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T o your staff it’s simply an ounce of booze. To your customer it’s a drink. But to your bank account it’s like prospecting for gold!
Every restaurant operation must, I repeat MUST, have systems in place to account for every ounce of liquor sold, wasted and on their shelves. If you don’t have these systems in place you can almost guarantee that someone else (an employee) will stake a claim to your gold mine.
In an industry where we’ve seen cheese prices (and many others) shoot through the roof, purveyors tacking on fuel surcharges and our profit margins being attacked from every angle, selling liquor can be a very profitable venture. But you need to view every ounce of liquor as an ounce of gold. You wouldn’t leave gold coins just lying around your restaurant unaccounted for and unsecured, would you?
Inspect what you expect
If you’ve been in the business for any period of time, you’ve 
heard the phrase “inspect what you expect.” It has many meanings, depending on how the phrase is being used, but in the case of liquor and profits, it means you let your staff know that you treat liquor like it’s gold bullion, and that you will be keeping track of every ounce that is sold, mishandled and checked in.
This does two things:
1. It keeps honest people honest
2. It ensures you of an accurate picture of your
bar’s profitability.
These two things are very important in an area of your restaurant where it’s so easy for an employee to steal from you and where your profit margins have the most potential, ranging from 16 percent to 18 percent for most operators.
While there are many simple systems you can put into place to control your bar profits, here are five that when implemented can have a large impact on your bottom-line.
• Spill Sheets – Just like your kitchen has a waste sheet, which keeps track of double orders, nonservable dishes and product lost due to poor refrigeration, the bar needs to have a spill sheet.
A spill sheet allows a bartender to mark down every returned drink, double orders and those that are spilled. At the end of each shift, a manager should assign a cost to each drink lost. Using a spill sheet gives you a clear picture of why your pour cost is running high and can identify for you when there is a need for training.
• Comp Sheets – Many restaurant operators have no policy whatsoever when it comes to allowing bartenders to comp a customer a drink. Many fool themselves into thinking that a policy of no comping means that free drinks aren’t being given away anyway.
Without going through a litany of ways bartenders steal from their employers, here is the best way I’ve found to control comps.
First, assuming your liquor laws allow it, give each of your bartenders the ability to comp two drinks per shift, no questions asked. When they do give a drink away, have them mark it down on a comp sheet. At the end of each shift a manager will assign a cost and retail value to each drink given away. This will allow you to keep honest people honest, because they have the ability to do what they do, without losing their job.
Plus, you get to show each bartender that it’s not just an ounce of booze they’re giving away. You can show them how much in raw product cost all the drinks they’ve given away for the day, week or month is and how much money the restaurant didn’t collect to pay their bills and their wages.
• Make Smart Purchases – When is a GOOD deal a BAD deal when buying liquor? You know the liquor salesperson that walks in your door with the deal on Bailey’s Irish Cream: you buy a case, and you’ll get three bottles for free.
On the surface it sounds like a great deal, especially when you start to calculate the potential profits you can make on those free bottles. But buyers beware. Ask yourself, what do those free bottles of liquor represent? The answer: cash!
What do you pay your bills with, profits or cash? That’s right, cash pays the bills. So as a general rule of thumb, only take the deal if you know you will sell the case and free bottles within the next three to four weeks. Otherwise you’re tying up your restaurant’s most precious resource on the shelves. It’s a waste and unavailable cash can make it impossible to make payroll that magical month when business is slow and you have three payrolls.
• Perpetual Inventory System – The backbone of any good liquor control system is to have in place and religiously use a perpetual inventory system. The perpetual inventory form is used on a daily basis for a week at a time.
This system is used to keep track of every bottle of liquor in and out of your liquor closet. You will mark down every bottle you purchase from your liquor purveyors. You will add that to how many bottles you started the week off with on your liquor closet shelves, and you will keep track of every bottle taken out of the liquor closet on a daily basis.
So at the end of the week, when you add the number of bottles you started the week with to the bottles you purchased and then reduce that number by the number of bottles that were removed from the liquor closet, that new total should match a physical count of what is actually on the shelves. If it doesn’t match up, you know there is something fishy going on.
• Control Keys – It’s a busy Friday night. Your restaurant is jamming. It’s the third time in the last 30 minutes that your bartender has asked you to get a bottle of liquor from the closet. Because you’re dealing with another situation in your restaurant, you reach into your pocket for your keys and toss them to the bartender to go get the bottle.
Want to know the fastest way to missing bottles of liquor … give your keys to an employee. I’m not kidding.
You have your perpetual inventory system in place to keep track of every bottle in and out. Your bartender has not been trained to use it and chooses not to. At the end of the week your physical inventory does not match the numbers.
You have one of two problems:
1. Your management team is not using the systems you’ve put into place to ensure your profitability, or
2. You have theft.
But how do you know which one it is when managers are giving their keys away? Remember, you’re never so busy that you should give your keys to anyone!
Management is required
I’ve just given you five simple steps to maximize your liquor profits. And while they may seem extremely simple, I cannot stress enough how well they work. They teach your staff that you view every ounce of liquor as if it were an ounce of gold. These systems really keep honest people honest. But what they don’t do is work automatically.
If you want to maximize your bar profits, management is required. The best systems in the world are worthless if management has not been trained to use them and ownership isn’t making sure they’re being used.