Loss Prevention & Profit Management

Authored By Robert Patrick

This article on Loss Prevention and Profit Management is for all owners and managers of beverage and food establishments but may hold information for any product based sales organization. The primary focus of this article is on Liquor, Beer and Wine and the Night Club, Restaurant management, owner experience.

Loss Prevention what is it and how can we implement a plan in our establishments to prevent our products and profits from being stolen or misused.

First and foremost you must have an inventory system and a willingness to see that it is implemented in its intended fashion. You cannot know what your missing or how your product is being used unless you have it counted down to the ounces or the products breakdown size. Without counting and verifying your product how can you say with certainty where the product is going? This is also true of counting customers when a door charge is in place.

After all my years in the Night Club business (27 years) and having used many different types of inventory and sales systems I can say that the best system I have used would be a manual inventory system. By manual system I mean taking the inventory manually, reading the sales registers manually, In-putting all the data into your inventory spread sheet manually, using your minds eye to scan all data. The use of hard copy paper accounting sheets and certain counting methods to track both products and customers is a must if you wish to track down missing and misused items and scenarios.

My reasoning for the use of a manual system comes from my extensive use and my understanding of the use of the human mind in seeing the bigger picture, yes the computer is of significant value and without it the process would become much more time consuming but it cannot compete with brainpower. When a person interacts with their products on a daily basis and reads or scans with their eyes both the inventory forms and the invoices a connection is made with the products themselves. Price changes and size changes will alter everything and one significant mistake in taking the inventory or in the input of the data into whatever system you are using can alter the data until it may be almost useless.

Your computer would not know there was a price change on the 5 th of that month but the human mind would if the person in charge was scanning invoices on a regular basis.

The best situation in my opinion would be to have one person in charge of all inventory and ordering. In my organizations this person is a working bar manager, one who is both a manager and a day-to-day bartender. For food houses this is a kitchen manager who works full time in the kitchen. These types of positions have a pulse on what is going on both with their staff and where the product is stored. They would know it's shelving position and would notice something missing or its misuse. Proper notice and logging of broken and spoiled products is a necessary and vital step in the inventory process.

Loss prevention is both mechanical function and personal observation. Without both the outcome would not be complete. Where Liquor, Food and profit are present there is someone trying to steal it, either for their personal consumption or personal profit. This fact runs from the front door register to the safe in the manager's office.

Owners and Top-level managers must take nothing for granted in the process.

I will not get into the specifics of all the steps taken by someone who would be removing your profit from the equation in this article. This takes personal observation of both the location and the systems employed to track your daily sales and inventory procedures. This information is available in a more in-depth ebook manual (Bar Manager Manual) or personal consultation with an owner who is looking to understand the dynamics being played out in the Night Club and Restaurant atmosphere.

I will however point to some highlights that will get you started on the path to better and steadier profits.

One of the points would be in Liquor percentages. Do you know your percentages and do you know how to obtain them? Please understand this Article is coming from the point of a teacher, I don't know your level of understanding so therefore I will be coming at this from the position of a beginner.

How much are you charging for a particular beverage, how much product is in that beverage? Sales price divided by cost equals percentage. Total costs divided by total sales equals percentage. Each product that has a different cost price will have a different profit percentage. Why are we talking about percent?

Unless you know all things about all your products you will not be able to get a handle on Loss Prevention. Yes you may catch someone outright stealing your product but this would not be the norm. So Loss Prevention is an all-encompassing subject that takes an especially trained eye and a special system to ferret out just where the profits and the products are going.

Door personal, Floor Personal, Wait staff, Bartenders, Bar backs, Customers, Managers, Cleaning Personal, Delivery Personal, Band Members, DJ's, each of these and all of these could be your weak link in the chain. You must be able to break down the entire shift into time zones, inventory points and sales reports, each standing on there own.

If the system you employ does these things you would have the necessary information to find the weak link. Understand that any sales and inventory system has its drawbacks. Someone who wants to steal will find wholes in any system if given enough time. Owners and Managers must be on the lookout at all times for behavior that is improper; knowing what is improper is a learned experience. So if you're new to this game you must employ a teacher as only time or proper written manuals can teach what you need to know.

As the owner or the trusted manager your eyes must be wide open and have an understanding of all systems employed in this Loss Prevention action.

I understand the need for trust and yes you must trust your management team and those you work with. I also see the need for outside eyes to take a fresh look at the systems you are using. If you think about it, one quarter of one ounce of any liquor over poured during a single calendar month by a single high ringing bartender can add up into the thousands of dollars. Can you afford not to implement a Loss Prevention system?

Can you afford not to use another set of eyes? Should you afford to take the advice or counsel of a friend?

The use of a consulting service for spot checks, turn around inventory, or mystery shopping would be a good idea.

Unless you have an extensive background in this industry it would serve your company well to have someone design a system for your location based on the needs of that specific location. It does take a professional to make sure all your I's are dotted and the T's are crossed.

Specialized Daily Sales Reports, Inventory forms, Tracking sheets and many other forms designed for this Industry are available from Liquor-Beer-Wine.Com We also offer consulting services to the Texas area as we are based in the Houston region. If you need especially designed DSR's or Inventory systems on a State-by-State basis feel free contact us at admin@liquor-beer-wine.com so we can discuss your needs.

We also offer a wealth of free information at our web site.

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