We have seen a dramatic increase in internal theft while in the field and expect to see a continued increase in 2009, especially in employees who rely on tips for a large part of their salary.  Many hotels have been forced to dramatically reduce the number of hours as occupancy declines and many of the hotel restaurants have slowed down.  Many employees are now really struggling to make what they made in the past and most cannot afford to take a pay cut and still pay their monthly expenses.    

What can you do to make sure your employees don’t turn to theft to make up their lost tips?   

First, have a good long term forecast and reduce your staff accordingly.  Many hotels make the mistake of forecasting their labor week to week instead of quarter to quarter.  If you do a quarterly forecast, you can make better decisions.  Unfortunately, many hotels will be laying off employees over the next year.  If you evaluate your staff now based on forecasts, you can consider laying off a few employees now rather than just reducing everyone’s hours until moral really suffers.  Be upfront and honest with your associates and how the decreased business will impact their jobs.  For many employees, this is the first recession in their working lives. 

Second, make sure you are reviewing your internal controls.  One of the most important tools to have now is a system to track all employee’s sales and tips by day.  Be sure to compare each employees’ percentage of cash sales to other employees’ percentage and investigate any inconsistencies.  

Finally, continue to do what you have been doing in more successful times to keep theft out.  Many hotels are tempted to spend less hours reviewing internal controls or reducing mystery shopping to save money.  Don’t be short sighted.  Think long term.

 To find out more information and register for one of the classes, click here.

To visit our new Perpetual Beverage Inventory How-To Video Page, click here.

Surprisingly, many people that are in food and beverage management positions and even general management positions do not know how to calculate beverage costs, one of the most important costs in every hotel’s budget.  Don’t worry, we won’t tell!  We will help you keep that secret by showing you how beverage cost is calculated.  It is really quite simple.

Here is the way that most actual costs are calculated.  This is the cost that you usually try to get as low as possible in order to beat your budget.

First, you will need your bar’s total purchases (in dollars) for the period.  Remember, these should be liquor purchases only.  Second, you will need to know your change in liquor inventory (in dollars) for the period.  You will then subtract the total change in inventory from the total purchases (if total change in inventory is negative, keep it that way but still subtract it from total purchases).  We must take into account the inventory change because if you do not, purchasing more liquor to stock up would drive your liquor cost up, while lowering your inventory by purchasing less would lower your liquor cost.  If the liquor inventory is not considered, your liquor usage will not be properly seen in your cost calculation.  Lastly, you will need your bar’s total liquor revenues for the period.  Divide the first (purchases – inventory) number by the revenues.  That final number will be the cost percentage for the period.  A formula for those of you that need to see it visually is below.

Check back soon for more useful tips that just might make your job easier.

Training Video Goal: Successful implementation of perpetual beverage inventory by providing instructions and necessary tools

Training Video Length: Approximately 10 Minutes, Video can be paused and replayed at viewer’s chosen speed

Training Video Audience: All Food and Beverage Managers implementing a perpetual beverage inventory system

This video takes approximately 1 minute to load and will automatically play once loaded. For your convenience, all templates and instructions that are mentioned in the video are available free for download on this page below the video.

To download the Perpetual Beverage Inventory Template in Excel Format, click here.

To download the Perpetual Beverage Inventory Template instructions in PDF format, click here.

To read an article on Perpetual Beverage Inventory, click here.

To download the free Banquet Bar Requisition Template in Excel format, click here

To download the Banquet Bar Requisition Template instructions in PDF format, click here

1.  Position the POS terminal so that customers can see transactions rung up. Most bars have the POS screen positioned towards the bar so that the bartender must turn their backs to use the register. This helps on two fronts; first, all guests can see their transactions rung up and second, it is tougher for the bartender to see who is watching him or her ring up the transaction, making it less likely that they will risk using POS manipulation. If your bar design does not allow the terminal to be placed this way, consider installing a display arm that can be positioned to face the guest similar to ones in retail stores.

2.  Ensure that it is your bar’s standard to have alcohol poured first when preparing mixed beverages. Pouring the mixer into the glass before the alcohol can only mean one thing; your bartender is attempting to adjust the perceived alcoholic strength of the beverage. This is a good indicator that your bartender may be pouring less per drink to steal so that it will not throw inventory levels off.

3.  Require the bartender to give a receipt after each transaction. This is one of the simplest standards to use yet many bars obviously do not require the bartender to give one. Make sure that your bartender knows that if a guest pays cash, it is not some secret code for, “I do not want a receipt.” Even if most of the guests throw the receipts away, at least your bartender gave them one and hopefully rang up the transaction.  Check out our article on how bartenders split and re-present checks with the POS.

4.  Have your bartender request some sort of payment or tab from each guest immediately after serving drinks. This can be as simple as placing a receipt in a glass in front of the guest. This way, the bartender does not forget what has been ordered and the guest can keep a running total or pay whenever they would like. As you can probably imagine, many types of POS manipulation, whether intentional or not, can occur if this standard is not followed.  Also, make sure your bartenders are properly controlling drinks they prepare for cocktail servers by reading this article.

5.  Issue POS cards for all your bartenders and servers. Do not allow codes to be used to access the POS systems. Fraudulent actions can occur if bartenders or servers get a hold of each other’s access codes.

6.  Security cameras should be installed and facing each register. You can always go back and refer to your tapes if necessary.  There are also new systems available that show the POS transaction details on the security footage.

7.  Give each bartender their own separate cash drawers. Any mistakes in cash handling should be traceable to the associate responsible for each drawer. Sharing cash drawers will make it difficult to trace back to one associate.

8.  DO NOT allow the ‘No Sale’ button to be used. Most POS systems show “NO SALE” very largely on the computer screen when it is used for a reason. There should be no reason to ever use this button that opens the cash drawer without entering a transaction. If change is requested by a guest, then have your bartender make change out of the tip jar, or have a manager witness the change transaction. No sale button pushes should be tracked and researched.

9.  Bottle for bottle exchange should be used as your bar’s requisition system. See our article on bottle for bottle exchange for details.

10.  The bartender’s tip jar should be placed away from the cash register. This will ensure that the bartender cannot easily transfer cash to and from the tip jar.  We recommend a minimum of 5 feet from the register.  The tip jar should be a one way jar.  Money should go in and not come out until the end of the shift. 

11.  Have a log that is kept at the bar to log any spilled or complimentary drinks given to guests. This will help prevent bartenders from abusing the system and help reconcile the beverage inventory when the time to count arrives.

12.  DO NOT allow unauthorized associates to go behind the bar area. Only bartenders, bar backs, and managers should be allowed behind the bar area, reducing the number of possibly responsible associates for issues that occur.

Visit our seminars page for information on our Liquor Costs Seminar by clicking here.

While there is a lot of great advice on preventative measures, the book does feel a little outdated.  Also, many of the recommendations for beverage control seem very costly when it comes to supervision.  Hotels that do not have a F&B Manager on the floor at all times will have a very hard time with the recommendations.  In addition, many of the recommendations are just way too time consuming and small to midsized hotels will have a hard time finding the time and manpower to do them. 

Overall, we recommend the book for managers who are new to beverage control.  Veteran mangers can probably skip this book.

To download these instructions in PDF format, click here

Instructions for using the Five Diamond Hospitality Banquet Bar Requisition Worksheet To set up the file:

1. Create a new file for each event. You can either create a new file for each month or add each month to a separate tab within this worksheet.

2. Input the details of the event at the top of the spreadsheet. Only fill in the cells that are in blue!

After you requisition the liquor to banquets:

1. Fill in the amount that you requisitioned in the column labeled ‘requisitioned’.

2. Again, only fill in the cells in blue.

3. Add additional rows for additional types of liquor not listed.

After the event and banquets returns the unused alcohol:

1. Fill in the amount that is returned in the column labeled ‘returned’

2. Again, only fill in the cells in blue.

To view your cost for the event:

1. Input the amount of revenue you collected for the event at the very top of the spreadsheet.

2. Your cost for the event will be displayed right below your revenues.

3. Send a copy of the worksheet to accounting so they can transfer the amount to banquets.

To download these instructions in PDF format, click here

Opinion Polls & Market Research

After you vote in our poll, be sure to tell us a little about your beverage pour cost.

-What was your budgeted percentage last year?
-What was your final cost last year?
-What is the best advice that you can give to someone who is over budget?

This book was actually written to teach bartenders and servers how to steal from their restaurants and bars. The tagline on the back reads ‘Diners and Managers, beware!  Waiters and bartenders, give yourself a raise!’ 

It was written by two servers who work on Bourbon Street.  It is a quick read, you could probably finish it on your lunch break.  It is a very dangerous book! It covers the simple scams like check representing and the more complicating scams like the wagon wheel. A couple of the scams are far fetched or out of date, but the book does a good job of describing all of the ways a server or bartender can steal from your hotel.  The book is also pretty entertaining.  It is written in an edgy fashion and includes chapters like ‘Suggestive Stealing’ and ‘The Buffet Scam’. 

Please add your comments about the book below… and if you buy the book, don’t leave it sitting around your office where your servers will see it!