bar inventory app

Why the “Double-Whammy Effect” is Costing Your Bar $1,000’s

Just to make sure we’re on the same page here, the Double-Whammy Effect that we’ll be dissecting here today is directly related to your bar inventory and your sales, and not that old game show Press Your Luck, hosted by Peter Tomarken, where the guests chanted “No Whammies, No Whammies, No Whammies, STOP!” and if they landed on the little mythical Whammy creature, they lost all their money.

And yet, in that sense, the two Whammies are very similar, in that they both rape you of all your money and leave you feeling empty, angry and taken advantage of. Except in the bar business, you don’t have Peter Tomarken there to laugh jovially to make you feel better as your money goes bye-bye.

WHAT CAUSES THE DOUBLE-WHAMMY EFFECT?

The Double-Whammy Effect is quite simply caused by bartender over-pours, whether they are knowingly giving away your profits, or whether they’re clueless as cane toads. In a minute you’ll see why we preach so hard for implementing a proper bar inventory management system. And while the concept of losing money from bartender over-pours is not a new or pioneering theory, most bar owners and managers are completely unaware of just how damaging it can be, because the damage to your profits is two-fold. I will get into that momentarily but first, in order to fully understand the bar profits you are putting at risk, we must understand the difference between…

WHOLESALE VS. RETAIL LOSSES

That’s right. Not all losses are created equal. Here’s the difference:

Loss at wholesale occurs when you, as a business owner, have no control over a menu item being wasted. In other words, the server spilled a drink or the guest didn’t like it or there was a bug in the drink, or a chip in the glass…you get the point.

You have no control over that and you’ll need to re-make the spilled or defiled drink. That’s a loss at wholesale, which means (for example) if a 1 liter bottle of Jack Daniels costs you $25 from the vendor and you pour a 1.5 oz. shot, you lost $1.11 wholesale.

bar inventory app

Loss at retail occurs when the drink could have been sold at full price, but your bartender either over-pours or gives away that shot. So in our Jack Daniels example, if you sell a shot of Jack for $7 and the bartender gives it away, you, as a business, just lost $7.

Make sense? Excellent, let’s move along.

WHAT IS THE DOUBLE-WHAMMY EFFECT?

Ok, now we’re getting somewhere. But instead of lecturing you with facts like an old boring history professor, let’s do an example so you can see the Double-Whammy Effect in action and discover why exactly it is sucking the profits from your bar.

Let’s say that I come in after work on a Friday and I plan on having four drinks because that’s my usual limit before things start to head south for me. So I order a drink from the bartender, a Bombay Sapphire and tonic, and the bartender knows me to be a decent tipper, so instead of pouring me the standard 1.5 oz. pour, he pours me 3 oz. No big deal, right? Just a little extra liquid in the glass.

I take a sip and practically choke from strength of the drink. What that means is that I now spend the next 30 minutes sipping on my drink, which might as well be a martini, and when I’m finally finished the bartender asks if I want another one. I agree and he pours me another 3 oz. and I spend another chunk of time getting it down.

Well, now it’s getting late, and I’m feeling tipsier than I thought I would after two drinks so instead of ordering my originally planned four drinks, I ask for the check, pay my bill and leave. Now here’s the math, and remember, this is a loss at retail because those extra 3 oz. that were poured could have been sold to me or someone else:

Bombay Sapphire at this bar costs $9 per drink. The bartender over-poured 3 oz. total, or two drinks, so the bar lost $18 on the over-pours. But this is only the first Whammy and the only one that most owners and managers think of when putting their liquor and money at risk and in the hands of their staff.

THE SECOND WHAMMY

The second Whammy comes in the form of lost sales. Think about it. My drinks were so strong that I was drinking them as if trying to force down a can of motor oil, until I realized it was time to go, which means I didn’t order the other two drinks I planned on getting. Another $18 lost. Whammo!

That’s $36 lost on one guest, and although you can’t count on that exact math for every guest, you can imagine how many sales you’re losing by having all your guests slowly sipping strong drinks throughout the night…the week…the month…the year. This is the exact opposite effect of the strategy invented in the 1800’s when bar owners brought in snacks and popcorn to make the guests more thirsty so they would drink faster and order more drinks. Sales go up. A brilliant tactic that is still used in bars today.

But with over-pouring, your bartenders are slowing your sales down and fattening their own pockets with big tips for making strong drinks. They get richer, you get poorer, and then at the end of each month you throw your hands up like a spoiled 6th grader who got his X-Box taken away whining, “Why can’t my bar make any money!!!???”

HOW TO STOP THE DOUBLE-WHAMMY EFFECT

The process is simple, but implementing it takes a commitment on your part to set the standards in your business and then enforce those standards, and the only way to do that when it comes to the Double-Whammy Effect is to get a good bar inventory app and system that can track how accurately your bartenders are pouring so they know that they are being monitored and that you mean business when it comes to…well, your business.

Sure, nobody likes counting their bar inventory, but your inventory is your money. It’s your livlihood. No matter how many times you want to declare yourself a service and hospitality business, you buy and sell products. It’s that simple. But if you allow 25% of your products to go to waste (the industry average) and another percentage of your sales to be lost caused by the Double-Whammy Effect because you don’t want to do your job and enforce the standards that you set with an inventory management system, then you should probably be a gas station attendant or something because this isn’t the business for you. Just my two cents.

A bar inventory system will not only track your bartender pours, but you can count easier, faster and more accurately, as well as do automatic ordering and invoicing. In addition, you don’t even have to count a full inventory to keep your bartenders honest. You can spot-check 5 or 10 of your highest moving products and see how John is pouring on a Tuesday night. This will take your 5 or 10 minutes and save you $1,000’s.

THE TRIPLE-WHAMMY EFFECT

Oh yeah, by the way, if your guests do decide to go ahead and consume the normal amount of drinks they’re used to, and those drinks are doubles, you now have a wasted patron who might go out and do something stupid, which could come back and haunt you as a liability law suit. TRIPLE-WHAMMY. Just sayin’.

With that said, I wish you all the best. Keep your standards high and your costs low, and I hope you make a million this week.

Cheers, until next time.

Dave

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