{468x60.media}
Ms. Harralson

Food & Beverage

Overpouring - or How to Send Liquor Profits Down the Drain

By Joanna Harralson, Vice President Operations, The Insight Group International

Whenever a bar is generating healthy gross sales it is most likely racking up equally healthy profits, right? Not necessarily. Much to the dismay of owners and managers of bistros, bars, lounges, nightclubs and restaurants -anywhere drinks are prepared and served - profits are the result of good sales volume plus a multitude of factors which need to be created and nurtured on an ongoing basis.

If profitability is the goal, then control and constant diligence must be major components of the oversight provided by owners and managers if their establishments are to remain 'out of the red' and send profits spiraling upwards.

Liquor Cost Controls

Overpouring - a significant profit drain can be the lack of portion-control of liquor drinks. Whether bartenders employ this practice in the hope of eliciting larger tips, stroking a pal or regular customer, or simply haven't the necessary skills or tools to measure the proper amounts of liquor in drinks, the end result for a venue is money being subtracted from its coffers.

Freepouring alcohol directly from the bottle to the glass should always be considered a definite 'no-no.' The accuracy of such pours is highly questionable, even when performed by the most experienced, honest and highly skilled bartenders.

Using bottle portion-control devices can provide an effective line of defense against overpouring, as long as bartenders do not upend bottles a second time in a double-pouring effort to serve stronger drinks. Sadly, many bars don't utilize controlled systems featuring bottle-top dispensers or liquor guns for portion-control, at all, although there are several excellent systems on the market. Many such systems can even be interfaced with a point-of-sale system.

Increasing the liquor used in a drink by one-half to one ounce means the liquor cost of that drink has just risen by 50 or 100 percent!! As a result, the establishment's profits have just been depleted by that amount. Multiply such losses over the span of one year and one can see just what harm is being suffered by the bottom-line.

Although management, in many cases, argues in favor of 'tailing' alcohol drinks in the interest of speed, customer service or ambience, and considers the amount of liquor necessary to engender customer loyalty to be a normal house pour of 1.5 to 2.0 ounces, anything beyond this is not only an unnecessary cost, but is unwise.

Regular Inventory a Must

And if it's going to be poured, it has to be tracked. Whether spilled, given away as a free drink, or used by the kitchen for cooking, it must be recorded. To be prevented from falling into the liquor abyss known as "shrinkage," regular and thorough inventories-with bar staff aware of what is being done (but not personally performing the inventories) - need to be taking place. A mere bottle count, according to experts, will not do. To be aware of the amount of alcohol in those bottles on the shelves is imperative and a definite deterrent to theft.

It has been estimated that in United States bars, "shrinkage" accounts for as much as $10 billion of loss annually. Not a pretty thought if some of that huge monetary loss is being pulled from your establishment's registers.

Training, Testing and Accountability

Hopefully, you are training your employees in proper pouring procedures. Some of the portion-control manufacturers provide excellent online videos for this very purpose. Do you hold bartenders accountable for their liquor portion pour accuracy? Is your staff consistent - whether using a shot measure or freepouring - in the amounts poured? It behooves Management not only to provide thorough training but to also check staff members, on a regular basis, for their pouring accuracy and abilities (try a variety of measures and empty drink glasses and use accurate measures when testing). To do such testing on a regular basis demonstrates your seriousness where pouring costs are concerned. Staff members cannot help but take note.

In addition to the financial drain caused by overpouring, undercharging is also damaging. It is therefore an excellent idea to also evaluate your employee's understanding of drink prices (and ingredients) on a regular basis, perhaps quarterly. Not surprisingly, your drink menu may contain several oversights or omissions, as well contradictory or confusing information. Here again, regular review and testing can save you bottom-line bucks. And you should ask yourself how comfortable you, as Management, are with your price list. Is it easy to read and understand? Has easy access to it been made available?

Additionally, a venue's policies in regard to complimentary drink orders must be in place and thoroughly understood by bartenders and servers. 'Freebies,' too easily provided, are certainly not 'free' when one totals up liquor profits and losses. Providing a guest the courtesy of what seems like an inconsequential amount of alcohol can, repeated over time, balloon into a regrettable - and preventable - loss in profits.

Hard Liquor Not Only Profit Loss

Also diminishing one's profits through overpouring, complimentary servings or simply being poured down the drain are Keg Draft Beer losses. Experts advise tight inventory control and ongoing training in serving and pouring to minimize loss. Why training? When bartenders spill because they pour too many beers too quickly, fail to tilt the glass properly to get a good head or don't allow time for beer to settle before the pour is complete, money is lost.

A Toronto-based liquor auditing company reportedly claims that typical draft beer losses range between 5 and 10 percent. The company's 250 alcohol auditors help bar operators reduce waste and increase profits by various strategies, such as using a five-gallon bucket beneath the bar to collect and weigh draft spillage, as well as weekly weighing of kegs and barrels, full and empty, to calculate the number of servings. However, the audits reveal that what goes down the drain is only part of the problem.

Too many establishments neglect to inventory bottles and barrels, relying on beer distributors, instead of bar employees, to enter the bar and replace/replenish inventory. "When you count bottles or kegs yourself, you're never surprised or short-changed," the company president is quoted as saying.

The Cost of Liability

As mentioned in previous Hotel Business Review articles, safety and social responsibility must, in addition to financial gain, be sought-after goals by bars and lounges. For example, serving alcohol to obviously intoxicated guests is, at the very least, foolhardy. Not only is there the question of financial liability, but also the establishment's responsibility to safeguard human life. A hotel/bar can lose its liquor license through revocation or suspension but even this is of lesser consequence that the fatalities which could result.

Here, again, the regular, periodic need for re-education of bar staff in this area should be a primary goal. Whether you are capable of providing such education or opt to hire professional trainers, this training is invaluable. There are even alcohol awareness training events held by major beverage distributors.

Profits Through Perseverance

It is up to Management whether a venue's liquor profits soar or rush down the drain. Continual oversight of all aspects of your bar or lounge, with employees being aware of how important it is to eliminate waste, mismanagement and theft, as much as possible, is imperative. When proper procedures are instigated and followed regularly, profits follow. Perseverance equals Profits.

Joanna Harralson, is VP Operations with The Insight Group. She has visited over 500 properties as a group trainer/evaluator, director of field operations, client liaison to management companies and provider of training to newly hired investigative agents. Ms. Harralson uses her knowledge, insight and expertise to evaluate employee integrity and to help drive the company's goal of premiere hospitality spotting agency. Prior to The Insight Group, Ms. Harralson rose through the ranks in hotels, as front desk clerk, server, bartender, concierge, auditor and sales and marketing specialist. Ms. Harralson can be contacted at (562) 694-3250 or jharralson@theinsightgroup.com Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

OCTOBER: Revenue Management: Technology and Big Data

Gary Isenberg

Hotel room night inventory is the hotel industry’s most precious commodity. Hotel revenue management has evolved into a complex and fragmented process. Today’s onsite revenue manager is influenced greatly by four competing forces, each armed with their own set of revenue goals and objectives -- as if there are virtually four individual revenue managers, each with its own distinct interests. So many divergent purposes oftentimes leading to conflicts that, if left unchecked, can significantly damper hotel revenues and profits. READ MORE

Jon Higbie

For years, hotels have housed their Revenue Management systems on their premises. This was possible because data sets were huge but manageable, and required large but not overwhelming amounts of computing power. However, these on-premise systems are a thing of the past. In the era of Big Data, the cost of building and maintaining an extensive computing infrastructure is incredibly expensive. The solution – cloud computing. The cloud allows hotels to create innovative Revenue Management applications that deliver revenue uplift and customized guest experiences. Without the cloud, hotels risk remaining handcuffed to their current Revenue Management solutions – and falling behind competitors. READ MORE

Jenna Smith

You do not have to be a hospitality professional to recognize the influx and impact of new technologies in the hotel industry. Guests are becoming familiar with using virtual room keys on their smartphones to check in, and online resources like review sites and online travel agencies (OTAs) continue to shape the way consumers make decisions and book rooms. Behind the scenes, sales and marketing professionals are using new tools to communicate with guests, enhance operational efficiencies, and improve service by addressing guests’ needs and solving problems quickly and with a minimum of disruption. READ MORE

Yatish Nathraj

Technology is becoming an ever more growing part of the hospitality industry and it has helped us increase efficiency for guest check-inn, simplified the night audit process and now has the opportunity to increase our revenue production. These systems need hands on calibration to ensure they are optimized for your operations. As a manager you need to understand how these systems work and what kind of return on investment your business is getting. Although some of these systems maybe mistaken as a “set it and forget it” product, these highly sophisticated tools need local expert like you and your team to analysis the data it gives you and input new data requirements. READ MORE

Coming Up In The November Online Hotel Business Review




{300x250.media}
Feature Focus
Architecture & Design: Authentic, Interactive and Immersive
If there is one dominant trend in the field of hotel architecture and design, it’s that travelers are demanding authentic, immersive and interactive experiences. This is especially true for Millennials but Baby Boomers are seeking out meaningful experiences as well. As a result, the development of immersive travel experiences - winery resorts, culinary resorts, resorts geared toward specific sports enthusiasts - will continue to expand. Another kind of immersive experience is an urban resort – one that provides all the elements you'd expect in a luxury resort, but urbanized. The urban resort hotel is designed as a staging area where the city itself provides all the amenities, and the hotel functions as a kind of sophisticated concierge service. Another trend is a re-thinking of the hotel lobby, which has evolved into an active social hub with flexible spaces for work and play, featuring cafe?s, bars, libraries, computer stations, game rooms, and more. The goal is to make this area as interactive as possible and to bring people together, making the space less of a traditional hotel lobby and more of a contemporary gathering place. This emphasis on the lobby has also had an associated effect on the size of hotel rooms – they are getting smaller. Since most activities are designed to take place in the lobby, there is less time spent in rooms which justifies their smaller design. Finally, the wellness and ecology movements are also having a major impact on design. The industry is actively adopting standards so that new structures are not only environmentally sustainable, but also promote optimum health and well- being for the travelers who will inhabit them. These are a few of the current trends in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.