The pros and cons of using a smart scale for liquor inventory

It's no secret that liquor has the best category cost as a percentage of sales in a restaurant compared to food, beer and wine. For MarginEdge customers, liquor averages around 15-16% of costs, compared to 22-24% for beer, and 28-30% for wine and food.

With margins that good, you might think they're not worth worrying about. But as many restaurant operators know, the old adage of “if it ain't broke, don't fix it” don't quite work in restaurants and bars (often because "it" ends up breaking mid-rush and your repair guy can't make it out until Monday).

While liquor costs can't break like an oven or a low boy (thankfully!), what makes them easy to manage also makes them easy to improve and boost your bottom line. Calculating liquor costs accurately allows establishments to price their drinks appropriately, optimize their menu and profit margins and make informed purchasing decisions. 

Why do liquor costs matter?

Many operators think that simply counting bottles at the end of the month or week is enough to keep profit deterrents like waste, theft and over-ordering in check, but that's simply not the case.

The only way to truly know your liquor costs is to take accurate inventory and compare those counts to your sales and purchasing numbers. 

Let’s say you sell 100 drinks a night for $15 each and at 15% alcohol cost as a percentage of sales. Let’s also say the actual liquor pours are off by half an ounce on average. Your profit margin on each of those cocktails should be $12.75 ($15 x .85). That half-ounce extra puts your actual alcohol COGS at 21%, so your profit margin is actually about a dollar less. That would be $100 lost profit a night. 

Tighter liquor inventory helps you catch these variances quickly, so you can make changes immediately. And it’s not about turning into Big Brother on your staff (no one wants that). Not every shot that’s poured needs to turn a direct profit and there are perfectly acceptable reasons to see variances in your liquor inventory - like if friends or family are in town and you want to comp their drinks (this is the hospitality industry, after all!). The importance here is that small differences can make a huge impact, making it crucial to have a system to monitor, control and understand what’s happening.

Common liquor inventory methods

When it comes to taking liquor counts, there are a few options. You can do the old call-and-response method, scratching down numbers at 3 AM and attempting the mental math of both how many ounces are in a bottle and how much time you have left until you can clock out.

Or there's the par method where you have a set par of how many bottles you need for each liquor, and just order to that par when you run below it. But that doesn't tell you how many of the bottles were wasted, aka didn't turn into a profit.

For more precise tracking, you can turn to liquor inventory apps that let you point to fill levels for each bottle on your phone and guesstimate counts that way. These apps can save time because they record the amounts for you, but they're honestly no better than eyeballing. In short, they save you time but not money.

So what is the best bang for your buck when it comes to taking liquor inventory? Smart scales. These tools let you scan bottle SKUs, weigh the bottles for counts down to the milliliter, and speed through inventory in minutes - not hours. They're accurate, easy to use, and integrate with your restaurant management system, simplifying and centralizing your restaurant or bar's data in one place.

Read now: 7 things to look for in a restaurant management system

Still not convinced? We've compiled a list of the pros and cons of weighing your bar and taking liquor inventory with a smart scale.

Pros:

1. Enhanced accuracy

Smart scales provide precise measurements by converting the weight of liquor bottles into volume, significantly reducing human error compared to traditional methods like eyeballing or using a dipstick. The scales already know the weight of the empty bottle based on the product SKU, so counts are always accurate down to the ml.

2. Consistency across staff

Some may see the bottle as half full, others half empty. By removing subjective judgment, smart scales ensure every inventory is measured consistently, regardless of experience or turnover. This is a particularly juicy pro given how frequently staff changes can happen in bars and restaurants.

3. Time efficiency

Although there's an initial setup like with any new tech, once integrated, smart scales can speed up the inventory process, especially for more varied and complex liquor programs, enabling staff to complete their counts and head home earlier. Once up and running, and with a little practice or training for your staff, smart liquor scales let you count around 20 bottles a minute.

4. Greater frequency

Because smart scales make liquor inventories so quick to do, they enable you to take counts more frequently. So instead of doing one big inventory at the end of the month or week, your team could do daily counts at the end of their shift including partial counts like only taking inventory for your rail versus including back stock. (This is also a great hack for food inventories too!)

This best practice makes liquor counts even tighter and greatly improves and optimizes ordering because you know exactly how much you have of your most-used liquors on a daily basis.

5. Loss prevention 

Accurate inventory tracking helps identify variances caused by over-pouring or theft, offering insights into potential losses, which can then be investigated and addressed.

6. Seamless integration

Modern smart scales often integrate with POS systems and inventory management software, allowing for real-time tracking and analysis of stock levels and usage patterns. This is what makes smart scales the gold standard when it comes to liquor inventory.

By integrating with the products and sales in your restaurant, this technology eliminates the manual work of calculating liquor costs and hand-entering counts. You literally push a button and the liquor cost data you need is at your fingertips, right alongside your food, beer and wine costs and some powerful reporting too.

7. Bonus incentives

By implementing a smart scale inventory system, operators can incentivize their staff to keep liquor counts tight and decrease variances. By tying bonuses to liquor cost controls, bartenders are encouraged to take accurate inventory more frequently and become more conscious of waste, leading to increased profitability for the business and themselves.

Cons:

1. Initial investment cost

As with any technology implementation, there is an initial investment cost associated with purchasing smart scales and integrating them into your restaurant's systems. This may be a harder pill to swallow for smaller businesses as restaurants are already run on such tight margins, but oftentimes the cost savings offset the initial investment and then some.

For example, if a smart scale enables you to lower liquor costs by even a few percentage points (like 17% to 15%), depending on your liquor sales, you could be saving thousands annually. Those savings not only pay for the initial investment and monthly subscription but also have enough left over to increase your profits.

2. Training requirements

New tech means time and effort spent training your staff so they can use the new technology effectively. Smart scales are relatively self-explanatory but still require effective training to make sure you're getting what you're paying for, including when new team members come on board. 

Look for a solution that offers a seamless onboarding experience including self-help resources like articles and video tutorials to make training even smoother.

3. Time efficiency

Regular maintenance and software updates are essential to ensure consistent performance, adding another layer of operational commitment. 

As with any software, sometimes bugs happen and technology carries the risk of technical malfunctions or errors, potentially disrupting the inventory process. The key here is to make sure your product comes with an exceptional support team that can respond quickly when issues do pop up.

Cordless scales also need to be charged which can be frustrating to wait for at the end of a shift if they don't have a full battery. While not as devastating to your operations as say your POS system going down, it can still be a disruption.

✨ Pro Tip: If you cannot plug your scale in during inventory, you can plug it in while your staff is completing other closing tasks or once you finish taking inventory so it’s always ready to go for next time!

4. Time investment for smaller venues

If you don't run a heavy liquor program or have a limited liquor inventory, shaving off a few percentage points from your liquor costs might not make that big of a difference to your bottom line. Your increased profit may not offset the initial and ongoing cost investments, so it is something to consider before implementing.

Restaurants that do at least $300k in liquor sales will see the largest impact, but depending on costs, it’s possible to see positive ROI even at $100k.

The bottom line

While smart scales offer remarkable benefits in terms of accuracy, efficiency and loss prevention, they also come with some challenges that must be carefully weighed (ba-dum-tss). The decision to start using a smart scale system should consider the specific needs and size of your business, balancing the initial investment against the long-term advantages of tighter control over liquor inventory.

Ultimately, a smart liquor scale that is integrated with your POS, restaurant management and accounting systems is the best way to manage and control your liquor inventory. Just because liquor margins rake in profit hand over fist doesn't mean they aren't worth tightening up.

Using an integrated restaurant management system and smart liquor scale enables you to see all your costs, inventory and sales in one place with no manual entry and minimal effort. We'll drink to that.