Bar inventory, also referred to as liquor inventory, is the act of taking a complete count of all your bar items. This includes counting your draft beer, bottled/canned beer, hard seltzers, liquor items and wine bottles. To get the most out of your bar inventory efforts, you should also be performing analysis of your data.

   In its most basic form, liquor inventory just provides you with the counting data. By integrating purchases, you can calculate your inventory on-hand. Most commonly, bars will incorporate the value of their purchases and the value of their sales to determine their liquor cost. With advanced systems, you can also integrate all the data to evaluate the performance of individual items.

The essential steps of bar inventory include:

• Counting– Measuring the amount of liquor remaining in partial bottles and counting full items.
• Calculating the value of inventory on hand – Combining your full and partial counts for each product and multiplying this figure by the wholesale cost for the product to know the dollar value of your inventory on hand for every product.
• Calculating how much inventory was used – Adding the current count to the previous count and subtracting purchases for each product to calculate the dollar value of what was used during the inventory period.
• Calculating liquor cost –Dividing the dollar value of product used by the total sales dollars to get a percentage cost (this is usually broken down by category – draft beer, bottled beer, liquor and wine – but advanced liquor inventory systems will also calculate the liquor cost of individual products).

There are essentially three different levels of bar inventory:

• Level1 (basic inventory) –Generate a list of what you counted and the value of the inventory on hand without performing any additional analysis.
• Level2 (calculate liquor cost) – Take the difference between the value of your previous count and the value of your current count, and add the value of purchases to determine how much money was spent during the inventory period and then divide this figure by sales to calculate liquor cost by category.
• Level 3 (evaluate the performance of each product individually) – Analyze the counts, purchases and sales of each individual product to determine how many servings were sold vs. poured for every product at your bar.

Counting inventory is normally very time consuming. The traditional method involves using a clipboard and a counting sheet with list of items you’re going to count, and recording the amount of inventory on hand for each item on the counting sheet. One of the reasons this process is so time consuming is that the order of products on each shelf behind the bar and in your storeroom rarely matches the order of the products on your counting sheet.

Shelf to sheet inventory, also called shelf to software inventory, addresses this issue by allowing you to create a virtual map/template containing different areas that represent each shelf behind the bar and in your storeroom. Then, you populate the list of items on each shelf in a way that ensures the order of products in your software mirrors the order of the products on the shelf.

By creating as many zones/counting areas in your software as you have shelves and organizing the order based on the order of products on the shelf, you’re able to count what’s on the shelf and record it directly into the software without having to manually search for that product on a list. This is one of the most effective steps you can take to reduce the time it takes to count inventory.

Liquor inventory is important for three reasons:

• It allows you to know what to order – Counting inventory tells you exactly how much of every product you need to order to ensure you have enough of each product without keeping too much inventory on hand.
• It can tell you how much money you’re making from the sale of each item – If you do a liquor cost calculation, it tells you what your margin is so you can manage this figure more effectively.
• It can help you make more money – When you perform bar inventory correctly and in high detail, it can help you increase your bar profits by as much as 30%. Since most bars pour more alcohol than they sell, doing detailed level 3 inventory can identify where you’re having shrinkage (situations where you’re using product that you’re not selling). If you measure this, it gives you the tools to fix that problem so that you can sell a larger percentage of each product poured and as a result, make more money off each product.

There are six different types of bar inventory management systems:

• In-house inventory systems
• Self-service apps
• Full-service apps
• Automated systems
• Accounting systems
• Hybrid systems

In-House Inventory Systems
‍In-house inventory systems use a tenthing system to count your inventory. This involves estimating how much is in each partial bottle in10% increments and then integrating the value of purchases and sales to calculate your liquor cost. These systems vary wildly in their sophistication and effectiveness. In general, if your bar is doing more than $20,000 in sales each month, we don’t recommend using an in-house inventory system because you’ll be missing out on a big opportunity to manage your costs and maximize your profits.

Self-Service Apps
‍Self-service apps are liquor inventory systems that allow you to create an account in some type of software system and then use the tools of that software system to perform your counts and possibly calculate liquor cost of products by category. As with in-house systems, these apps vary wildly– some use hardware such as barcode scanners and Bluetooth scales, while others have less sophisticated methods of counting your inventory.

Self-service apps are typically inexpensive, but the downside of using these systems is that they are typically more limited in the functions they allow you to perform. Most bars using self-service apps typically only perform level 1 or sometimes level 2 inventory, but they lose the ability to look at the individual performance of products necessary to make more money from your inventory efforts.

Full-Service Apps
‍Full-service apps provide a much more robust service. You pay a company to come to your bar to do your inventory counts and perform all data analysis for you. These systems are very effective and allow you to achieve the results necessary to improve your profitability. However, they are also the most expensive option since you’re having a third-party professional do all the work for you.

Automated Systems
‍Automated systems measure your product usage at the time when alcohol is being poured from an individual bottle of liquor or when beer is being dispensed from a draft beer line. While these systems provide highly accurate usage data, they require careful management by a knowledgeable person to ensure they work effectively.

For example, using an automated inventory system with your draft beer requires you to manage the system when the lines change and when the draft system is cleaned. In addition, these systems don’t allow you to track the usage of bottled beer and they rarely track wine usage, making them limited in their ability to provide a comprehensive picture of the performance of all your bar’s products.

Accounting Systems
‍Sometimes, inventory systems are baked into bigger software platforms. It’s common for robust accounting software systems to have an inventory module. The problem with these systems is that since inventory is only a small component of the functions the software manages, it will often lack the robust, high-end features that come with dedicated inventory software.

For example, these systems usually lack hardware integrations that improve the speed and accuracy of inventory counts, and you often don’t have the option of receiving assistance using the system from an inventory expert that is common with full-service and hybrid systems. Instead, you have to run every aspect of the inventory software on your own, which makes them essentially self-service systems with a little more functionality than is provided by a typical self-service app.

Hybrid Systems
‍Hybrid systems combine elements of self-service and full-service systems to provide you with the highest levels of functionality at a more affordable cost. Bar-i’s system is a great example of a hybrid bar inventory system. When you use our system, the actual data collection process(counting inventory, collecting invoices and running sales reports) is done by your team. Then, a dedicated Bar-i account manager will be responsible for:
·        System setup, support and training
·        Entering invoices and updating prices
·        Receiving counts
·        Resolving counting errors
·        Adding new products to the system
·        Managing integrations with your POS system
·        Providing follow-up reports and consulting services

Since the data collection is completed in-house by your team, the cost of hybrid systems is lower than with full-service systems. However, you still have the assistance of a dedicated independent inventory expert to deal with the more challenging aspects of the inventory process. This approach saves your team time while providing the expertise necessary to get the most out of your inventory efforts. Bar-i has several different hybrid options, allowing you to choose the amount of assistance you require from our staff.

Determining your return on investment (ROI) involves comparing the benefit of the service to the cost. The cost will vary based on the specific inventory system you use, but the general benefits achieved by barinventory systems are consistent regardless of the type of system you implement at your bar. These benefits are:

• Save time
• Improve your bar’s performance

Save Time
‍Just about all bar inventory systems will provide time savings benefits compared with performing inventory manually in-house. If you were previously spending five hours a week on the bar inventory process and you’re able to reduce that amount of time to two hours using a more sophisticated bar inventory system, you’ve saved three hours of your staff’s time each week. The value of this time savings may vary based on what your managers are using those additional three hours for each week, but this can free up a significant amount of time that can be used for other essential tasks associated with running your business.

Improve Your Bar’s Performance
‍The bigger benefit provided by sophisticated liquor inventory systems is the ability to improve your bar’s performance. If an inventory system allows you to decrease your liquor cost and increase your sales by having more of each product rung in every week, it’s typically going to equate to a significant amount of money over the course of a year.

At Bar-i, we typically see bars we work with decrease their spending and purchasing of inventory by 3%. In other words, for every $100 of sales, these bars capture an additional $3 as profits because they’re reducing the amount of alcohol they pour to generate those sales. Therefore, the ROI of Bar-i’s inventory service is 3% of your sales.

The harder part of the ROI calculation is measuring how much your sales increased. If your inventory data allows you to make changes to your processes that significantly reduce the number of drinks given away and ensure that all drinks are being rung in, you’ll generate more sales. It can be challenging to measure the exact increase in your sales, but we conservatively estimate this figure as a 6% reduction in cost to your bottom line.

The best way to measure the success of your bar inventory system is to evaluate the improvements you’re experiencing associated with the two primary benefits of using advanced liquor inventory software – saving time and making more money.

Measuring Time Savings Benefits
‍There are three ways you can experience time savings improvements from using an advanced bar inventory system:

• Spend less time counting – Advanced inventory systems have more efficient tools that will count your inventory faster and more accurately.
• Spend less time producing inventory on hand and liquor cost data – Advanced bar inventory systems allow you to automatically integrate the wholesale cost, the amount you spend purchasing products and your weekly sales in order to calculate your liquor cost.
• Spend less time ordering – Many advanced inventory systems provide functionality that makes ordering easier. With Bar-i’s system, the software generates dynamic pars based on your recent usage. Then, the software compares the par for what you need to have on hand against the current count and suggests the difference as the amount to order. Our system not only tells you how much you need to order, but it allows you to place those orders via email to save even more time.

Measuring Your Bar’s Ability to Make More Money
‍Similarly, there are several ways an advanced bar inventory system can help you make more money. Make sure to measure how effectively your system is performing the following functions:

• Precisely measure performance - If your system performs level 3 inventory and increases the precision of yourperformance data, this will allow you to make better informed decisions thatwill help increase profits.
• Product level detail – When your inventory system provides detailed information regarding the performance of each individual product, it unlocks a variety of benefits that will help you better understand how to reduce shrinkage, lower your liquor cost and make more money.
• Error resolution and feedback loop – If your inventory system has an error resolution system, it will significantly improve your results. Make sure that during the investigation of errors, there’s enough detail to see where an error was made, what type of error occurred and how to correct it. Not only will this make your inventory results more accurate, but the feedback/error investigation process informs how these errors were made in the past so that over time, you continuously reduce errors and increase the accuracy of your inventory process.

Using a basic bar inventory system causes several problems that significantly reduce the effectiveness of your inventory efforts:

• Slower counting process
• Inaccuracy
• Lack of invoice integration
• Lack of sales integration and programming
• Increased errors

Slower Counting Process
‍If you use a manual inventory system or have basic software that doesn’t offer hardware integrations such as barcode scanners to look up new items and scales to measure the amount of liquor remaining in partial bottles, the counting system will be much slower and take longer to complete.

Inaccuracy
‍Traditional inventory counting methods involve estimating how full an open bottle is to the nearest 10% (for example, if you have 30% of the bottle left, you’d estimate it at 0.3). Not only is this method very inaccurate and subjective, but it’s especially problematic for high end, low sales volume products. When a product is rarely used, it’s easy to estimate a bottle at 0.6 one week and then estimate it at 0.7 the next week, even if nothing was poured or only 1-2 drinks were poured that week. This gives you negative usage.

This method is also problematic with:  

• Kegs– Tenthing providesinaccurate measurements of draft beer usage.
• Opaque bottles –Products contained in opaque bottles, such as Bailey’s, prevent you from seeing inside so you won’t be able to estimate how much is left in the bottle.
• Irregularly shaped bottles – Bottles that have an unusual shape, such as Crown Royal, will make it harder to estimate how much is left inside the bottle than products that come in a traditionally shaped bottle.

Lack of Invoice Integration
‍Most basic inventory systems don’t accurately integrate invoices, match the value of purchases and divide them up based on what was spent on each category (bottled beer, draft beer, liquor and wine). Without this information, it’s hard to achieve the actionable data necessary to increase profits. When you use Bar-i’s inventory system, we perform this task for you either by entering the invoices for you or pulling the data from our integration partner Fintech (if you use their system).

Lack of Sales Integration and Programming
‍In order to calculate liquor cost or look at individual product performance, you need to pull the itemized sales data from you POS system. Many basic inventory systems don’t provide this functionality, making it much harder to get the performance data you need to maximize profits. Bar-i’s inventory system integrates with over 40 POS systems, making this process easy and seamless.

In addition, there are typically occasions where the programming of your POS system isn’t optimized. By reprogramming your POS, you can get a better record of sales and more accurate inventory data. This is a strength of Bar-i’s service, and we can help you do this to ensure your POS is always optimized to deliver the most accurate inventory data.

Increased Errors
‍By far, the biggest problem associated with using a traditional inventory system is an increased likelihood of errors. Traditional systems involve a lot of manual processes, and this introduces many opportunities for errors while limiting your ability to diagnose, fix and learn from those errors. These errors will reduce the accuracy of your results and prevent you from having confidence in your inventory data, making it harder to take the actions necessary to improve profitability.

‍

The setup process for Bar-i’s inventory system depends on the service option you choose. If you choose one of our lower tier self-service products, we’ll provide you with a one-hour complimentary training session. Then, you’ll be able to work through a series of self-service YouTube training videos to complete the setup.
‍
Our pro platform comes with our exclusive Simple Start Setup™ which provides much more robust assistance with setting up your inventory system. With Simple Start Setup™, you pay for significant training, setup and support by Bar-i account managers, but you’ll have peace of mind that the system is set up correctly and that your team will understand how to work the counting software.

Our Simple Start Setup™ includes a five-phase process:

• Discovery– During the discovery conversation, you’ll learn about our system and choose the appropriate option for your bar. Then, we’ll mail your equipment to you.
• Map Setup –During a Zoom meeting, our team will train you on how to map out your bar, create counting zones and fill in each zone by scanning the barcodes on the items on each shelf.
• Counting Training –Our team will train you on how to do your inventory counts so that you can complete them as quickly as possible. This involves teaching you how to use the counting software and providing you with counting hacks that will make your counts both faster and more accurate.
• Recipe Creation –Once we’ve performed an initial count, your dedicated Bar-i account manager will learn about your glassware, standard drink portion sizes and signature drink recipes so that we can set up your system in a way that delivers the most accurate results possible
• Audit Training – We teach you how to perform a detailed audit. You’ll learn the different steps in the process that your team needs to complete each week. This includes how to upload invoices; how to submit your counts; how to run and submit the correct sales reports from your POS system; how to provide our team information on new POS buttons; and how to investigate, diagnose and resolve errors.

All Bar-i packages are on monthly recurring billing. When you start working with us, you’ll sign up for the package you want, and then you’re billed monthly for using the software. Since there’s no long-termcontract or commitment, you’re free to cancel anytime you want. If you want tosave some money and you’re willing to commit to using our bar inventory system for a year, you can prepay for an annual license to receive a 20% discount forpaying for an entire year upfront.

In order to maximize your ROI on your inventory efforts, you should be using bar inventory as a tool to make more money. This is accomplished by performing what we refer to as level 3 inventory, or “down tothe serving” inventory.
‍
Down to the serving inventory refers to the process of looking at individual products with the detail necessary to see how many servings were sold during the inventory period. To get this level of detail, you need to write recipes for every drink button on your POS system so that when your POS data is integrated into our inventory software, the information is compared to the amount poured for each type of liquor. The amount poured is determined by measuring partial bottles on scales to identify how much of each product you have on hand at the end of the current inventory period. Then, you can take the difference between the current inventory level and your previous inventory level, and add what was purchased during this cycle. You complete this processfor every product you carry to find out exactly how many servings you have of each liquor you sell.  

Since you sell alcohol in single serving increments,tracking your inventory down to the serving allows you to precisely calculate the shrinkage of each item so that you can evaluate the performance ofevery product you sell.This level of detail also allows you to calculate the liquor cost of each product. When you understand the level of shrinkage and the liquor cost for every product at your bar, you’ll have the actionable information necessary to improve the performance of struggling products so thatyou can make more money.

The Bar-iinventory system integrates with over 40 POS systems, including many of the most widely used systems. In addition, our software makes it easy to integratewith additional POS systems. All we need to add a new POS system to our software is an example of your itemized sales report. We can set up the integrationin under five minutes once we have that sales report, and we can easily integrate with any POS system you work with even if they aren’t an existing integration partner of ours.

Our inventory system uses two different methods to accountfor purchases in order to calculate usage:

Method 1
‍
‍If you use Fintech as your payment processing system and if you have thecorrect subscription level, you can provide us with access to that data. Once we have access, we can pull the purchases from the previous period without anyaction required. This is the preferred method because it reduces the work required on your end, and it improves the accuracy of your inventory results because youeliminate potential errors associated with misplaced invoices.
‍
‍Method 2

‍If you don’t use Fintech, you need to gather all your invoices, check them in and upload PDF copies of them into the Bar-i system prior to counting inventory each period. Then, the invoices will be reconciled by your Bar-i account manager and our data entry team during the inventory audit. Accurately accounting line by line for individual purchases is a tedious task that often takes between 30-60 minutes per inventory count, so it’s often one of the impediments to doing effective level 3 inventory (down to the serving). This is why we include this service with our pro systems. If you use one of our lower tiered systems, you can pay per invoice to have this done. We strongly recommend that you consider this so that your purchases are reliably and accurately accounted for, ensuring you have the correct data necessary to improve your profits.

At Bar-i, we have a thorough, multi-step process to accountfor your sales:

• Interviewon Settings – If you use our pro system, during the third setup meeting with your team, we run through a series of questions that allows us to learn about your standard drink sizes for draft beer, as well as liquor drink sizes for shots, singles,doubles, neats/rocks, martinis, classic cocktails and signature cocktails. We also learn about all the ingredients used for every cocktail,including how much of each type of liquor is used to make that drink.
  ‍
• Code Recipes –Based on this information, your Bar-i account manager writes recipes for eachdrink served at your bar and adds them into the inventory system. This task typically takes a couple of hours to complete, so having your account manager do this provides convenience and ensures it is completed accurately.
  ‍
• Resolve– We only write recipes for drinks where we’recertain about how they’re made. For drinks where it’s unclear, we run through aprocess to resolve any questions we have so that we can write the remaining recipes correctly.
  ‍
• Upload Matching Period Report – Each inventory period, we upload an itemized sales report for the entire period.
  ‍
• Identify and Resolve Missing Buttons – Our system automatically identifies if there are new buttons on the report each inventory period. If so, you’ll be prompted to provide information on what the ingredients are for each drink associated with a new button so that we can addthese recipes into the system for you.
  ‍
• Error Checking – Once we look at your sales information for the period, we compare it to what was poured to see if there is a significant difference for each product. If there are wild variances, it’s often a sign that either the recipes aren’t written correctly,or that the bartenders aren’t following the recipes. Investigating items that have a significant difference between what was sold and poured to determine if there’s an error or if the product is missing is an important part of our sales accounting process, but it’s only available if you use our pro version and have access to our level 3 inventory system.

At Bar-i, we’ve developed a meticulous process to ensureyour inventory counts are completed as accurately and efficiently as possible,allowing you to acquire the actionable data necessary to reduce inventory shrinkage and maximizeyour profitability. This process involves the following steps.

‍Step 1 – Upload Your Invoices
‍Bar-i needs access to your invoices so that we can have anaccurate record of what’s been purchased during the current inventory cycle. Yourteam provides access to your invoices in one of two ways:
- You can upload them into Bar-i’s inventory system.  
 
-  If you use Fintech as your payment automation system, our software integrates with their platform, making theprocess of uploading your invoices even more seamless. Simply provide our teamwith a login for your Fintech account and we’ll pull the details of what’s beenpurchased since your last count and enter them into the system for you.

This process is completed the daybefore your inventory count.

‍Step 2 – Inventory CountYour team performs the complete inventory count. All full bottles are counted and partial bottles are weighedon Bluetooth scales that are accurate to the hundredth of an ounce, ensuring we’re able to provide inventory data that is accurate down to the serving. Your team will also run the sales report for the inventory period. All of the data from yourinventory count and your sales report will be sent to your Bar-i account manager for analysis.

‍Step 3 – Adjustments Once your inventory count data hasbeen completed, your team will tell us about any communication items orexceptions so we can make the necessary adjustments ahead of time.

‍Step 4 – Initial Analysis After all these items have beensubmitted to our team, your Bar-i account manager will perform an initial analysis. This involves entering all the data, making sure all the numbers makesense and addressing any issues that come up. Your account manager will choose a subset of items where there’s a difference between what was sold and poured and load these items onto a variance report that is emailed to your team so youcan check the counts for these items.

‍Step 5 – Error Investigation Your team will then investigate the items that have been flagged during the initial analysis to determine if there were any counting errors, invoice related errors, sales related errors,or if the product was actually missing. After you’ve determined the cause ofthese discrepancies, you’ll respond to your account manager with your findings.

‍Step 6 – Final Report Your account manager willreconcile the suggested changes with your data and use their judgment to makeany necessary adjustments to the data. Then, your account manager will finalizethe results and produce either a video report or bullet point reports that highlight the results of the inventory audit, providing suggested next steps.Your account manager will be available to discuss the report andrecommendations with you if you have any questions.

Bar-i offers four different service options with our liquorinventory system:

Speed Count
‍
‍Speed Count is our basic counting system that offers shelf to sheet inventory,barcode lookup of products, and Bluetooth weighing of open items. This service produces aggregate counts of all products at your bar. This means that if you have to count a product in five different locations, you’ll automatically get atotal aggregate count of all locations, making the counting process faster andmore accurate.

Complete
‍
‍ Complete provides the same best-in-class counting system,but also allows your team to:·     
- Enter wholesale prices for each item ininventory·        
- Enter the value of purchases during eachinventory period·       
- Upload sales reports
This additional information allows us to calculate yourliquor cost by category (bottled beer, draft beer, liquor and wine). In addition, Bar-i Complete provides automated ordering, making this process easy and hassle free for your team.

Pro
‍
The Pro version of Bar-i’s inventory system provides you with all of the services associated with Speed Count and Complete, but you will also have the ability toperform level 3 inventory, which compares precisely what was poured vs. soldfor every product at your bar. This detailed information is critical to your ability to leverage your inventory efforts as a profitability tool. In addition, you’ll havethe ability to calculate the liquor cost of individual products and for individual drinks/buttons on your POS system.
‍
Bar-i Pro comes with robust services from our team. You’llhave a dedicated account manager working with you who will guide you throughthe counting process, help you resolve any potential errors, and provide youwith detailed reports containing recommendations for how to reduce shrinkage and improve the performance of struggling products.

Pro Lite
‍
‍The Pro Lite version of our software allows you to leverage all the benefits of the Pro version. However, you will be using the software independently without supportfrom a Bar-i account manager. You will have the option to pay per invoice to have our team enter invoices for you if you don’t want to perform this task yourself. In addition, Pro Lite includes licenses for two users.Single location bars can have one user complete the entire process. For multiple location bars that have a regional manager over seeing every location, you can split the task between two users -- the first user (individual location manager) performs all the counting tasks at the bar and the second user(regional manager) performs all data analysis (i.e. all the tasks completed bya Bar-i account manager in our full-service Pro version).

Bar-i Complete allows you to leverage our extremely fast andaccurate counting system when performing your inventory counts. In addition, itallows you to enter the wholesale cost of each item so you can calculate the value of inventory on hand. You can also integrate the value of purchases and sales at the category level to calculate liquor cost at the category level (bottled beer, draft beer, liquor and wine). Complete also provides automated ordering where par values are compared to the most recent counts to determine what needs to be ordered.‍

Bar-i Pro is one of the most sophisticated inventory systems available. In addition to providing you with extremely fast and accurate counting capabilities, Bar-i Pro delivers robust data associated with the performance of each individual product you carry. This allows you to compare usage to sales in order to calculate liquor cost on an individual product basis. Most importantly, it allows you to see exactly how much of each item is missing.
‍
The industry standard for inventory shrinkage is 15%, and the purpose of Bar-i Pro is to evaluate where that shrinkage is occurring soyou can take the steps necessary to reduce it and improve your profitability.The Pro version of our software comes in two options:·     

- Full-service – You’ll have access to adedicated Bar-i account manager who will provide robust support throughout theinventory process, including all data analysis and reporting
‍
-  Lite – The Lite version gives you accessto all the capabilities of the software, but you won’t have the assistance of adedicated account manager (your team will have to perform all the data analysisyourself)‍