically, for lack of better words, been pouring down the drain.”