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:

JANUARY: Mobile Technology: A Permanent Sense of Immediacy

Michael P. O'Day

For many hotel guests, the most appealing hotels are the properties that offer instant connectivity with the bandwidth capable of supporting multiple devices. As our need for faster speeds and higher quality content continues to grow, hotel guests now expect uninterrupted service putting more pressure on hotel IT building designs. As more and more guests shift to the “always connected” mindset, hotels must be able to deploy technology solutions with minimum downtimes that can grow with the increasing dependence on mobility. Hoteliers must now meet today's guest technology expectations while preparing for tomorrow by installing an infrastructure in which the bandwidth and technology can be expanded as the need arises. READ MORE

Terence Ronson

There’s only one way to view this – we live in a mobile world. Almost any consumer product or service developed today, is most likely created with a mind-set that one day it will somehow be used in a mobile manner. Consigned to oblivion are the days when we need to return to a desk to do email, go to a fixed line to make a phone call, plug into a network port for internet connectivity, have a hard-wired antenna to watch TV, or wear a wired headset to listen to music. READ MORE

Scott Schaedle

It’s no secret that mobile technology has reshaped the consumer travel experience. Today’s traveler can check in and out of a hotel without ever speaking to a human being. That lack of human interaction and direct communication is both a good and bad thing for the hospitality technology industry. From booking a reservation to leaving a review, mobile use continues to rise in the hospitality technology sector, and is not slowing down any time soon. Today, nearly 60 percent of travelers book hotels using a mobile device while 81 percent of travelers find user reviews important when considering which hotel to book. READ MORE

Court Williams

In some ways, running a successful hotel comes down to a proposition both simple and sometimes complex: delivering service that exceeds the expectations of your guests. You need to provide comfort and hospitality, but also something extra to set yourself apart from other properties. Without differentiating yourself in the market, you risk becoming just one of many hotel options, rather than the preferred choice for your market. One valuable way to set yourself apart from your competition is through embracing technological opportunities available to hotels. If you leverage mobile technology, a wealth of options are emerging that can deliver new conveniences and services that enhance the guest experience. READ MORE

Coming Up In The February Online Hotel Business Review




Feature Focus
Social Media: Interacting with the Hotel Customer
Consider these astonishing numbers: 1.49 billion active monthly Facebook users. 1.1 billion active monthly YouTube users. 320 million active monthly Twitter users and nearly 400 million registered users on LinkedIn. 400 million active monthly Instagram users and 200 million active Google+ users. The power and reach of social media is an awesome force and it has transformed how hotels interact with their customers. In the past year, social media advertising spending increased 33.5% to nearly $24 billion dollars. Social networks are being utilized by hotels to reach more visitors, expand brand awareness, enhance brand reputation and to establish more direct and personal communication with their customers. Savvy hotel operators are adopting a comprehensive social media strategy, and there are several emerging trends to note. Video continues to be a powerful and influential element in social media marketing, with 70% of companies saying that it is their most effective marketing tool. Video generates a 62% higher engagement rate than photographs alone, and with new social sites like Meerkat and Periscope which offer live video streaming, those numbers will only increase. Sponsored content is another growing trend. Though advertorials have been around for decades, hotels are finding new ways to maximize the visibility of their content. Some are placing sponsored content on Facebook, or on influencer blogs. Another trend is the integration of a “Buy Now” button into social media websites. Customers will be able to make purchases without ever having to leave their favorite social sites. This development is a major convenience for customers and should also be an additional revenue source for hotels. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.