Managing a restaurant bar can be daunting. Every concern, responsibility, and task you have for your food inventory is now doubled by introducing liquor to the mix. Twice as many distributors. Twice as many menus. More employees. More upfront expense. But if you’re successful, your bar can also generate more patrons and higher revenue.
There’s no question restaurants with liquor licenses can generate a great profit from their bar menu — but how much profit depends on how well your bar selection matches your brand and audience, and how well you manage your inventory.
A common dilemma for bar owners is resisting the siren call of the liquor sales representative. Your rep will ALWAYS have deals to offer you — deals that seem too good to pass up. You need to take a breath and question those deals before signing on. Is this something you can really sell? The last thing you need as a lean operator is a lot of unused stock gathering dust in your storeroom or on your rail.
The key to success in managing your relationship with your sales rep (and you do want to maintain a great relationship — they’re a fantastic resource!) is to get their interests to line up effectively with yours. Don’t be afraid to ask what their incentive is on any given week, or what incentives are just over the horizon. It’s very possible that your interest and theirs line up immediately. Maybe they’ll line up next week. But do not be hesitant to put your interests and needs first and have your salesperson come back with an offer when it’s right for you.
So, how do you build a bar inventory that will work for, and not against, you? We have three simple steps for you to consider.
1. Start with the basics.
The first step is a fairly straightforward question: who are you? There’s no guarantee you have a plain answer for that, but the goal here is to order alcohol that makes sense for your brand and your bar. If your patrons are largely neighborhood joes getting together after work or dinner, you’ll likely want a different mix of drinks available than if your target audience is couples drawn to an intimate setting.
Decisions about wine or beer menus may be simple if you have a sommelier or cicerone (beer’s version of a sommelier) on staff, but more challenging if you or your chef are making decisions on the fly. Choosing the right pairing for your menu — and being able to sell it effectively — takes research, and you need to presume that your customer has access to the same information you do about quality and price of what you’re selling. That means not marking full bottles up like you would other types of alcohol, and offering choices that will match the level of pricing on your food menu.
Most wines can be purchased at $5-7 wholesale, making a $25 bottle price on your wine list both profitable and in line with what your customer could buy themselves at a store. If in doubt about what to purchase, at minimum just make sure you have at least one heavy and one light red, plus one heavy and one light white wine available.
Deciding what mix of liquor to maintain is yet another challenge. If you don’t know where to start with your basic inventory of liquors, here’s a quick guide to get you started.
Equal supplies of:
- Whiskey
- Bourbon
- Tequila
- Rum
Plus, twice the quantity in:
- Vodka
- Gin
- Scotch
And non-alcoholic mixers like:
- Club Soda
- Tonic Water
- Coca Cola or Pepsi (plus diet)
- 7-Up or Sprite (plus diet)
- Orange Juice
- Lemonade
- Tomato Juice
- Grenadine
- Margarita Mix
Once you can see how your patrons are actually consuming your inventory, adjust accordingly. If you get frequent requests for something you don’t carry, expand your menu. However, no matter what you stock: stay organized. Keeping like alcohol with like in an arrangement that makes sense to your staff (and for your flow) is important to ensuring everyone works efficiently. And it will keep your revenue up, too. Quick, professional service encourages second rounds, return visits, and great tips for your team!
Mare sure you do the same for your garnishes. Organize your cut lemons and limes, stemmed cherries, and olives in a way that makes sense for your flow, keeping their containers and surrounding area clean and clear. It will make everything easier to find during heavy service periods and prevent contamination of your drinks.
2. Level it out.
One aspect of alcohol purchasing that may seem foreign to a bar manager who also stocks food is the idea of dividing your order by selection. It’s unlikely that you’d order vegetables or grains for your kitchen by low, medium, and high quality brand, but you want to do just that when it comes to your bar. Maintain par for a minimum three levels of purchase for your customer. A Smirnoff vodka is not an Absolut is not a Kettel One. They represent increasing quality, but also increasing cost to you that can be passed on to your customer.
The three levels of liquor inventory are commonly referred to as:
1. Well (what you keep under the counter and dispense when no preference is given by the customer)
2. Call (popular name brands that can easily be upsold or are often inquired about)
3. Top Shelf (expensive, premium items placed in full view behind the bar)
There is no right or wrong answer as to which brand falls into what category. You decide which is which based on your clientele, your overall pricing, and the atmosphere of your restaurant. Maintaining multiple brands of liquor (perhaps even multiple, popular brands within each level) enables you to provide each customer with exactly the experience they are looking for — while suggesting upgrades to patrons along the way, of course. Stocking levels of liquor quality can also allow you to establish better margins on your drinks by controlling costs.
3. Mix it up.
There are a number of ways sophisticated bartenders and mixologists can control your costs while not skimping on the experience for the customer. Signature drinks are not just a great way to set your brand apart from the competition, but they also can help you control liquor cost. How? With a signature cocktail, you can limit your ingredients to one high quality liquor to three well liquors or mixes. Customers will see your cleverly named cocktail, note its listed ingredients on your menu, and identify the first item by brand. The remaining are left to your recipe’s discretion. For example:
The Thornbirds
Jameson 18 Year Old Limited Reserve whiskey, gin, vermouth, bitters
Listing a few blended drinks on your menu can be valuable as well, because ice takes up a significant volume of the cocktail. Yes, it means your bartender will need to use (and clean) a blender, potentially adding noise and delay to the bar environment. But the financial advantages may outweigh the hassle, and some recipes can be finished off with a much less noisy immersion style blender. And while nearly every blended drink begins with equal parts ice and liquid, a savvy bartender will continue to add crushed ice until the drink smoothly folds in on itself. Your customers will have the texture and consistency they’re looking for, and you will have a drink that is largely made of an inexpensive inventory item: ice.
Ultimately, determining profit on your drink menu comes down to pricing, and the same rules apply for liquor as for food. Ask yourself:
- How much does this item cost me to make?
- What is the guest willing to pay for this item?
Most liquor has a five-fold mark-up as a start (and four-fold for beer), but doing some competitive analysis in your local market can give you a sense of what your customer will tolerate.
Of course, after you’ve determined WHAT to sell, the next step is maintaining your stock through inventory management and control. Continue to the second part, where we discuss pour technique, inventory process, and preventing theft.
