How 10% Can Make a World of Difference
Liquor is the highest margin product sold at bars and restaurants. Yet, according to industry estimates, approximately 20% to 30% of drink revenues are lost to overpours, mis-rings, comps or carelessness. With operating margins at casual restaurants in the U.S. averaging 3.6% while net margins on liquor range from 60% to 90%, closely managing liquor pour costs is key to maximizing the sizeable profit opportunity drink sales represent. Unfortunately, many bars and restaurants do not pay close enough attention to this part of their business because they have not found the right technology to help them.
The impact of liquor pour tracking on profitability is best understood through an example. A typical sports bar drawing a steady weekend crowd can expect to sell approximately 500 drinks per week based on common liquors such as whiskey or vodka. Recipes generally call for 1.5 ounces of liquor per drink for a total of 750 ounces sold per week. This represents the liquor sold, or the amount the customer expects to get when paying for a drink. In the real world, the amount actually poured can vary significantly.
In this sports bar example, a conservative estimate of overpouring is 10%. Overpouring is excess liquor poured over the recipe portion that reduces the number of drinks a full bottle yields. This excess has any number of causes including “heavy” pouring, improperly or under-trained staff, free drinks given away (comps), substitutions (substituting top shelf liquor for lower-quality well product), drinks not entered into the POS, or outright theft. Whatever the cause the impact is the same: fewer drinks are sold per bottle, increasing the cost of goods sold per drink and lowering total profit. In the example shown above, a weekly loss of $500 turns into $25,000 over the course of a year.
With so much weekly profit at stake, owners and managers must identify a timely way to track liquor pours and limit losses. Typically, inventory is done manually once a week at the cost of significant time and effort. Simplifying this process means delivering pour data to the right managers at the right time using a combination of hardware, software, data analysis, and easy implementation. How can owners and managers get timely information to limit pour losses without spending hours they don’t have doing daily inventories? The BarVision automated bar performance tool offers one solution.
The automated bar performance tool is a technologically sophisticated yet simple-to-use solution for pour tracking that combines three components into a full technology stack:
§ Wireless pour spouts – The patented BarVision spouts are based on traditional speed pour spouts staff are accustomed to using. These spouts measure individual pours with an extremely high degree of accuracy and are proven to last 3 years in the field.
§ PCI-compliant POS connection – Measuring pours against rings is vital to gauging lost profits. BarVision has a PCI-compliant POS connection that enables the tool to work with a majority of POS systems including Aloha, Micros, Positouch, Focus, and many others.
§ Cloud-based reports – BarVision reports can be accessed from any Internet connected device anywhere in the world. The daily performance reports provide aggregated and detailed information on sales volume, lost revenue, pours versus rings by hour, and even a pour-by-pour breakdown for every bottled covered with a BarVision spout. For multi-unit operators, these reports provide visibility into daily site operations across locations from a single seat.
According to the National Restaurant Association, bars and restaurants that calculate costs of sales on a weekly basis generally gain 2% to 10% more profit. The system improves on this by tracking pours and delivering cost of sales daily. Dramatically shortening the feedback loop on this key operating metric enables owners and managers to take action sooner and drive greater profitability. Best of all, this tracking is automated and doesn’t require any extra work.
This simple example demonstrates why liquor pour tracking is vital to any bar or restaurant. The BarVision technology not only enables this through a robust and proven combination of hardware and software but also delivers this information faster and with less effort than performing manual inventory. This provides owners and managers more time to focus on what really matters: a great customer experience.
About the Author
Mark Brooks is Director of Business Development for Motivated Foods. Motivated Foods drives growth of small companies by delivering professional sales capabilities and market development. The Company is the exclusive territory representative for BarVision covering New York state, northern New Jersey and southern Connecticut. For more information, visit www.motivatedfoods.com or firstname.lastname@example.org