Managing Shrinkage In Your Bar

Your bar is losing money, but you aren’t sure why. You have a busy flow of customers, but something isn’t adding up. This perpetrator of profit is your shrinkage rate. Commonly defined as “the difference between the amount of inventory you acquire from suppliers and the amount of product you sell to customers”, shrinkage can be the stealthy killer you don’t even realize is affecting your bar. Average shrinkage rates in the bar industry is a whopping 25%, or about $46.8B in the US alone in just 2018. This isn’t where the story of shrinkage ends though. There’s an often overlooked 2nd level of loss that comes with shrinkage, and that’s foregone potential revenue. Not only was your money wasted, but you forfeited the potential money that bottle would have made you.

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The biggest issue with shrinkage is, as mentioned before, it can be hard to pinpoint. There are usually a few common reasons for it in the bar industry though, which all add up to the main problem. The first of which, and usually the smallest in the bar industry, is waste and product expiration. It’s a bigger issue in the restaurant industry where ingredients spoil faster, but liquor bottles last much longer than fresh produce. Still though, it can have an impact on your business. If a certain drink on your menu isn’t popular, the bottles ordered to make sure you can fulfill orders can easily go to waste in the back of the liquor shelves and be forgotten. A much smaller issue though, than the big two in the bar industry.

One of the big two is accidental overordering and inventory counting issues. The current industry standard for counting inventory is spending around 2 hours in the back with a pen and piece of paper, counting like they did decades ago. This gives way for plenty of things to go wrong. Your staff normally doesn’t have that kind of time because they’re busy caring for your customers. Being burdened with that kind of time commitment during a busy shift can lead to sloppily jotted down counts that are done in short bursts of time over the period of their shift. Not only does this waste your money, but it waste’s your staff’s time. And even after all of that, the process isn’t done. It needs to be entered into your ordering system and/or spreadsheets, taking up more of your valuable time and still far from perfect.

Employee training is the other of the big two that affects the bar industry the most. It takes lots of time to train bartenders on how to make your drink menu, especially for those with little to no experience behind the bar (which the industry has seen an influx in due to the labor shortage). Pouring drinks correctly is typically the biggest learning curve for inexperienced staff. Inaccurate overpours of drinks add up over time, and means you get less money out of each bottle that you buy. It also creates an inconsistent customer experience, meaning that your drinks taste different depending on who’s making them.

Fixing the black cloud that is shrinkage can have a huge impact on not only your business’s bottom line, but the functionality of your restaurant as a whole. So, what is the quick and efficient solution to shrinkage? BarMinder. By installing the BarMinder inventory system into your business, your inventory worries will be a thing of the past. You get real-time views of every bottle from when it enters your establishment until it goes into the trash. This means it’s much easier to identify which employees need refreshers on their training so that you can provide every one of your customers with exactly the experience you design.

BarMinder provides bar and restaurant owners an automatic digital inventory count that gives you a count on a physical hub in your location, or the BarMinder mobile app. Simply put a sticker tag on the neck of the liquor bottle, check it into the system, and know exactly what you have in your inventory at all times with confidence. Reduce shrinkage, reduce overhead and make more money with BarMinder.

people sitting in a bar

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