Friday, August 20, 1999
Bar audits add up alcohol
Waste, theft, human error drain profits, company finds
BY JOHN ECKBERG
The Cincinnati Enquirer
The numbers were just not adding up at Toots Restaurant earlier this year.
General manager Timothy Tillman knew that too much liquor was heading out the door at the end of each day at the Loveland restaurant, and there was not enough money in the till to explain the difference. Was it drink size? Theft? Spills?
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ON THE HOUSE
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Greater Cincinnati settles for a glass of draft beer when it comes to a drink on the house — although a free half-pint is not refused either. The top 10 items most often stolen by bartenders are:
1. Crown Royal
2. Draft beer
3. Bailey's Irish Cream
4. Grand Marnier
5. Single-malt Scotch
6. Absolut Vodka
7. Jack Daniels
8. Amaretto
9. Chivas Regal
10. Stolichnaya Vodka
Source: BEVINCO
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Mr. Tillman turned to start-up company BEVINCO, headed by Jeffrey Topping, to figure it out. Mr. Topping brought his proprietary measurement system to the bar to track the profits. He soon got a pretty solid clue.
“After the first staff meeting, a couple of employees stopped showing up for work,” Mr. Tillman said. “We now have depletion sheets each week. Our operations are documented on a weekly basis. We've had labeling on mugs and carafes. We captured $7,500 the first month. I wish we had him on board from Day One.”
Mr. Topping knows about bar profits going down the drain and how to plug the hole.
Whether top-shelf whiskey or bottom-of-the-keg beer, Mr. Topping, owner of a Cincinnati BEVINCO franchise, uses his high-tech inventory control system to determine how much in revenue bar owners are losing to bartenders' thievery, giveaways and spills.
“In general,” Mr. Topping said, “I've found that for about every $1 that a bar will spend on my service, they'll save $3. I've found that in Cincinnati, my clients were losing 15 percent to 30 percent of their gross sales per week in liquor.”
A growing number of local bars and restaurants have hired Mr. Topping to bring his computerized auditing system to their establishment to figure out why a bottom line has no beef. Village Tavern, BarrelHouse Brewing Co. and J Arthur's have all signed up.
“Owners can count their cash every night against their cash register tape, but there's only going to be as much cash in there as the bartenders chose to put in,” said Mr. Topping, a 29-year-old former bartender from Columbus.
“In all other industries, you check the product used versus the money taken in. But in the restaurant industry, owners think that there's this much money in the cash register — I've made more than what it cost me this week — I'm paying my bills — no worry.”
The system, developed in 1988, depends upon a database of weight and volume of thousands of liquor products developed at the Toronto headquarters of BEVINCO. Mr. Topping measures the weight of the inventory at client bars after the bar closes and employees have gone home. He returns a week later at the same time to take a second measurement and compare results against receipts. He charges $200 per week to audit an establishment with three bars and $225 for four bars. One bar costs $150 per week.
“In the eight months since January, he's probably saved us $5,000,” said Mr. Tillman of Toots, 12191 Montgomery Road in Deerfield Township.
The Lab, a bar and eatery scheduled to open Wednesday at 1126 Main St., will have BEVINCO on board the first day the doors open at the club, which will have a capacity of 153 customers.
“He has already helped us set up the registers for product control,” said Craig Sutter, a co-owner and managing partner. “I've been in the bar business for 17 years, and this is the best system I've ever seen. If I had to do it myself, I'd be there seven hours a week doing what he does in an hour. It's a great system.”
Brad Saltz, director of Saltz, Shamis & Goldfarb, a Blue Ash accounting and consulting firm that advises restaurants on how to cut costs and retain customers, said liquor inventory control is critical for a restaurant to have a solid balance sheet.
Almost all restaurants with liquor licenses grapple with the problem, he said.
“In most bar situations, you have only one person, the bartender,” Mr. Saltz said. “Nothing forces a bartender to ring up a drink.”
The consulting group, which has a client base of about 100 restaurant companies with an estimated 400 to 500 units, finds that some restaurant chains do not want rigorous controls on drink volume.
“They may want an atmosphere that is more friendly to customers. They don't want customers to feel that operations are very militarily run,” he said.
He estimated that about 1 percent of a restaurant's sales are lost to theft or giveaways.
“That would be sales that are not rung up — and it's not necessarily deceptively either. It could be in error,” he said. “You'd be surprised how often a Coke or iced tea is not rung up.”
Mr. Topping said the Cincinnati restaurant industry has not been an easy pane to crack, either, mostly because owners are not keen about opening their books to an outsider.
“Everybody is skeptical about new things,” Mr. Topping said. “And then you have somebody coming in and telling them that they can do it better. How many others have told them that?”
Mr. Topping estimates that his company's revenues will top $40,000 this year, with projections of $60,000 next year. “What I've found is that 25 percent of a staff is honest, 25 percent of a staff will steal you blind and 50 percent is somewhere in between,” Mr. Topping said.
“The key is to get the 50 percent to be more accountable.”
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