Bar inventory and shrinkage: how to keep your stock under control

Why stock counts matter so much in a bar

In the kitchen, ingredients are processed; in the bar, stock is sold almost unchanged. On the one hand that makes the bar very profitable: a long drink or a glass of wine usually has a much lower cost of goods than a main course. On the other hand, stock in a bar is easy to give away, spill or take home. A bottle of spirits is small, valuable and opened in seconds. If you only look at your bank balance, you notice losses only once they have added up over months.

A stock count answers three questions: How much stock do we have? How much should we have according to purchases and sales? And where does the difference come from? This is not about distrusting your team. Most variances come from missing entries in the till, inaccurate pouring and wrong recipes stored in the till system. All of that can be fixed with clear routines. A bar with a short menu can often manage with a spreadsheet, while a club with several bars and high volumes needs fixed counting zones and a till with stock management.

Stock count: step by step

A stock count is only as good as its repeatability. If someone different counts at a different time in a different order every time, the numbers cannot be compared. So define a fixed routine and write it down.

There are several methods for open bottles. What matters is that you pick one and stick with it. Draught beer is the hardest to record: weigh kegs if possible and allow for a dispensing loss for foam and line cleaning that you have measured in your own venue.

Variance check against till data

The real insight comes from the comparison. Expected stock is opening stock plus deliveries minus usage according to the till. Actual stock is what you counted. The difference is your shrinkage. For the till to know the usage, every item needs a stored recipe: 4 cl of gin and 20 cl of tonic for a gin and tonic, 0.125 l for a small glass of wine, 0.5 l for a large beer. How to set up such recipes and the prices that go with them is explained in the guide to drinks menus and cocktail costing.

Always convert the variance into money and lost sales as well. “1.3 bottles” sounds like little; 23 unsold gin and tonics sound different. Your team understands that language better too. Analyse the variance per item, not just in total: a surplus of one product and a shortfall of another often point to items rung up incorrectly, for example when the premium gin is entered in the till as the house gin.

Where shrinkage comes from and how to spot it

Shrinkage almost always has several causes at once. Before you suspect individuals, check your routines. The following overview helps you read patterns in your figures.

A certain amount of shrinkage cannot be avoided, for instance through evaporation, drips or a spilled glass. What matters is knowing your own normal level. If the variance suddenly rises, it pays to look closely: which items, which bar, which days? Shrinkage also affects your bookkeeping. In Germany, an electronic till system must record every transaction without gaps (see till systems with TSE), and in Austria the cash register obligation applies. Sales that bypass the till are therefore not only a costing problem but also a tax problem.

Pour sizes, jiggers and recipes

The biggest single lever against shrinkage is an accurate pour size. Free pouring tends to mean more rather than less in daily practice, especially under stress or for regulars. Just a few millimetres extra per glass add up over hundreds of drinks a week. A jigger (a measuring cup, for example with 2 and 4 cl) or pourers with portion control make sure every serve is the same size. That is good not only for your cost of goods but also for your guests: a cocktail then tastes the same every night. What one extra centilitre per glass costs you is shown by the drinks price calculator: it works out the cost per serve from bottle price and pour size.

The quantity stated on the menu must actually end up in the glass. Serving glasses and measures are subject to legal metrology rules: in Germany in the Mess- und Eichverordnung (measurement and calibration ordinance), in Austria in the Maß- und Eichgesetz and its ordinances. These include permitted nominal volumes and fill lines. Buy glasses and carafes with fill lines from a specialist supplier who confirms the marking, and if in doubt ask the calibration authority, the WKO in Austria or the IHK in Germany.

Recording free drinks, staff drinks and breakage

A shot on the house, a beer for the band, tastings with a supplier, a drink for staff after their shift: all of this is fine as long as it is recorded. Unrecorded usage cannot be told apart from theft in a stock count and distorts your costing. So decide who may give out what, and make recording it as easy as possible.

• Dedicated till buttons for “guest treat”, “staff drink”, “artist/DJ”, “tasting” and “breakage”, each with a price of zero but with a recipe, so the usage is deducted from stock.
• Clear rules: for example one staff drink per shift, treats only by the shift manager, drinks for DJs as agreed.
• Breakage log at the bar: date, item, quantity, initials. Keep empty or broken bottles briefly until the shift manager has seen them.
• Analyse events separately: for happy hours, free drink vouchers or drinks packages for groups, ring up the usage separately. Ideas for such nights are in the guide to events in the bar.
• Returns and empties to the supplier recorded with a receipt, so credits are not counted as deliveries.

How staff drinks and treats are handled for tax purposes, for example as a benefit in kind or as an advertising expense, differs between Austria and Germany and depends on the individual case. Have your tax adviser explain it to you once and set up the till buttons accordingly.

Storage and ordering rhythm

A tidy storeroom is the basis for a quick stock count. And a fixed ordering rhythm prevents both empty shelves on a Friday night and too much money tied up in bottles that sit for months.

• Fixed places: every product has a labelled spot, in the storeroom and on the back bar in the same order as on the count sheet.
• Restrict access: the main storeroom is locked, the bar is restocked from it each shift and this is recorded in writing.
• Minimum and maximum stock for each item: when stock falls below the minimum, reorder up to the maximum.
• Fixed ordering day to match the delivery days of wholesalers, breweries and wine merchants, for example count on Monday, order on Tuesday, delivery on Thursday before the weekend.
• First in, first out: new stock to the back, older stock to the front, especially for beer, juices, syrups and open wines.
• Check slow movers: offer bottles that have not sold for months as a special or remove them from the range.

In clubs especially, usage varies widely from weekend to weekend. So plan orders around your event calendar: a sold-out club night needs different stock from a quiet Thursday. Use the price calculator to work out what a drink should cost based on your cost of goods.

Key figures for the month-end review

You do not need controlling software to run your bar. A few key figures, calculated the same way every month and compared over time, reliably show whether something is getting out of hand. The trend in your own venue matters more than any target value from the internet. How cost of goods and contribution margin fit together across the whole business is explained in the guide to costing in hospitality.

A well-run bar also needs a website that brings guests in on quiet nights: a current drinks menu as text, an event calendar, opening hours and group bookings. The free preview shows what your site could look like.