Technology and training counter theft and bad habits
“Bar shrink,” an industry term for losing revenue on liquid assets due to bad practices—either inadvertent or deliberate—has been a perennial problem for restaurant operators.
“The bar business is a cash business. It’s too easy and too tempting for dishonest or careless employees to take advantage of that,” says Steve Haas, owner of City Hall the Restaurant in Miami and chairman of the Greater Miami Convention & Visitors Bureau. “The bar is the No. 1 area where theft takes place,” advises the industry veteran.
Theft, by his definition, includes giving away free drinks without authorization, over pouring alcohol, and pocketing some of the cash receipts.
“In the past, we had all of these problems,” Haas notes. “In my business, bar shrink can be in the thousands of dollars by the end of the year—and in a large nightclub it can total in the hundreds of thousands.”
Today, his bar shrink has shrunk, in large part due to the implementation of technology that includes a point-of-sale system integrated with a sophisticated liquor inventory-management system called BarMaxx.
Utilizing RFID (radio frequency identification) technology, BarMaxx tracks every ounce of bottled alcohol from the time it is delivered—and maintains a real-time measure of liquid assets with a scale that precisely monitors beverage inventories to an accuracy of 4/1000th of an ounce.
“You can instantly see any irregularities between sales and inventory,” says John Zevgolis, CEO of Maxx Technologies, developer of BarMaxx. “Inventory reports can be generated from anywhere so a manager doesn’t need to be on site to know what’s happening instantly.”
When a shipment arrives, the bar staff simply attaches an RFID barcode label to each bottle and the information is integrated with the bar’s POS system so that every detail can be tracked—including what was poured, how much liquid remains in the bottle, who rang up an order, and what price was charged.
“We have tight control without having to constantly monitor,” says Haas.
Another Miami restaurant, The Forge, started using the BarMaxx technology in 2010, when it was experiencing an average of 22 percent shrinkage per month at a cost of roughly $10,000. By September of 2010, the restaurant’s bar shrink was reduced to only 2 percent per month, saving about $8,000 in lost revenue.
Shareef Malnik, president and CEO of Shareef Management, which owns and operates The Forge, says the system “helped us achieve our lowest liquor cost in more than 40 years of being in business.”