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Beverage Cost In Our Bar Are Too High. Why?


At the restaurant bar’s beverage costs was 36%, a full 5% points above what was budgeted. The owners carefully re-priced the drinks, did a menu-mix analysis, and had measured pour devices installed on the liquor bottles. The beverage costs hardly budged. The client suspected theft and asked Bosco to refer independent professional mystery shoppers to the bar to see who was stealing.


Bosco spent more time on the floor and about some basic controls:

  • What was the percentage of cash sales?

  • How aligned was the POS with what the      bartenders poured?

  • How often did they audit the bartender banks?

  • How often do they do inventories?

  • Were there security cameras in place?

It was immediately determined that the client did not have a consistent foundation of controls in place. One of the security cameras was broken. The starting banks were different for different shifts. Each night there was over BHD 500 in ‘Open Liquor’ drinks recorded to the POS (making inventory data worthless). Bartenders shared POS keys/logins, and management never did a mid-shift audit of a bartender’s cash drawer.

Bosco, advised the client to fix the security camera, force the bartenders to explain every ‘Open Liquor’ ring, standardize the banks, and insist that bartenders use their own keys for each transaction.

Management noticed an immediate increase in average daily receipts. Since it would take a full-month to normalize the new inventory, Bosco referred independent professional evaluators to conduct additional observational bar shops. It was immediately evident that many transactions were not being properly entered into the POS, while many were not entered at all. Here is an observation from one of the evaluator’s findings:

When Analisa served me the two Gin & Tonics, She quoted me a price of BHD 10.  She then moved onto the next guest and took their order for two draft beers. I placed two BHD10 bills on the bar and stepped back allowing another guest to take my place at the bar.  Analisa served the guests the two beers and asked for BHD12.  The guest gave Analisa a credit card. While Analisa processed the credit, Ernie the bar-back cleared the empty glassware and put the two BHD10 bills in a pile of other bills, and eventually put those bills into the tip bucket.  Analisa settled the credit card transaction and several guests were shouting orders to them. Analisa proceeded to complete these orders forgetting entirely about my transaction. I observed Analisa pick up the cash from another transaction and make an entry into the POS over 15 minutes after serving Cosmopolitans.

The loss of revenue was incidental not purposeful, and shoppers saw variations of this type of missed transaction time and time again over a few short days.

Bosco advised management to institute two policies. First, the bartender had to close each transaction prior to beginning a new one.  Secondly, a receipt was printed for each transaction presented with all change.



Beverage cost returned  to budget levels, providing over BHD 2000 of increased profits on peak weeks. The lesson learned was that bartenders improved performance simply because management paid more attention and eliminated sloppy procedures. It was then that a good mystery shopping program was launched. Now a dozen transactions were observed  instead of just a few to ensure that compliance to the ringing procedures remained intact.

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