Freeing up Capital and Space in Your Liquor Room
In an industry that runs on such small margins, where locations are often as strapped for cash as they are space, having items sat on shelves that are worth money yet aren’t going anywhere can be worrying and frustrating at the same time. How did it get to this? Some manager will ask themselves. However, the smarter managers will ask: how do I return this money sat on my shelves to my regular cash flow? And how do I stop it from happening again? Luckily, the answers are simple and by keeping a few things in mind you’ll have that capital in your pocket in no time!
Dead Stock Review
Begin by reviewing your sales, your liquor room and your liquor shelves. Which items do you have on your liquor shelves that you don’t seem to be selling? What quantity of these items do you have, and do you want to keep a stock of them? Secondly review your liquor shelves and previous inventories. What have you had sat right at the back of a bottom shelf gathering dust for a long time, probably ordered by the previous bar manager; or maybe even the person before her. Gathering this information will allow you to find out what items you can begin your purge with.
Menu Cocktails and Specials
To purge your bar of these unnecessary items and to still secure a profit from them is to challenge your bar staff to create a menu item based around them. This is an especially good tactic when you have a lot of an item to move off your shelves. This technique allows you to charge an appropriate price for those items which may have been expensive for you to purchase.
The second option for these items is to run a special featuring that item. Running promotions like this is usually suited to items which you may only have two bottles or less of; you don’t want promotions to run for too long and seem stagnant to your locals. It is not necessary, but specials usually have a lower price than regular menu items, so keep this in mind incase you’re considering using specials to move some high value stock.
Proper Inventory Management
Once you’ve identified and begun to free up your capital that is locked inside unused liquor you can review your inventory, sales and your par levels in order to ensure that such an overstock doesn’t happen again. Although these techniques are mainly focused on shifting liquors which you no longer want to carry it also applies to product for which you wish to keep but have too high a stock of. For example, if you’re a whiskey centric bar you probably won’t need a back stock of 5 bottles of that premium vodka. You can use the above tactics to shift these extra bottles, providing you with the capital locked up in them. Then you can reassess the par level for such items to ensure this doesn’t happen again. Bevsight’s tools suggest ideal par levels for you to use as a base, however you’re still free to adjust these if you feel they are not dialled into your needs.
There are two other quick points which can help you from locking up too much capital in your liquor room. The first is “run lean”, this means don’t over order items. Obviously you’ll want to keep a small surplus of well liquor and popular call brands, but don’t be afraid to intermittently run out of premium items. Secondly, “don’t take offers from your reps lightly”. Often reps will try and push new product on you by offering you a certain amount of items you sell a lot of for free. Consider this offer carefully; if the new product suits your location and whether you’ll be able to sell it. If you can’t fulfill these points then the offer probably isn’t going to benefit you. If you keep all of these things in mind when managing your liquor room you’ll be freeing up cash in no time!
