Unlike other industries, bar owners have long struggled to find a way to control
their liquid assets around the clock, with most accepting the possibility that
their profits regularly being poured away is just another business cost of dealing
in alcohol.
But a “bar auditing” operation called Bevinco has finally touched down in Rhode Island to tackle just that issue. The company has expanded to about 175 franchises since first entering the U.S. market in the early 1990s and has plans to take its stock to the public sometime next year.
“Every owner knows there’s a problem (with his or her inventory systems),” says Sean Mahony, who bought the first Bevinco franchise in Rhode Island a little more than six weeks ago. “A lot of owners don’t realize just what a huge problem it is,” he said. “Bevinco offers a permanent solution on an individual basis.”
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Bevinco provides software and an independent system that allows the number of drinks sold to be directly compared to the actual amount of booze used. In the early weeks of the program, auditors accurately weigh all the liquor on-site regularly and calculate how much revenue is being lost.
Bevinco estimates put the inventory shrinkage (the amount of alcohol overpoured, stolen or bottles broken) at most bars somewhere between 20 and 25 percent. The goal of the auditors is to bring that down to an “acceptable” level of 5 percent and have their service more than pay for itself.
After having spent all of his working life in the hospitality and service industry, Mahony moved with his family from Manhattan to Middletown this spring in order to work as the general manager for a Newport hotel. One of the operation’s bigger problems was its unbelievably high beverage cost. Mahony did a bit of research about how to best tackle the problem, and found a chapter in a book about Bevinco’s Barry Driedger, who founded the business in Toronto in 1987.
After looking into the company a bit further and finding that buying a franchise had a reasonable cost of entry (around $35,000), he bought the Providence County territory.
The Rhode Island franchises, which will be sold by counties, are overseen by brothers Rich and Chris Evans – the “master” franchisee owners who have operated in the Boston territory since 1993.
Mahony attended two weeks of training sessions in Canada at the end of September, and after having met with a handful of owners, recently signed his first two clients.
For the past two weeks, Mahony has been in and out of those Providence restaurants before the lunch staff arrives in the late morning. He weighs bottles and kegs to one-thirtieth of an ounce and accounts for every case of beer and bottle of liquor while establishing a baseline for inventory shrinkage. Soon, he’ll sit down with management, servers and bartenders to let them know how the alcohol is being monitored.
Rich Evans said after that initial meeting, shrinkage gets to the acceptable level quickly and tends to stay there with the occasional reminder.
The specificity of reports can vary greatly from bar to bar. Smaller bars might only have registers with 20 keys – assigning designations of alcohol as simply well (the cheapest stuff), call or top-shelf – while more and more restaurants and larger bars are using POSitouch computers that allow auditors to actually put in hundreds of specific drink recipes. The only difference is in the details the auditor can provide in the weekly report – say that eight shots of Kahlua are unaccounted for, as opposed to a broader number of shots of premium liquor missing.
Mahony said the message he is bringing to owners is: “Try it for a month, if I’m not impacting your business significantly, then fire me.”
Oftentimes, inventory reviews are the first thing to be eliminated when owners find themselves running short on time. Evans said retention of his services has been very good for him and the other four auditors he employs perform weekly or biweekly audits at two dozen bars.
The few dropped customers he’s had over the years have come when hotels lost business after the Sept. 11 attacks and when a tough economy has forced a few operations to cut all but their essential costs.
“Once we start working, we can help with the ordering and provide peace of mind for the owners,” said Evans, who said the average audit cost across the country is around $200, while he charges about $175 to his Boston clients.
“Somebody’s time, whether it’s the manager’s or the owner’s, goes into inventory. At the end of the day, their numbers are really only an estimate and it’s difficult to hold anyone accountable.”
Mahony’s already been refining his own system as he learns to efficiently make his way around a bar and is hoping he’ll soon be able to get to two bars a day for 10 bars a week, at which point he’ll begin hiring additional auditors.
Like Evans, who found that word spread quickly among his territory’s Irish bars, Mahony is confident that word-of-mouth will play a big part in his expansion.
“I really believe the other owners I’ve met with will eventually sign up,”
Mahony said. “People don’t really know what this is all about yet, I’ve been
playing the educator instead of the salesperson a lot. I’m hoping that will
change soon.”
