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PORTFOLIO MANAGEMENT IN THE BAR

With more products out there than ever it can get very confusing about what stock to buy. Business of bars expert, Sean Finter from Barmetrix takes us through his tips on stock management to ensure your bar minimises losses, boosts profits and delights customers.

A CHANGING MARKETPLACE

Making money in the bar business has never been easy. Every year I work with thousands of operations teams around the world to help them manage their product portfolio so we see the challenges first hand.

To earn strong profits in this marketplace you must be a strategic retailer. There are a few forces that have ushered in more change over the last decade than the previous three combined.

Bars are holding more stock and carrying more brands than ever before. In fact, too many. The average bar we start working with has 35% too many products. This results in money tied up in deadstock in the back of house and purchasing paralysis for the consumer at the point of purchase.

THE SIMPLE FORMULA

The best operators in the world follow a simple formula:

1. Right Size Your Portfolio - The Pareto Principle (80/20 Principle) applies to most bars in that 80% of your sales come from 20% of your products. Every product must have a purpose. If it doesn’t bring something to the party, then why was it invited? Use it or lose it.

2. Keep Your Losses to a Minimum - Every bar loses inventory. The question is how much? Many of our clients in Europe were losing 10% of their beverage through shrinkage, while the USA the average is 20%. Shrinkage need to be held down to 1-3% and that is typically only accomplished with an outsourced company.

3. Operate inside of strict Retail Guidelines:

REMEMBER

Keep a good eye on the data. A product that was selling out last year could be collecting dust tomorrow. Act on the info monthly.

Finally, it’s not enough to simply have a well-educated management team, you need to educate every member of your team if you hope to optimize your profits. Smart retailing is a team effort.

CHECKLIST:

KEY TAKEAWAYS

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