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:

JUNE: Sales & Marketing: Who Owns the Guest?

Wendy Stevens

From digital room keys to wireless internet, the hospitality industry continues to embrace new tools and technologies that promise to enrich the guest experience. Advances in technology also open up possibilities behind the scenes for hospitality sales and marketing professionals—online booking services, social media channels, and hotel review sites are reshaping the sales and marketing landscape in important ways. But are all of those changes necessarily a good thing? Are there limitations to the power of technology, and inherent trade-offs and compromises that need to be taken into account? READ MORE

Joe Currie

Being a business traveler is not about choosing between Tahiti and Maui for a dream vacation; it is about the luck of dodging an air delay and narrowly catching a few winks of sleep at a hotel before a morning meeting with a client. Business travelers do not have the luxury of choosing time or location, but they do have a choice when it comes to their hotel booking, and the entity that has the most influence over that choice in accommodation ultimately becomes the owner of it. READ MORE

Bill Linehan

Channel management is a practice that allows hotel companies to cast a wider net to capture more market share. How you manage various marketplaces defines your customer acquisition strategy. RLH Corporation recognizes cost of distribution differences between direct and third-party channels, and we always promote direct bookings. However, an important component of increasing direct channel traffic and conversion is to leverage OTA site traffic to promote brand awareness. RLH Corporation takes a contrarian approach to OTAs – a customer acquisition strategy where we fish where the fish are to capture, convert and retain ongoing relationships with consumers. READ MORE

Tara K. Gorman

When guests checks into a hotel, there are plenty to mechanisms to protect their physical “stuff”, but how can they be sure that their personal information is protected? This is the question hotel owners and operators are keenly focused on in the aftermath of cybersecurity breaches in the hospitality industry. Guest Data - an Asset or a Liability in the Age of Cybersecurity? will explore whether guest data is an asset or a liability by exploring the rules and regulations that govern privacy and security, steps that hotel operations can take to ensure that they are in compliance with privacy and security requirements for guest data, and privacy considerations. READ MORE

Coming Up In The July Online Hotel Business Review




{300x250.media}
Feature Focus
Hotel Spa: Measuring the Results
As the Hotel Spa and Wellness Movement continues to flourish, spa operations are seeking new and innovative ways to expand their menu of services to attract even more people to their facilities, and to and measure the results of spa treatments. Whether it’s spa, fitness, wellness meet guest expectations. Among new developments, there seems to be a growing emphasis on science to define or beauty services, guests are becoming increasingly careful about what they ingest, inhale or put on their skin, and they are requesting scientific data on the treatments they receive. They are open to exploring the benefits of alternative therapies – like brain fitness exercises, electro-magnetic treatments, and chromotherapy – but only if they have been validated scientifically. Similarly, some spas are integrating select medical services and procedures into their operations, continuing the convergence of hotel spas with the medical world. Parents are also increasingly concerned about the health and well-being of their children and are willing to devote time and money to overcome their poor diets, constant stress, and hours spent hunched over computer, tablet and smartphone screens. Parents are investing in wellness-centric family vacations; yoga and massage for kids; mindfulness and meditation classes; and healthy, locally sourced, organic food. For hotel spas, this trend represents a significant area for future growth. Other trends include the proliferation of Wellness Festivals which celebrate health and well-being, and position hotel spas front and center. The July issue of the Hotel Business Review will report on these trends and developments and examine how hotel spas are integrating them into their operations.