UNIT 2

INVENTORY:-

Inventory management helps companies identify which and how much stock to order at what
time. It tracks inventory from purchase to the sale of goods. The practice identifies and
responds to trends to ensure there's always enough stock to fulfill customer orders and proper
warning of a shortage

Inventory management refers to the process of ordering, storing, using, and selling a

company's inventory. This includes the management of raw materials, components, and
finished products, as well as warehousing and processing of such items.

KEY TAKEAWAYS

 Inventory management is the entire process of managing inventories from raw

materials to finished products.
 Inventory management tries to efficiently streamline inventories to avoid both gluts
and shortages.
 Two major methods for inventory management are just-in-time (JIT) and materials
requirement planning (MRP).

Fundamentally, taking bar inventory is the process of counting everything you have in stock
twice. Then you use those numbers to calculate how much product you used during that time,
which is your inventory usage. That number, in turn, allows you to calculate a whole host of
other useful metrics.

Fundamentally, taking bar inventory is the process of counting everything you have in stock
twice.

Then you use those numbers to calculate how much product you used during that time, which
is your inventory usage. That number, in turn, allows you to calculate a whole host of other
useful metrics. Metrics you can use to make profitable decisions.

Things like setting par levels, reducing excess inventory, and determining pour cost and
pricing structure. All dependent on inventory numbers. It is, in fact, the single best way to
drive operational efficiencies and profitability in a bar.

Wine Inventory
Every time a great bottle of wine swirls down the drain, a sommelier somewhere sheds a tear.

It's the very definition of sommelier. Here are some wine inventory management tips to make
sure you’re keeping eyes dry.

 Store your wine labels out, if possible. Turning the wine too often can interrupt the
natural aging process.

 Cork is important for the development of the flavor profile. Store bottles lying so the
cork is in contact with the wine.

 Keep wine out of direct light. Wines are happiest in places like cellars, where light
and the resulting oxidizing is at a minimum.

 Keep a separate wine log or wine inventory spreadsheet. Wine has unique
characteristics like vintage, varietal, vineyard, etc., that are helpful to record and
review as time goes on.
Beer Inventory
There are many different types and shapes of keg sizes, and draft beer inventory is a different
animal. Here are 3 ways to go about it:

 Tenthing AKA the “lift-n-guess” method. Good news, everyone! The rule of tenths is
back, but this time you can’t see anything! But seriously, you can still use the rule of
tenths to estimate the amount of beer in a keg. You have to lift the keg up and do it by
gauging its weight.

 Get a keg scale. This is a lot like the option above, but with machine precision.

 Use the Keg Check. It’s a torque wrench designed specifically to measure the amount
of beer left in a keg.

STORAGE:-

Keep it cool
For common distilled spirits, such as whiskey, vodka, gin, rum and tequila, the general rule of
thumb is to store them at room temperature. Though some experts say the ideal range is
slightly lower, between 55 and 60 degrees. Keeping them in a relatively cool place preserves
them longer

As temperatures rise, the alcohol begins to expand and can evaporate more quickly. While it
won’t hurt you healthwise to consume, storing in a warm place can cause the liquor to oxidize
more quickly and change flavors over time.
Avoid the sun

If your bottles sit on a bar cart, make sure they’re out of direct sunlight. While UV rays won’t
spoil liquor, extended exposure to the sun has a similar effect to storing at high temperatures
(speeding up the oxidation process). In fact, researchers from Bacardi showed that sun can be
even worse for liquor than warmth. When researchers left bottles exposed to sun for 15
days, bourbon lost 10 percent of its color, and a bottle of scotch lost 40 percent of its color in
that time.

To freeze or not to freeze

Ah, a bottle of vodka in the freezer: a staple of college life. While no spirit needs to be kept this
cold, it’s a matter of preference (many choose to do this with lighter liquors), and there’s no
harm in doing so, as the alcohol won’t freeze. Even if you don’t opt for this storage method, gin
and vodka are better served chilled, so experts recommend throwing them in the freezer about
an hour before serving.

Vermouth belongs in the fridge

While most spirits have enough alcohol content to be fine when stored at room temperature,
there are a few items that belong in the fridge. Fortified wines—such as vermouth, port and
sherry, as well as cream-based liqueurs, like Baileys Irish cream, need to be kept cold.

Liquor likes to stand

Sommeliers often encourage storing bottles of wine on their sides, but for liquor, not so.
Keeping your whiskey down rather than standing it upright can cause the cork to mix and seep
into the liquid, altering the high-alcohol content and causing it to disintegrate over time. Keep
those bottles vertical for best results.

Drink that last drop

A full bottle of liquor will last longer than one with just a bit left. The smaller the amount in the
bottle, the more it will be subject to oxidation, a process that tends to speed up when less than
one-third is left—even more reason to finish that bottle off!

BAR STOCK TAKING:-

Fundamentally, taking bar inventory is the process of counting everything you have in stock
twice. Then you use those numbers to calculate how much product you used during that time,
which is your inventory usage. That number, in turn, allows you to calculate a whole host of
other useful metrics.
Bar Inventory Control Methods: 2 Ways Take Stock of Liquor
Measuring and counting your liquor is a cornerstone practice of bar inventory control. After
all, you can’t manage your bar’s stock if you don’t know how much you have.
There are two common ways of taking stock of liquor in bars: there’s the traditional method
which involves spreadsheets or a pen and paper, and then there’s the modern method that
uses inventory software.
Let’s look at each of these methods in more detail below.
‍

Traditional Bar Inventory Control

The traditional way of counting bar inventory involves manually recording inventory data
into a spreadsheet, and then physically counting and measuring your bar’s stock.
Here’s how it works.
What you need:

 A note-taking device such as a pen and paper or an iPad/laptop if you want to digitize
your notes
 A stock-taking spreadsheet with the following columns:
 Itemized list of beverages
 Beginning inventory
 Received inventory
 Current inventory
 Consumption (formula below)

Step 1 - Enter Your Beginning Inventory

The first step in the inventory counting process is to determine your beginning inventory
(sometimes referred to as your “starting inventory”) for each beverage.
Your beginning inventory pertains to how much alcohol you have in stock at the start of your
inventory period. So, if you conduct your inventory counts every week, then your starting
inventory would be how much stock you have at the start of the week.
Knowing your starting inventory will allow you to calculate the consumption of alcohol in
your bar, which you’ll factor in when placing orders.
With the traditional method, you need to physically count the bottles you have in stock. You
also need to visually assess the amount of alcohol that’s left in the partially consumed bottles.
So if you started with a bottle of Jose Cuervo and it looks about half-full, then you’d count
that as 0.5.
Step 2 - Enter the Received Inventory
You should take into account the liquor that you received during the inventory period. Going
back to the Cuervo example, if you received 10 bottles within the current inventory period,
you’ll need to enter that into the “Received Inventory” column.

Step 3 - Enter the Current Inventory

Next, fill out the “current” column, which is the amount of alcohol you currently have. Using
the Cuervo example, let’s say you have 8.5 bottles left.

Step 4 - Calculate Your Consumption

The next step is determining how much alcohol was consumed within the current inventory
period. To do this, use the formula:
Consumption = Beginning Inventory + Received Inventory - Current Inventory
Sticking with the Cuervo example, your consumption calculation would look like this:
0.5 + 10 - 8.5 = 2
Your consumption is 2 bottles, which means you’ve consumed 2 bottles of Jose Cuervo
within your current inventory period.
Repeat the above steps for every bottle that you have until you’ve completed the entire
location.

Step 5 - Review Your Data

Once you’ve filled out the spreadsheet, double-check everything (or have another person do
it) to make sure that you’ve entered the info correctly.
‍

Modern Bar Inventory Control

If you’re looking to level up how you track alcohol usage in your business, you can
modernize the process by using a bar and restaurant management system.
There are number of apps in the market (such as WISK) that enable you to measure and
record your liquor levels using your mobile device. Some solutions even integrate with
your bar scaleand POS system, further eliminating manual work on your end.
All you have to do is scan the barcode of your products, enter the quantity, and the liquor
inventory app will record and calculate the data for you.
Each solution is different, so your counting process will depend on the bar inventory system
that you’re using. But here’s a general overview of what the steps would look like:
What you need:

 Your mobile device with the bar management app installed

  A scale (optional)

Step 1 - Scan the Barcode

Take each bottle from the shelf and use your mobile device to scan the barcode of the
product. If this doesn’t work, you’ll have the option to enter the beverage information
yourself.

Step 2 - Enter Your Inventory Quantities

Just like with the traditional method, you’ll need to enter the beginning, received, and current
inventory for each bottle. Doing this should be a straightforward task that involves adding the
quantities into the app.
Solutions such as WISK even make this step easier by enabling you to connect the app to a
Bluetooth scale, which can measure the exact quantity of each beverage. No need to visually
estimate how much alcohol is left in the bottle — the app + scale can do it for you.

Step 3 - Let the App Do the Rest and Review the Info
Once you’ve finalized the information, your bar inventory app should be able to calculate
consumption automatically. From there, it’s just a matter of reviewing the information to
make sure everything is entered correctly.

Bar Stock Control: General Tips and Best Practices

If you made it this far, then you now have a solid understanding of how to count and measure
your liquor levels.
Every business is different, so inventory control processes will vary from one bar to the next.
However, there are some general best practices that you should consider to keep your
processes tight and efficient.

Keep a Consistent Schedule

“Organization and consistency are vital in order to have a functioning bar inventory system,”
says David Mitroff, Ph.D., a business consultant, author, and speaker who founded Piedmont
Avenue Consulting, Inc.
“You need to be organized and consistent right from the time you place your order and till
your actual inventory-taking process,” he adds.
For instance, if you decide to conduct bar stock-taking sessions every week, then schedule it
on your calendar and stick to it.
Once you have a regular cadence for your inventory counts, it’ll be much easier to spot trends
in stock movement, so you can get a clear picture of how alcohol levels fluctuate from one
period to the next.
Established routines can also streamline your processes and improve productivity. This can
help you and your team work more efficiently behind the counter.
Consider Conducting Inventory Counts Every Week
According to Mary King, a restaurant business analyst at FitSmallBusiness.com, “the
simplest way to maintain your liquor supplies and inventory is to do a full inventory count
every week.”
“Don't wait until the end of the month to check your physical counts,” she adds.
“It's easy if you split the inventory load between your closing manager and bartender Monday
night and your opening bartender and manager Tuesday morning. The Monday night team
should count the back storerooms and the Tuesday morning team should count the active
stock behind the bar.
From there, it's easy to place your liquor orders on Tuesday afternoon so they arrive well
ahead of the weekend which gives your team time to set aside wine and spirits for upcoming
large parties, or batch cocktails for a busy weekend.”
King continues, “an added benefit of getting your bar-tending and management team in the
habit of performing a weekly inventory is that your month-end inventories will be a breeze
and you'll reduce opportunities for theft or shrinkage.”

Be Organized
Being “all over the place” is a cardinal sin when it comes to inventory counts. Make the
process as efficient as possible by organizing how you count and measure alcohol in your bar.
This means determining where to start counting — and how to do it — before you pick up a
single bottle.
For example, you could decide to start counting at the main bar, going from the top shelf to
the bottom, and counting from left to right. When you’re done with that area, you can move
on to the backroom.
It also helps to organize the items in your spreadsheet or app, so they coincide with how
bottles are physically arranged in your bar. This will make the process go by a lot faster and
minimize human error because you won’t have to jump from one row to the next when taking
down inventory information.

Conduct the Count Outside of Business Hours

The last thing you want is to deal with product movement in the middle of your count.
Prevent that by conducting your liquor stock-taking outside of your business hours. You can
do it either before you open or after you close.
Make sure to budget enough time for the task. Depending on how large your catalog is,
inventory counts can take anywhere from a few hours to half a day (or even an entire day).
So, if you’re planning to conduct an inventory count, set aside the appropriate amount of time
to do so.

Pay Attention to the Data

Regularly counting and measuring your stock will allow you to glean insights about your bar.
Use that information to your advantage.
“Look at your sales data and history to spot trends for different days of the week, times of
month, and months out of the year,” advises Meaghan Brophy a senior retail writer
at FitSmallBusiness.com.
“For example, you might sell more tequila on Tuesdays with your taco special and red wine
in the winter months. Use historical data compared to recent sales trajectories to forecast
what your liquor sales will be. Then, program low-stock alerts in your POS system to notify
you when on-hand quantities.”

Time to modernize stock counts in your bar?

Whew! We’ve covered a lot of ground in this post and for good reason. When it comes to
liquor inventory control, stock counting is an absolute must.
As mentioned, you can choose to measure and count your products manually or use a bar
manager app to do so.

BAR FRAUDS AND BEST PRACTICES:-

Frauds by Customer

Customer walking without paying

The primary kind of customer fraud is customers walking out without paying their checks.
However, customers may also cheat an establishment by a number of other methods. They
may claim that the food was unsatisfactory and thus indicate (usually the manager or host
will make the suggestion) that they will not pay for it.
Bringing foreign article
Another possibility, which has occurred frequently, is for customers to indicate that their food
contained some foreign matter, such as glass or china, or even an insect (perhaps even
brought in by the complaining customers).

Customer making unnecessary complaints

Complaints are generally made to the waiter or waitress, who should, in turn, call the
manager or host to solve the problem. Since there is always the possibility that the events did
in truth occur, the normal policy is to grant free drinks or dinners to the guests to avoid
embarrassment, to prevent possible lawsuits, and, of course, to encourage the customers to
return. In most cases of fraud, the guests will not return to perform the same type of fraud nor
will they return merely to buy a dinner.
In the case of falsified complaints, the establishment has no recourse except to treat the affair
as a normal business expense. In cases of walkouts, the house may have legal recourse, and
of course, it can set up a control system that minimizes the chances of this type of theft.
Customers normally cannot perpetrate any other type of theft, since they do not have access
food or beverages. Disputes may arise, however, as to the exact number of drinks that were
served. In cases of parties where payment is based on head counts, lower figures may be
presented by the guests. However, verification can readily be made by staff members.
Only one or two systems of cash collection can eliminate the walkout fraud. Cash prepaid
(for fast food) or collected either by a cashier stationed at the beginning of food service
(single-price dinners or buffets) or a cashier at the end of the line in cafeteria eliminate
customer fraud of this nature. A COD system comparable to those used for beverages is
occasionally used in food service
In every other system, there remains a possibility that the customer will walk out despite
precautions by management and by employees. It is impossible for a waiter or waitress to
watch a table continually. Even with team systems in which two servers work together—-one
remaining in the dining room and the other placing orders and relaying food from the kitchen
—the team cannot watch every customer continually. A team system, however, certainly is
an. improvement over the individual server system. Likewise, a cashier cannot be expected to
stop every customer to determine if the check was paid, particularly during busy meal hours.
Using false credit card
Customers may also use credit cards that are worthless or attempt to pay with checks that are
not honoured by banks. Unless customers are known, it is best to avoid cashing checks if
possible. If a check must be cashed, adequate identification should be provided, and no check
should be honoured for more than the value of the dinner.

Counterfeit currency
Occasionally customers will attempt, either intentionally or unintentionally, to give to cashier
counterfeit currency. In most cases, this currency will be easy to detect if proper cash
handling procedure is followed. All bills should quickly be examined on both sides and
placed on the ledger of the register. It is hoped that this cursory examination will detect most
of the counterfeit money, although in some cases help of the expert can be taken.

Frauds by waiter and waitress

Intentional omission  of items
Items are omitted from the bill in order to establish a rapport with customers, to increase tips,
or perhaps to give free merchandise to friends or fellow employees. This type of fraud occurs
when inadequate dupe system or validating systems are utilized. A full control system in
organizations having full services is impractical since accounting for items with a retail sales
value of less than $1 is too costly. Bookkeeping costs would be excessive in relation to
income.
In some cases, the items that are to be sold are already under the control of the service staff,
as in the case of milk in individual containers or a 6-gallon refrigerated carton in the service
area. No records are is maintained when a waitress or waiter pours a glass of milk. Should
this charge be omitted from the check, it would be impossible to track down the guilty party,
since a number of personnel may have access to the milk supply.

Reusing of checks
This type of theft may occur in any kind of establishment. For high volume operations, it is
possible that a large number of sales may be the small dollar amount. Thus customers
presented with a particular check would have no way of verifying whether it was their own or
not since the dollar amount was correct and the items were the same. With the abbreviation
normally used on checks, it may be impossible for the guest to read a check without an
interpreter. So long as the dollar amount is correct, they are satisfied.unless the dollar amount
is higher, most customers do not care if they receive their own check.
Pocketing checks or using unauthorized checks-
 It is often possible to reproduce the checks that are used by an establishment. Certainly, if
stock checks(not specially imprinted ones) are being used, they may be readily be purchased
by anyone form dealers. It is also possible when checks are not numbered or recorded (and in
those cases where the numbers are recorded but not audited) for a waiter or waitress simply to
pocket the check and the cash received, if other control systems are not utilized.
Checks can be counted automatically by the utilization of a check numbering system similar
to UPC(universal product code) or those system s being used by banks. Each check is
imprinted with a number that can be read by a machine. If a number is omitted or the check
not closed out, the machine will report this omission. These systems are readily available that
have been made in electronic technology.

Overcharging
 This practice may occur when staff members are allowed to make corrections on the checks
without supervision. The customers may be charged for merchandise not received. Or higher
prices may be entered on the check. After the customer has paid the staff member, the correct
prices and amounts are entered, the check is re-totalled, and the difference is pocketed by the
server.
Incorrect addition- intentionally adding a dollar to each check and pocketing the money when
the check is properly totalled can readily be performed, particularly if amounts are
handwritten on the checks. Should the error be discovered by the customer it is normally
excused, since an error is over adding can be quickly explained away as poor arithmetic.

Substitution
In some establishments with a fairly tight system of control, it may be impossible for a
waitress or waiter to supply friends with free merchandise. However, substitution can be
made by ordering higher priced items from the kitchen and charging for lower priced ones.
The server orders a higher priced item but records a lower priced item on the check. The
friend is presented with a check for the smaller amount.

Falsification of tips or other charges

In some areas of the country, where many foods and beverage sales are complimentary, other
incidents occur where a dinner is a bing paid for by someone other than the guest. The extra
amount of beverages or food may be placed on the checks to increase the value of the sale.
This extra food can be sold to other guests and the cash received pocketed by the waiter or
waitress. This padding of the bill may also be done whenever the tip may be a fixed
proportion of the total bill. If the sales are increased by 1000rs the tip may go up to 100rs or
more. When given a free dinner the guest does not closely inspect the items on the bill.
Instead, he or she merely gives a brief inspection, signs for the full amount, and leaves a tip
based on the total value listed on the check.
Incorrect change
Shortchanging of the customer is possible no matter what system is used. It cannot be
prevented without s shopper system, which may or may not be able to detect the fraud.
Certainly, if repeated complaints by customers occur, immediate action must be taken.
A shopper system is one in which a person unknown to the regular employees is hired to
come into the store and posing as a customer, checks on the efficiency of the operation and
various segments of the system.

Split rings
 When a waiter or waitress also handles the cash registers, split rings may occur this situation
arises when for example, a check for 1000rs is rung up 500rs and 400rs. The owner has lost
100rs which the waiter or waitress pockets.
By ringing the second time, the waiter or waitress prevents the customer from seeing the
actual amount of the first ring-up. The customer usually presumes there was a simple error.
Should anyone question the two rings for one check, the waiter or waitress merely states that
he or she made an error on the first ring and rang 900rs by mistake. Using a cash register with
a tape and giving guests receipt will help to alleviate this type of fraud.

Bartenders fraud or errors

A bartender who handles cash(using a register) has the same opportunity of theft as a waiter
or a waitress- and the same chance of error.

Cashier theft or error

The possibility of theft for the cashier is more restricted than with either bartender, waiters, or
waitress since they normally do not handle the products sold. If the cashier is responsible
solely for cash collection, errors or theft may occur under any of the following categories;
1.    Cashier keeps the money and pockets or destroys a check.
2.    Cashier changes the total of the check after collection.
3.    Cashier bunches sales, split-rings, or under rings.
4.    The cashier gives incorrect change.
5.    Cashier performs incorrect addition.
6.    Cashier falsifies payout or adds items to complimentary checks and removes them from
other checks.
 BOOKS AND RECORDS USED IN BAR:-

The books maintained for beverage control are:

 Cellar inward book
 Bin card
 Cellar control book
 Beverage perpetual inventory ledger
 Breakage book
 Empty return book
 Hospitality book
 Cellar Inventory Control Ledger
 

1.  Cellar Inward Book

This book contains records relating to all inward beverages and used for posting data for the
cellar man’s bin cards.

2.  Bin cards/stock cards

For each individual beverage item, a separate bin card is prepared. It records the item held in
stock, deliveries and issues made. These cards are fixed on the shelves or rack against each
beverage. Each bin card number refers to the same bin number as the wine list and originates
from the standard bottle code list.

3. Cellar Control Books and Daily Issues Record

It contains all daily deliveries to the cellar and daily issues of each beverage from the cellar to
the various bars. It should cross-check with the entries in the bin cards and the perpetual
inventory ledger held in the control or accounts office.
 4. Beverage Perpetual Inventory Ledger
It is a master ledger maintained in account and control office. It is prepared for each
individual types of beverage held in the stock. Each type of beverages purchased, quantities
issues from the cellar to each individual bar or other area and perpetual inventory balance for
each item are recorded in this ledger. The sources of information for this ledger are: invoices
or suppliers notes, credit notes, daily beverage requisition from different bars. The perpetual
inventory figure of this ledger must tally with the physical stocktaking of the cellar.

5. Breakage and ullages form/book

Breakages of bottled beverages occur by mishandling by cellar and bar staff. The ullages
cover all substandard beverages such as bottles of weeping wines, a bottle of wine with faulty
corks, unfit barrels of beers etc. which would be returned to the supplier for replacement. A
record of the above items with an explanation and countersigned by food and beverage
manager is prepared in this standard format.

6. Container Record Book/Empties Return Book

There are many containers such as:-
 Crates
 Kegs
 Beer bottles
 Soda syphons etc
There are generally charged by the suppliers against a delivery. A control is maintained on
these charges items to ensure that they are returned to the supplier and the correct credit is
obtained. This book contains all information about containers received from various
suppliers, container returned and balance which must match with the physical stock taken of
the empties.

7. Hospitality book
Issues are made from cellar to the kitchen and other entitled staff as laid down by
establishment’s policy. A complete record of these issues is maintained in this book.

8. Cellar Inventory Control Ledger

The control office maintains the master to record, full details of the movement in and out of
the cellars and the balance of stock in hand and the value of the balance cost. It is prepared
from the beverage control records