How to Take Your Bar’s Inventory - dummies

By Ray Foley, Heather Dismore

Everyone seems to have their own way to track inventory. As you begin to run your bar it is important to keep track of your inventory. Knowing how much product you have on hand at any given time is essential so that you:

  • Can order product when you get low

  • Know where and how your inventory dollars are being used

  • Make sure that your inventory is actually making it into your menu items and out to your paying guests

  • Assess the cash value of stock on hand for accounting purposes

Most bars use one of these methods (or a combination of several methods). They generally fall into a couple of categories:

  • High-tech systems: These computerized systems include scanner guns and bar codes and practically update themselves as products come in and go out of your business. Some systems are fully integrated, tracking products from the time they’re delivered, through the preparation process, to the time they make it to the customer.

    Other systems can automatically count down your inventory as you use products. If you’re missing a single can, it shows up. The systems work well if you’re planning on having an exceptionally stable menu. If you’re planning any kind of change, completely automated systems can be more work than they’re worth. And these systems are more expensive than low-tech versions.

    To use this kind of system effectively, you have to have someone who accurately enters all data in a timely manner. This happens only in a business with sufficient staff to devote the necessary time to this detailed process. In an independent (rather than a corporately run) bar, these systems usually end up being scrapped, or underutilized at best.

  • Low-tech systems: These rely on paper and people: purchase orders, requisitions forms, and you or one of your employees physically counting and weighing your stock, each shift, each day, each week, and each month.

Even if you use an automated system, you still must physically count and weigh your inventory on a regular basis (monthly at a minimum, more if you need it) to account for everything and catch any discrepancies, including simple human errors and theft.

Yes, it’s a big job. Yes, it takes a lot of time. But it’s absolutely necessary to ensure that your profits are not ending up in a trash can or in someone’s home pantry.

As part of your monthly P&L (profit and loss statement), you count your inventory. This count is a full and complete account of all the food and beverage items in your bar. Your goal here is to reconcile (or match up) your assets on hand (your inventory) against the liability of the invoices (the bills you must pay).

Here is a snapshot of an inventory worksheet looks like. It can be used to decide which supplies need to be ordered.

Item Unit Unit Price On Hand Value
Pizza dough balls, 20 oz. Case, 24 ct. 27.34 0.3 8.20
Bread, 3-ft. loaf, Italian Each 2.49 1 2.49
Cheese, mozzarella, shredded Case, 14 lb. 18.52 0.2 3.71
Cream, sour Case, 8 lb. 9.37 0.5 4.69
Chicken, breast, 4 oz. raw, 15% Case, 10 lb. 16.43 3 49.29
Beef, burgers 3:1, 80/20 Case, 10 lb. 18.56 2 37.21
Total Value of Inventory $105.59

Here are some general guidelines for taking your monthly inventory count:

  • Conduct your inventory late at night or early in the morning. This way, you minimize the likelihood that you count something twice because someone moved it while she was working.

  • Split up the process over two days. Do dry storage and food one day, and liquor another. Don’t try to do them both on the same day; it’s a lot of work.

  • Enlist the help of several employees. It’s a great lesson to help them become aware that you have put controls in place.

  • Make sure you create and use a complete and consistent format for your inventory worksheets. Including the unit is essential for getting an accurate count. The “Unit” column helps everyone know how you want each product counted. For example, look at the line for pizza dough balls.

    If someone went into the freezer and counted seven balls of dough and wrote “7” in the “On Hand” column, the “Value” column would reflect the dollar value for seven cases of dough (or $191.38), rather than the value for seven dough balls, or roughly 0.3 cases of dough (or $8.20). That’s a significant difference.

  • After you have your count, use a spreadsheet program, such as Excel, to help you calculate the value of your inventory. Multiply the amount of each item you have on hand by the price you paid for the item.

  • Add up the total of all the items in your inventory to get your total value of inventory. You need this number for your monthly P&L reports.

  • If at all possible, and to keep people honest, rotate the items that individuals inventory. In other words, have people inventory things they’re not responsible for. If the bar manager is responsible for the liquor and the kitchen manager is responsible for the food, have them inventory each other’s area. Otherwise, they may have incentive to fudge the numbers.

Remember to conduct inventory at the end of a period, like the end of the week, month, or year. That way you can reconcile all your invoices and statements with the actual physical count to get a true and accurate picture of your bottom line.