1. Measure It! If you can’t measure it, you can’t manage it. Bar Managers should be keeping a detailed beverage cost report. This is an easy report to generate.
Opening Inventory (Value in dollars) + Purchases (Value in dollars) – Returns/Credits/Waste – Closing Inventory (Value in dollars) = Usage (Value)
Usage (Value) / Sales (Value) = Cost of Goods Sold (%)
I would also recommend breaking this into 3 categories. 1. Spirits 2. Draft Beer 3. Bottled beer. All have different target beverage costs. The overall combined target is 21%. When you break it down, your Spirits should be around 15-18% Draft Beer 25% and bottled beer 22%. You will need to check your cost from the vendor against your menu price, to set your individual goals (and ensure your charging enough for these targets. (The above references are what most profitable establishments follow.)
2. Monthly pour tests if you do not use jiggers. “Heavy hands” are just as bad as a bartender that steals from you. The train gets “off the tracks” for all of us. I used to test myself after several months and would find that I was overpouring. This is why I recommend separating your monthly spirits cost from your overall cost. This problem will manifest on reports, then you can go to the floor to test your staff to make sure the proper amounts are being poured. 1/2oz extra in every cocktail can have massive implications on your profitability. If you have cocktails that lend themselves to 2oz of spirits (martinis or oversized glasses) that’s fine, just set your price levels accordingly.
3. Create a written process for the rotation of stock If it is not in writing, it’s not repeatable. Have a written policy on the rotation of stock and check to see that it is followed. Beer is perishable, so it is imperative that you rotate daily. Not once a month.
4. Clean all of your draft beer lines weekly Beer lines can grow mould and yeast so they need to be cleaned regularly with a special solution. I have walked into establishments that seem to ignore this detail not knowing that they can get people sick. They also wonder why their beer tastes bad.
5. Protect the liquor license. This seems like a no-brainer but it is one of the most important aspects of bartending and bar management. If you serve a minor, you will lose your license. Have a good written system and process for checking IDs and set the expectation for your bartenders. Possibly secret shop them yourself.
6. Maintaining a Waste / Promotional log book. The only way to have proper reporting is to have good numbers. Corporate America spends a lot of time and effort to see to it that they have good information to make decisions. The beverage cost formula needs accurate waste tracking for drinks that are spoiled or were “on the house”. Let your bartenders know that if they make a drink it has to be accounted for via log book or rang up. If neither, it is theft, no exceptions. Those bars that allow bartenders too much freedom are among the 6,500 that will close their doors in 2013.
7. Develop a written bartender manual and update it as needed. If it is not written, it is not repeatable. It’s also harder to train. Develop processes and set expectations so you can effectively manage.
8. Inspect what you Expect. Check to see that all written processes are being followed, label date rotate, cleanliness, deep cleans, etc. To ensure your bartenders are meeting your expectations.
9. Maintain proper par levels of product. You do not want to run out of items between deliveries, but you also do not need 20 bottles of Galileo sitting on the shelf for 10 years. That stock room represents dollars spent and you don’t make money until that product is sold.
10. Training and Continuous education of Bar Staff. There is a lot to learn. I have been in this industry since the day I turned twenty-one and even after 10 years behind the bar I felt like I was just breaking the ice on real mixology and creating speciality craft cocktails. Keep your bartenders from developing know-it syndrome (We call it ABS “Arrogant Bartenders Syndrome”).
Constant education with going training on the beverage side and on the culinary side can help them to realize there is a lot to learn. Bartenders also serve food, so they should know the details of how your dishes are prepared as well as basic culinary terms and ingredients. So diners get a consistent experience with all of your employees.
