Thursday, September 04, 2008

Markets in Everything: Alcohol Audits

In most industries, a 20% to 25% loss is enough to put you out of business. In the bar business, such losses are routine. Beer foams up, and there are spills. Bartenders pour a little extra into drinks for bar regulars. Waiters and waitresses discreetly dole out freebies to friends. And more unscrupulous employees flat-out steal while their employers aren't looking.

But Keith Bowler, an "alcohol auditor," says a 25% loss isn't necessary. He says in many cases, he can reduce that to 5%. More business owners are hiring him to do just that as the economy slows down and the expenses of running a business go up.

Bowler, owner of Canadian-based Bevinco, performs "alcohol audits" for bar owners, pinpointing losses and translating the ounces lost into dollars. "Our objective is to show them where they can save money," Bowler said. "A lot of times it can be thousands of dollars."

HT: Clover Aguayo


At 9/04/2008 11:52 PM, Anonymous Anonymous said...

Bartenders have been known to bring in their own bottle and sell from that. The bar's inventory doesn't change and the money never hits the cash register. It's an invisible bar within a bar.

At 9/05/2008 9:28 AM, Anonymous Anonymous said...

Employee theft also tells you that the greatest markup is on alcohol rather than food.

At 9/05/2008 2:17 PM, Blogger OBloodyHell said...

Often the problem here is that the owners are treating their employees poorly.

I know of one case where the owner was paying his night manager about 50 cents an hour more than the best of his other workers -- and still that wasn't much.

So, of course, the guy in question left each night with something, and didn't necessarily look that close if the other workers, did, too. And pretty quickly, a rack of bread, a case of beer, adds up.

Contrast this with Price/Costco (then just Costco) -- back in the 80s, with minimum wage around $5/hr, they were paying entry-level cashiers $10/hr, and other employees were similarly compensated (and I assume wages varied with the area).

Costco was experiencing "shrinkage" rates under 2%, in an industry where over 4% was the norm. Most employees simply didn't think it was worth it to them to risk their job "shrinking" the inventory.

What it cost Costco in extra wages was more than made up by the reduction in shrinkage.

Smart. And probably a much better way to resolve shrinkage than a professional auditor. Make your employees appreciate the job, and feel appreciated themselves, and they generally won't want to steal from you. Yeah, there will be exceptions, but the other employees will side with you, not the exception, and help protect you, too -- again, far better than an auditor could.

At 9/05/2008 6:01 PM, Blogger save_the_rustbelt said...

We did "mystery shopper" observations of bartenders more than 30 years ago.

If I remember correctly a good bartender should get 24 shots per 5th, put my memory is a little fuzzy on the number.

Pouring freebies for buddies or good looking women was the biggest problem.

There were plenty of other tricks though.


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