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How Overpouring Drains Profits and 4 Ways to Plug the Leaks in Your Venue

Overpouring is often unintentional

The most common cases of overpouring are unintentional, caused by a lack of solid measuring practices or tools. Eye-balling a glass of wine or counting out shots for a cocktail are just two examples. Even when performed by highly skilled, honest servers, freepouring alcohol is questionable. Serving sizes are extremely difficult to judge without measuring – the difference between a 5 oz. glass of wine and a 6 oz. glass is almost imperceptible to the human eye.

Overpouring can also be intentional

Intentional overpouring shows up in different forms. Filling a draft beer all the way to the top and pouring off the foam is overpouring. Adding in an extra shot to elicit a larger tip is also overpouring. Topping off a glass of wine to kick the bottle sooner? Overpouring.

All of these actions might seem harmless on a case by case basis, especially to servers who don’t have to get up close and personal with the books. But over time, they will gouge revenue.

THE MATH: HOW DOES OVERPOURING IMPACT DIFFERENT BEVERAGE SALES?

Now that we’ve covered the two forms of overpouring – intentional and unintentional – let’s look more closely at the different beverages in your arsenal: wine, liquor, and beer. Making a few assumptions on costs and volume, we can project losses across all three:

A single ounce of overpour on a glass of wine loses you 20% of revenue

We’ll start with wine, which is typically served from 25.4 oz. bottles. Doing the math, that bottle can serve five 5 oz. glasses or four 6 oz. glasses – a 1 oz. difference that’s difficult to see without placing the glasses side by side. If you’re accidentally serving 6 oz. when you mean to serve 5 oz., you’re losing 20% of the potential revenue from each bottle.

Now let’s break it down in terms of potential revenue. If a bottle costs you $7, losing 20% only adds up to $1.40. But, if you’re selling glasses of wine for $9 a pop, losing an entire serving per bottle cuts deeper into your margins.

A single ounce of overpour doubles the amount of liquor in your cocktails

What about cocktails? The amount of liquor in each glass is typically so small that overpouring even a little will double the cost of that serving. The same imperceptible 1 oz. overpour we talked about with wine will now lose you 50% of the potential revenue from a bottle of liquor. Cocktails are unique because the liquor is often poured over ice and mixed with other ingredients, making it even more difficult to accurately freepour. You can’t see exactly how much liquor is going in.

The problem becomes more apparent when we break down the potential revenue. Liquor has a much higher profit margin than beer or wine. The cost of a bottle of vodka can range from $27 for 33.8 oz. on the lower end to $20 for 24.5 oz. for more premium options.

Focusing on the lower end (which is served more often), the cost comes out to $0.80 per ounce. We’ll also assume your guests are paying around $10 per mixed drink. Most cocktails have 1 oz. of liquor in them, which means you can serve 33 beverages per bottle. Overpouring 1 oz. per drink cuts that potential down to 16 servings, losing you $13.50 in cost and $160 in potential revenue per bottle.

 A couple ounces of overpour on a glass of beer loses you thousands of dollars per year

The harm of frequently overpouring wine or liquor is obvious – they come in smaller servings and cost much more. But beer takes up all of the real estate in its glass and the markup per ounce isn’t quite so extreme. Still, don’t write off beer overpouring.

Let’s say a typical half-barrel keg of domestic beer costs around $100 for 1,983 oz. The cost per ounce is around $0.05. According to Nightclub & Bar, a properly poured, 16 oz. beer should have about 2.25 oz. of foam – this allows the carbon to release and affects the taste of the beer. Filling that glass all the way to the top doesn’t just hurt the taste – it also means pouring about 2 oz. more than necessary, a $0.10 loss per glass. Even if you only serve 200 glasses of beer per night, you’re losing $7,300 per year.

Put another way, you’re losing 400 oz. per night – about 25 glasses. If you’re charging as little as $6 per beer, you’re still losing $150 per night. Considering the average bar can serve over 1,000 beers on a weekend night, those lost servings add up to a huge chunk of change.

TURNING YOUR PROGRAM INTO A LEAN, MEAN, PORTION-CONTROLLED MACHINE

We can all agree that overpouring – intentional or unintentional on wine, liquor, or beer – is bad for business. Here are a few ways to put your beverage program on track:

Take stock of your venue

It’s difficult to solve a problem without knowing how big it is. Start by evaluating your entire program. You want to have a complete picture, from what your pour costs should be to which products aren’t popular with guests.

Then, if you don’t know where to begin, start by tightening up inventory practices. Set up a regular schedule for inventory and make sure you’re counting the same way every time. Even something as small as always starting at the left and moving right as you count will help increase efficiency and accuracy. If you need more guidance, the Bevspot blog has a good in-depth guide. Once you’ve established your new and improved system, train your employees to assist and keep an eye out for specific issues.

Train employees properly

Make sure your entire staff is knowledgeable on pouring procedures. Discourage them from pouring multiple beers at a time, opening a tap before the glass is fully under it, or topping off cocktails with a little extra booze. Providing a resource that clearly lays out your venue’s “best practices” is a great way to make sure everyone’s on the same page.

If you still encounter problems, it’s better to show than to tell. Bartenders and servers don’t have the same insight into venue sales, revenue, and losses as you do. It’s easy to lose sight of the bigger picture. If you hold a regular meeting to go over important figures, your staff can invest themselves more in the business. Really drive the point home by filling up buckets with water to show the amount of shrinkage per month. This will give everyone a clear idea of just how much poor practices cost.

Measure with the right tools

Jiggers, measured pouring spouts, and other precision tools are an excellent investment. While they may add some extra time to service, your bottom line will appreciate the patience. And, guests will be more satisfied with beverages that are properly measured – nobody wants a mouthful of liquor when they’re expecting a fruity refreshment. Another alternative is glassware marked with portion sizes. Something as simple as a line on your wine glass indicating exactly 5 oz. will keep servings in check.

Invest in systems that do the work for you

The beverage industry is finally catching up to the 21st century. Technology is available to take the guesswork (and human error) out of pouring. It may seem like a big investment but effortless precision will always pay for itself in the long run.

The added bonus of automated solutions is that they will increase speed and quality of service. When your servers can simply place a glass and press a button, they’re free to pour more glasses at once without overpouring. Hands-free dispensing lets them take their eyes off of the tap and do what bartenders do best – engage with guests.

If you invest in a system that tracks as it serves, you can also streamline your inventory process. Data from a connected beverage dispensing solution will compare directly to point of sale and give you a clear view of what you’re losing and why.

WHERE YOU LEAD, PROFITS WILL FOLLOW

Tighter inventory, frequent training, better tools, and increased monitoring are four ways to take stock of your venue’s inner workings and prevent a bad situation before it happens. Letting your servers know the steps you’ve taken to cut down on shrinkage will stop unintentional overpouring and show how serious you are about stopping shrinkage – which will also encourage intentional leaks to plug themselves.

 

Why the Beverage Industry Needs Internet of Things (IoT) Technology

WE WERE TECHNOLOGY PEOPLE. THEN WE WERE WINE PEOPLE. NOW WE’RE BOTH.

We started in the telecommunications industry before turning our passion for vino into a nationwide importer/distributor business. As our client list grew, we became immersed in the beverage industry – end to end – learning and experiencing as much as we could about wine production, packaging, distribution, and consumption. That’s where our story of IoT beverage dispensing really begins.

THE FIRST STEP TO RECOVERY IS ADMITTING YOU HAVE A PROBLEM.

The beverage industry has a few. Because we worked primarily with wine programs, that’s where our clients were expressing frustration. But once we scratched the surface, it was everywhere. From beer and liquor to coffee or even milk, every person in every corner of the industry was experiencing the same issues:

There’s Overpouring.

A LOT of overpouring. When you get down to the specifics, there are two kinds of overpouring: unintentional “eye-balling” or a complimentary top off. Either way, serving more than the proper amount gouges profits. Take wine for example – the single ounce difference between a 5 oz. glass and a 6 oz. glass is difficult to notice unless they’re side by side. But, if you mean to serve 5 oz. glasses and instead are serving 6 oz. glasses, you’re losing 20% of potential revenue. Then there’s pouring off foam from beers and “timed” pouring for cocktails – just think of all the loss.

There’s Theft.

Like overpouring, theft takes two forms. If a bottle (or a case) disappears from inventory, that’s sunk cost. If something is served but never makes it into your point-of-sale, that’s lost revenue. A bottle might set you back a couple dollars for the cost but a glass that isn’t paid for loses you much more. We had clients reporting losses up to 50% due to bottle theft.

There’s Waste.

Perishability is a fact of life throughout the F&B industry, whether it’s food, alcohol, or other beverages. Different beverages have different shelf lives but all good things eventually come to an end. Once opened, a bottle of wine only has a couple days of life left in it. Liquor lasts longer without oxidation but the alcohol will begin to evaporate off and it will slowly lose its “sparkle.” Spoilage is one thing but breakage is another. Even when our clients were moving through stock quickly, accidents happened. Glass is fragile by nature so it only takes a few jostles in transport or a long drop off of a shelf to lose inventory.

There’s Trash.

Take a case of wine, serve its contents, and what are you left with? A dozen glass bottles, corks, labels, foils, and the package it all came in. Glass bottles are sexier and more traditional compared to bland bulk packaging. But, like a good shoe, sometimes you need to choose function over form. Glass is expensive to buy and fill, difficult to package, cumbersome to get rid of and costly to have hauled away. When we spoke to clients, they weren’t just concerned about their own ease of operations. They wanted to minimize environmental impact too. The beverage industry isn’t exactly a beacon of sustainability – on average, only 20% of glass actually gets recycled.

There’s Inefficiency.

All of those bottles to carry. All of that ice to replenish. All of the tables, the refrigerators, the searching, the opening, the measuring, the pouring, the counting. And the big problem with our clients: how could they manage purchasing without tracking everything by hand then trying to compensate for discrepancies? Most venues were tight on storage space and even tighter on resources.

WE DECIDED TO DO SOMETHING ABOUT IT.

After hearing the stories and crunching some numbers, we thought, “There has to be a better way.” But there wasn’t…until we made one. The food and beverage industry was sorely lacking technology and we didn’t want our clients to cobble together a solution from multiple products and services.

Our IoT beverage dispensing device integrates with any ordinary keg systems to equip it with programmed portion control, in-line chilling, sophisticated analytics, remote management, and more. It’s unobtrusive, easy to install, and takes care of every problem with one punch. Loss prevented before it happens, operations eased, service elevated with near hands-free pouring, and carbon footprint sliced – our clients were thrilled. They were calling us a win-win-win.

BUT, WHAT’S NEXT? BUILD AWARENESS, EDUCATE AND INNOVATE.

We know more people and places are having the same troubles. But, in an industry relatively slow to innovate, it can be hard to pull people away from their “good enough” solutions. Overpouring? A squat cup or pour counting is “good enough”. Trying to keep up with inventory? Using data from hand checking and POS comparison is “good enough”. Aside from that, some of our newer clients weren’t even aware of the extent of their issues until a discussion with us.

We don’t think “good enough” is good enough. Our new goal is to spread the word about beverage industry problems, ways to improve and the technology available to help. By educating, improving and continually innovating for the industry – through this blog, through our website, and through our solutions – we can all win.