Posted on | November 20, 2014
Written by | Andrew Bell
Integrating POS and inventory puts you in control of margins.
Running a beverage program regardless of its size is daunting and goes far beyond being able to blind-taste a product with laser accuracy. The skills must include one’s ability to control cost, maintain a healthy inventory level and and move product in a manner that leaves nothing aging out of drinkability before being sold. And along the way, the beverage director’s use of technology is the surest way to ensure a “well-oiled machine.”
What technology? Begin with the point of sale system—an uncontestable way to bring precision to the program. Yes, a painstaking series of tasks are required to enter and keep up to date all aspects of the beverage program. To ensure efficiency, creating item numbers that correspond to the distributors’ own item codes means that whoever needs to order will have the exact items that you have in inventory or need to reorder. This level of detail will also allow you to know how much has been sold when you next execute inventory.
Do inventory regularly—weekly maximum, monthly minimum. The more frequent the better, even though it is the least enviable task of running a program. Repeated and regular inventory updates have several benefits. You will know your variances and discover inconsistencies quickly. Plus, when your staff knows there regular inventories, they are less likely to behave inappropriately. Yes, I am implying that they may steal, that the bar may be overpouring, or they may be giving away wine to increase their tip percentage and not ring in the comps.
Truth in Numbers
The basics are relatively simple: Starting inventory, plus purchases, minus sales is considered your virtual inventory. You have 10 bottles of Cabernet X, you purchase 120 bottles and you sell 220 glasses. Questions should arise, such as how many ounces per glasses, giving you how many glasses per bottle? For this case we will say your pricing is for 5 ounces per glass therefore approximately 5 glasses per bottle, leaving about .36 ounces remaining per bottle. Not a tremendous amount of room for error.
The math continues: 220 (glasses sold) divided by 5 equals 44 bottles. Your virtual inventory is 10 plus 120 = 130, minus 44 = 86 bottles remaining. If you spot-check and count only 80 bottles (referred to as actual inventory) your variance is 6 bottles. Where did they go? It is the equivalent of 30 glasses unaccounted for. Depending on the value of the glasses, this may equal your profitability—and if you do not find them, ultimately your job. Overpouring is often the culprit.
The formula for the above to calculate the variance is SUM=(C2+D2)-(E2/5)-F2. Having this level of detail with all of your beverage items is imperative to know where to give your attention when training your staff.
The formula may seem like a foreign language, but setting up your POS system exportable to Excel will allow you to have a tight, reliable system. If a wine cost changes, the formula will indicate the new sales price automatically. The sales price would be altered to a round number either up or down depending on your other offerings to balance what your selling prices are.
Andrew Bell is a co-founder and president of American Sommelier. Through the Sales, Service and Buying Seminar Series, American Sommelier provides professionals with the tools needed to build and maintain a successful wine program in any restaurant environment. Member benefits include events, career guidance, discounts and the American Sommelier newsletter. For more details and a calendar of classes, visit americansommelier.com or call 212-226-6805.