Inventory Tracking – In-House vs Contracted Services

When it comes to Liquor Inventory Management Systems, you have two broad categories from which to choose: an in-house system – such as TavernTrak – where you purchase the equipment and provide the labor to run the system or a contracted inventory service, where a crew of one or more people comes into your bar periodically and performs the stock take for you, leaving behind a set of reports and statistics for your consumption.  Both have their advantages and drawbacks.

Right up front, let’s stipulate that having some form of inventory management system in place is an absolute must.  Without one, you are quite literally flying blind when it comes to the operation of your bar.  Ask any pilot if they expect to arrive at their intended destination – or even survive the flight at all – when they fly into clouds if they don’t have a bank of instruments to rely upon to keep their wings level and their nose (and landing gear!) pointed in the right direction.  The very survival of your bar depends upon you having a firm grasp on its operations — and first and foremost of those operations is Inventory Management.

With an in-house system, you purchase the equipment and software that runs that equipment.  The equipment that is provided with in-house systems tends to vary, but — in the case of TavernTrak — consists of a laptop PC, a barcode scanner and a digital scales device all connected – either through wires or over Bluetooth – to the PC to provide an integrated means for selecting Products, counting full units and weighing partial units.  Other in-house systems involve a Personal Digital Assistant (PDA), or some other type of proprietary piece of computing hardware and/or paper templates or rulers that you hold up against bottles to assess the quantity held within each bottle.  When you purchase a TavernTrak system, three days of on-site training are available to your team so that you are fully-versed in the operation and use of the system.

With most contracted inventory services, there is no hardware to buy – as the service provides their own hardware, which is brought along with the inventory personnel each time they visit your site to perform a stock take.  For these types of service providers, there is no up-front investment required.  There do exist contracted service providers that do make you buy their hardware and software – which is used either by you or by the service’s personnel when they visit your site to perform the stock take.  With all contracted inventory services, you pay a monthly fee – ranging from several to many hundred of dollars a month depending upon the size of your bar – for weekly visits.

Which brings us to another major distinction between in-house systems and contracted services: Frequency of Stock Takes.  Weekly visits can – at best – only alert you to the fact that you have a problem.  It is virtually useless in helping you to determine where your problem lies.  The expression “safety in numbers” is the bartender’s best friend with a weekly stock take – since they can claim to pour with absolute accuracy themselves, casting blame for the 35% over-pour detected at the bar on their fellow bartenders who worked during the week.

The only way for you to determine where your excessive pour cost issues lie is by – at least initially – performing daily stock takes at each station that is open in your bar on a given night.  By performing daily stock takes, you will be shown – on a station by station basis — the number of servings of each Product that was sold and have that compared with the exact quantity of each Product was poured from each bottle behind that bar.  After the stock take is performed, a Usage vs. Sales Report is generated and e-mailed to your bar’s management team – and, if configured, to the bartender(s) that worked at the station since the previous stock take was performed.  By having your bartenders receive these reports, they see the exact same data that you are seeing as regards to their pouring accuracy – such that they can moderate and tune their own pouring technique in order to improve their accuracy, which is the goal of your instituting an Inventory Management System in the first place.

Once you have attained good bartender compliance, you can back off to performing stock takes on a weekly basis. Having and enforcing a clearly-defined and well-communicated Over-Pour Policy can greatly reduce the time it takes to get to a state of “good bartender compliance”.  If problems crop up in the future, daily (or spot) stock takes can again be performed to determine the source of those problems.  But here’s the point: until you’ve identified the source of your over-pouring issues, it’s impossible to correct your over-pouring issues.

One common objection to doing daily stock takes is the time required to perform those stock takes each day.  This is a legitimate concern – especially for a large nightclub with many stations.  It should be noted that some contracted services will still require you to perform the physical stock take – electronically up-loading the results of that stock take to their servers so they can return an analysis (in a day or so!).  With a well-designed, speed-optimized system such as TavernTrak, you are able to move down the bar with pretty amazing speed — under six seconds per Product!  — without sacrificing accuracy.  When you’re talking about a bar with twelve stations, it still takes you a couple of hours to perform a full-bar stock take after a night when every station is operating (such as a Friday or Saturday night).  On those days, it might be beneficial to consider utilizing a part-time employee (or one of the assistant managers) to perform the stock take.  However, for nights when only a couple of your stations are open (Sunday through Thursday, for example), the daytime staff can easily find the 15 minutes per station required to perform a stock take at the stations that were open.

And here’s a basic truth: The time you invest in performing the stock take — managing the most fundamental of your bar’s inventory operation — is an investment in the fiscal health of your bar.  The return on that investment is measured by the dollars you save in reduced costs and the dollars you reap through increased revenue.

Another important distinction between in-house and contracted inventory tracking services is where your data is “housed”.  With a contracted service, data relating to your bar’s sales and usage is carried outside of your bar every time the crew departs your premises.  How secure is your data?  How many people see your data?  Is your data shown or shared with your competitors?  Is it stored on servers susceptible to hackers and data theft and prying eyes?

With TavernTrak, your data is stored on equipment that you own (on the laptop or on a company-owned server, if that’s the way your site is configured).  Nobody but you can access the data.

So the tradeoffs between an in-house Inventory Management System and a contracted Inventory Tracking Service are real and merit consideration when determining which direction to take when implementing a new Inventory Management System – or improving on your existing Inventory Management System.

To find out more about how TavernTrak can help your bar control costs, increase revenue and prevent your liquor, beer and wine inventory from walking out the door unpaid for, visit our website at or contact us directly.

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