An issue that many bars and restaurants deal with is excess inventory or inventory overstock. Liquor rooms become overrun with bottles and boxes of product that just don't sell. This can really hurt bar costs and hamper operations by tying up budgets in product that doesn't sell and reduces the opportunity for profits. This blog will detail how to identify products that are overstocked and some tips for reducing inventory levels.
How to Identify Inventory Overstock
Overstock drives up costs, bogs down inventory turnover, and just makes the physical space in a bar or liquor room harder to navigate. The best way to prevent overstock is to find out your product's usage rates.
At Backbar, we've written about how important it is to track usage rates so you can improve your purchasing cycle. Doing so helps you know when to order products from vendors so you don't run out of popular spirits and beers.
But tracking usage rates will also help stop you from ordering products when you don't need them. Usage rates are like the good friend who stops you from ordering a drink during last call or helps you put down that last slice of delicious-but-unneeded pizza before you get a stomach ache.
In Backbar's inventory management software, we provide a report that spotlights products that have Excess Inventory. How we determine when a product has excess inventory is by looking at the monthly usage rate for an item and comparing that rate to the quantity of products in inventory.
So if we're looking at Jameson Irish Whiskey and you have 15 bottles in inventory, but your monthly usage rate is only 10.4 bottles, then our software would flag Jameson as being in excess inventory.
