Learn how to overcome the challenges of starting a bar, building bar inventory, and managing that inventory with these tips and tactics.
The benefits of having a bar in your restaurant are undeniable:
- A well-located bar attracts social gatherings
- Gross margins on alcohol sales are higher than food which means a bar can significantly boost your bottom line.
- Clientele who enjoy dining at bars have easy access to food and drinks, helping you increase average check size
- A bar is a convenient waiting area for guests to capture any overflow
As appealing as these benefits are, building a bar can be a challenge.
You not only have to contend with the logistics of starting one—like choosing the right size and bar configuration, but you also need to select the right bar inventory. And these challenges only continue long after opening, with you having to manage your inventory to prevent shrinkage and remain profitable.
The good news is you can overcome these challenges by following numerous bar building tips, and implementing several bar inventory building and management tactics. In this post, you’ll learn about:
- 6 crucial tips to help you cope with the logistics of starting a bar
- 3 bar inventory building tactics that ensure your bar is stocked with the right drinks
- 4 bar inventory management tactics to maximize profits
Ready? Let’s get started.
Managing a bar and your bar inventory is not the only thing you need to know about opening and managing a successful restaurant. For the full story read How to Start a Restaurant: Your 13 Ingredient Recipe
Logistics of Starting Your Restaurant's Bar
The logistics of building a bar can be complicated—from deciding on the type of bar and how big it will be, to choosing the right liquor license and selecting your optimal bar configuration. The following six tips will simplify this process:
Tip 1: Let Your Target Market Inform Your Bar Type
You need to understand the demographics and psychographics of your potential customers such as age, average household income, and drinking habits. You can get this information by referring back to the marketplace research you would've done before opening your restaurant.
Tip 2: Learn from Your Competition
Visit restaurants with a similar concept that also have a bar. Analyze how the bartender runs the bar, the number of customers who eat there, the size of the bar relative to the overall restaurant, and the types of drinks served.
Tip 3: Analyze Your Site and Concept to Determine Your Bar Size
Both your current location (site) and restaurant concept will inform your bar size. For example:
- Smaller restaurants usually have more compact bars
- Fine-dining restaurants that focus on food and the dining experience generally have smaller bars
- Casual neighborhood restaurants often opt for large bars
Of course, you may decide that your bar will not play a prominent role in your restaurant and instead be used as a waiting area. In this case, you’ll create a small space to accommodate this.
Tip 4: Make Sure You Obtain the Right Liquor License
There are many types of liquor licenses, but the two most common are a “beer and wine license” and a “full” liquor license that lets you sell wine, beer, and spirits. The costs for a license typically vary by state so make sure you consult the Alcohol Beverage Control Board in Your State.
For more details on types of licenses, cost, and how to apply in your state, read How Much Does a Liquor License Cost?
Tip 5: Source the Right Equipment and Supplies
Finding the right equipment will help your bartender do their job and ensures you run a more profitable bar. Standard items include chairs, pourers, glasses, glass racks, wine coolers, beer taps, dump sinks, ice buckets, and cocktail shakers.
For more detail on what you’ll need, read Owning a Bar: Everything You Need to Know.
Tip 6: Determine Optimal Bar Configuration
Any bar will typically consist of three core areas:
- The front of the bar, where customers drink and (maybe) eat
- The back of the bar which includes shelves for glasses and alcohol
- The under bar which is reserved for refrigeration, sinks and speed rails
While your available space and concept will play a role in determining the optimal bar configuration, there are a few guidelines you can follow. Here are three provided by Roger Fields, CPA, author of Restaurant Success by the Numbers:
- The width of the front bar is usually 24 inches
- Follow health codes when building your back bar
- Refrigerated alcohol under the bar needs to be easily accessible
“Wherever glasses are stored, health codes mandate that the shelves must either be ridged or covered with a heavy plastic netting to allow air to circulate through the glasses to prevent bacteria growth.¹”
Bar Inventory Building Tactics
After attending to the logistics, it’s time to build your inventory. This process involves choosing brands from different liquor types such as Vodka and Gin and ordering the right quantity from suppliers to maximize sales.
You'll typically aim for a sales ratio of 60 percent food to 40 percent alcohol. But your ratio may differ depending on your concept and bars role in your restaurant. If your bar acts as a waiting area, chances are alcohol sales will be lower. Regardless, here are four tactics to help you build your inventory.
Tactic 1: Let the Concept and Customers Inform Brand Choice
Ensure that you stock your bar with drinks your customers want by understanding their drinking habits and preferences. Also, remember your concept!
Upscale restaurants usually offer premium labels and a larger variety to cater to their markets’ discerning tastes. Similarly, themed restaurants will often buy alcohol that matches their theme. For example, if you’re a Mexican themed restaurant, you may opt for premium Tequilas or even craft Mexican beers.
Tactic 2: Research the Competition to Identify Top Sellers
If you’re struggling to choose brands from the many available, visit your direct competition to see what they sell. Don’t be afraid to speak to the bartender to get an idea of what their top sellers are and even what suppliers they use.
Tactic 3: Base Stock Quantity on The Industry Rule of Thumb
With your choice of brands complete, it’s time to establish the inventory quantities. Avoid stocking too much as this can cause cash flow problems—especially if too much is tied up in slow-moving stock.
As a general rule, Roger Fields suggests the following: “Limit the amount of inventory you keep in stock of any brand to not more than 150 percent of your estimated weekly usage. So, for example, if your average weekly sales of Absolut vodka are two bottles, you should stock 2.0 times 1.5, or three bottles.”
Bar Inventory Management Tactics
Your bar may be fully-stocked but now is where the real work begins. You’ll need to properly manage your inventory to reduce shrinkage and remain profitable. Here are five tactics that will help you do exactly that:
Tactic 1: Make Well and Call Brands Easily Accessible
Also known as house or bar-rail brands, are the brands you serve when a customer doesn't specify. For example, if customers ask for vodka and Coke, you’ll simply offer them your house or generic vodka. These brands are usually less expensive and located under your bar on the ice well rail.
These are the brands a customer asks for by name. For example, if a patron asks for Smirnoff Vodka and Coke, Smirnoff Vodka is the call-brand. These brands are often more expensive, located at the back of the bar, and visible to customers.
Both call and well brands are the brands your customers order the most, and in turn, that you’ll order most often. Make sure your bar is adequately stocked with these brands and that your bartender can easily access them at all times.
Tactic 2: Monitor Your Sales to Identify Slow-Moving Brands
You may recall that having money tied up in slow-moving stock can cause cash flow problems. While following the advice in the previous section will decrease the odds of this happening, chances are you will still have to prune slow-movers.
So, monitor the sales of different brands to determine the popular ones and the slow-movers. Then, get rid of the unpopular brands by offering specials and discounts on these drinks to customers and replace them with more profitable ones to free up working capital.
Tactic 3: Monitor Inventory Levels to Keep Your Bar Stocked
As you saw, you need to estimate your weekly usage when stocking your bar for the first time and ensure the stock of any brand remains under 150% of weekly usage.
You should aim to maintain this limit and ensure your inventory is always at optimal levels by keeping tabs on your stock. This means your bartenders should note down the beginning and ending inventory during every shift so you can replenish the stock in time without a negative impact on operations.
Tactic 4: Implement the Right Strategies to Reduce Loss
According to statistics, bars lose anywhere from 14 to 28% of their bottom line because of shrinkage¹. This loss occurs for many reasons: theft, over pouring, breakages, bartenders giving free drinks, and spillage.
While a certain amount of loss is unavoidable, there is a lot you can do to control and minimize the loss. Here are four ways:
- Train bartenders properly so they understand precisely how to make and pour specific drinks. If it’s a cocktail, they need to understand what goes into it and how much alcohol to include. If it’s a beer, they need to learn the right pouring techniques, so they don't waste beer.
- Provide bartenders with the right tools for the perfect pour
- Measured pourers to reduce over-pouring
- Use jiggers for the perfect cocktail. A jigger is an hourglass-shaped cup that comes in different sizes—a large cup that measures one and a half ounces and a small cup that measures three-quarters of an ounce.
- Regularly monitor stock to reduce theft. Checking inventory levels daily allows you to identify missing stock and prevents staff from stealing in the first place because they know you keep tabs on it.
- Implement the right cash control systems. Examples include having a tip jar, encouraging bartenders to record and track comps, and making sure bartenders ring up orders before pouring drinks. Having these controls lets employees know you have processes in place for tracking sales and identifying discrepancies. This knowledge is often enough to deter any theft.
Bar building for restaurant success
Building a bar and stocking it with the right inventory can be a complex process as you grapple with many important decisions such as choosing the bar size and right mix of brands to stock. And, once you’re operating at full steam, you then need to shift focus to managing that inventory to remain profitable.
Yes, the above can be challenging, but it doesn’t have to be. You just need to concentrate on the right bar building tips and implement the right tactics for building and managing your inventory.
This post explored several of those bar building tips. But most importantly it shared essential tactics you can implement to build and manage your inventory—from letting your customers and concept inform your brand choice to implementing the right control systems to minimize shrinkage. The only thing left to do is start implementing these tactics today so that you can run a more profitable bar.
- Fields, R. (2007). Restaurant Success by the Numbers: A Money Guy’s Guide to Opening the Next Hot Spot. The United States. Ten Speed Press.
- Bar Management: Is Shrinkage Really that Big of A Deal?(https://blog.sculpturehospitality.com/blog/bar-management-ordering-tips-to-decrease-shrinkage)