Which liquor inventory service is better: AccuBar or BevInco? Today we'll discuss the liquor inventory methods these companies use and how they compare.
Every bar owner has heard about the importance of inventory management. Some owners heard it directly from the guy who handed the keys over to them when they took ownership, and others heard it from other sources, such as their accountant. Have you ever been the victim of an audit by your state liquor commission? Are you aware that over 80% of bars and nightclubs exceed the state allowance for shrinkage*? ‘But wait a minute,’ you say, ‘I personally take inventory every week; I’m in great shape!’ Oh really? Perhaps your perspective on this subject will change when I exploit the inventory myth known as “tenthing.” In a previous edition of Design Buzz (refer below), I discussed the merits of the BevInco inventory service. This edition of the Design Buzz Productive Bar Design series analyzes how AccuBar and BevInco stack-up as the top inventory service for nightclubs and bars.
What Are The Most Common Liquor Inventory Methods for Restaurants, Bars and Nightclubs?
There are basically three different types of inventory methods:
The traditional liquor inventory method: clipboard / spreadsheet method
Of course, there are many methods people have devised to manage their inventories, but this method employs the most basic techniques, which includes:
· Count full bottles of beer, wine and liquor.
· Estimate the unused portion of all open bottles using the “tenthing” method. This is nothing more than an educated guess as to how many ounces are in the bottle by determining how may “tenths” of each respective bottle are still in the bottle. In other words, is 10% left, 20%, 30%, etc.? With a quart-size bottle, for example, we are estimating whether there are 3, 6 or 9 oz, etc., left – right? Well, this is the concept many people use, but this is anything but accurate.
· Estimate the unused portion of barrels of beer. Many bar owners would lift the barrel, shake it and guess to the closest ¼ barrel. Again, this is archaic, but it’s common practice.
The results are recorded on a homemade pre-printed form or entered into a spreadsheet.
AccuBar Inventory Audit Service
AccuBar is an inventory management system that takes a more scientific approach than the traditional clipboard / spreadsheet method. Fundamental to the AccuBar approach is the sophistication of intelligent hand-held devices, such as smarphones. Here’s how the AccuBar method works:
· The physical inventory is done exclusively by the bar owners or their representatives.
· Scan UPC code of all full bottles.
· Smartphone technology is utilized to assist the inventory person through a series of diagrams for each respective brand. The diagrams work by offering a visual aide to assist in estimating the amount of liquor in open bottles. However, the diagrams use the same “tenthing” system described above.
· Kegs are estimated in the traditional manner described above.
BevInco Inventory Audit Service
· The physical inventory can be done by the bar owner or by a local BevInco technician.
· Scan the UPC code of all full bottles.
· All open bottles are weighed and entered into a device such as an iPad, using BevInco’s proprietary software.
· All kegs are weighed.
· Drink recipes are entered using the BevInco software.
· Batches are weighed and entered using the BevInco software.
“Tenthing”: The Big Liquor Inventory Myth
To the average person, attempting to estimate the amount of liquor in an open bottle by the method known as “tenthing” might seem like a logical approach. If someone were to provide a set of diagrams, each with a graduated scale (in the manner of a measuring cup), what could be better? Each graduation, described above, is what has become known in the industry as “tenthing.” Imagine how invaluable it is to have a template for every brand. After all, tequila bottles have a vastly different shape than whiskey and vodka bottles. This is the system used by AccuBar. In case you are unaware, this is a grossly ineffective approach to measuring, much less inventory auditing. For one, the variance of this method is +/- 5% (one-half of the smallest measuring unit, the universally-held principle of scientific instruments). Bottle weighing, the method used by BevInco, yields accuracy of +/- 1/32 oz, which, is light years more accurate. Consider the following sample audit of a single brand:
AccuBar: .9 = 28.8 oz, is entered as 29 oz by the technician
BevInco: bottle weight = 30.4 oz
AccuBar: .9 (same as week 1), is again entered as 29 oz
BevInco: bottle weight = 27.4 oz
AccuBar: usage = 0
BevInco: usage = 3 oz
If the bottle in question were Johnny Walker Blue, which you are selling at $45 per shot, the AccuBar method would not have revealed that you sold $135. In other words, your inventory would not have tied to your POS. What we see in the above example is the result of operator error, which is the multiplication of two 5% errors.
NOW IMAGINE if you have 200 - 300 open bottles! One week your inventory could be overstated and the next the opposite!
If this pattern were repeated week-after-week, how could any bar owner have meaningful accounting or inventory information? With BevInco, all open bottles and kegs are scientifically weighed – to the gram.** Therefore, the accuracy used by BevInco scales is, virtually, impunity.
The Value of Batches and Recipes FOR BARS AND NIGHTCLUBS
If your bar sells margaritas (by the batch) or multiple-portion cocktails such as long island iced tea, this should be of interest to you. How does your inventory method account for these items?
· The clipboard / spreadsheet has no way of accounting for either of these.
· AccuBar has no way of dealing with either of these.
· BevInco addresses both by entering your cocktail and batch recipes directly into their proprietary software. Batches are weighed – to the gram.
According to a recent edition of Ohio Tavern News (which can be downloaded below), author Chuck Deibel, a CPA by profession, without understanding your current product mix, it’s impossible to calculate your ideal pouring cost percentage. In other words, ideal pouring cost cannot be determined without factoring your batches and mixed drink recipes.
What You Don’t Know About Your Liquor Inventory DOES Hurt You!
Contrary to the old cliché, not only will ignorance hurt you – it can be crippling your bars’ profits! Proper and thorough inventory auditing is the only answer, the BevInco way. Without ideal pouring cost, you can’t understand how much inventory is missing. According to the above-mentioned article in the Ohio Tavern News, Deibel goes on to say, “On average, a bar is missing 20 percent when it is not calculating its ideal numbers based on the current product mix. This means that practically all bars would be found to be out of compliance (with the state liquor commission) and would be charged (in an audit).”
TheRealBevInco Service: The Intangibles
Beyond the superior benefits of their scientific and accounting approach to inventory management, BevInco develops an invaluable consulting role with its clients. They teach their clients how to use their software and how to conduct inventories. They also help bar owners as clients, in isolating their losses and how to take corrective steps. If you are over-pouring, BevInco will help you learn how to discover this with their software. Because of their commitment in helping their bar owner clients succeed and the insight their software provides, the local BevInco representative can even help a bar owner understand how to structure drink specials or shot-and-beer specials. AccuBar provides none of this assistance.
An example of the potential benefits owners have with the BevInco service, I’ve included the first and fourth audits of a new BevInco client, which can be downloaded below.
To me, BevInco is the only inventory management service that makes sense.
Columbus Bar 1st Audit Report
Columbus Bar 4th Audit Report
Productive Bar Design: State Audit Peace of Mind With BevInco
Easybar Liquor Control Systems for Maximum Bar Profitability
Productive Bar Design: What Are The Most Profitable Drinks?
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* Source: BevInco State Audit Brief by Charles Deibel, which can be seen here
** One gram = 1/28 of an ounce; the dry weight is converted to fluid ounces through the BevInco software. BevInco has chosen to use a highly-accurate scientific scale (with a deviation of +/- .5 gram), the resulting audit is accurate to within 1/100 ounce.