Cutting their lossesRestaurants and bars turn to new technology to track inventoryFour percent is the norm, according to Melvin R. Thompson, vice president for government relations of the Restaurant Association of Maryland. ‘‘When the profit margins are that small, restaurant owners are always looking for ways to contain costs,” Thompson said.
Last summer, Ho Chang, owner of Orange Ball Billiards and Café, a Rockville establishment on Hungerford Drive, was looking for ways to save money. He signed on to Bevinco’s alcohol and beverage inventory control and sales auditing program.
He’s glad he did.
The alcohol auditing business has also gone well for Michele Gaidelis, the owner of the relatively new Montgomery Bevinco franchise. Gaidelis has hired two employees and is adding another, she said.
The average restaurant and bar loses at least 15 percent of its liquor through sloppy pouring, free drinks and theft, according to industry reports. Using scanners, scales and laptops, Bevinco’s auditing system can reduce that loss to 3 percent or less, said Gaidelis, who has worked as a bartender and restaurant manager herself for many years.
‘‘The loss at Orange Ball was probably up to about 20 percent when we started,” Gaidelis said. ‘‘We’ve gotten that down to as low as 4 percent. This system pays for itself.”
Getting up at 4 a.m.
The work is not without its challenges. Gaidelis and employees strive to be invisible to clients and their customers, so that means getting up at 4 a.m. many mornings to weigh out the inventory.
Employees have to be strong enough to lift kegs. An establishment can have several hundred bottles of alcohol and other beverages to carefully monitor on a weekly basis. The data are compared with bar sales records, such as cash register receipts, to discover potential discrepancies.
Orange Ball has 366 bottles and kegs to weigh out each week, Gaidelis said. That’s about average for her clients, which include Pelican Pete’s in Germantown and TK Sharky’s in Annapolis.
‘‘Some have only 100 or so bottles, while others have more than 500,” Gaidelis said. ‘‘We do more than auditing the inventory. We work with owners to see what has to be done to make sure the bar or restaurant runs smoothly. It’s a full-fledged consulting service.”
Some bartenders give stiffer drinks in hopes of acquiring bigger tips from appreciative customers, causing part of the loss, Gaidelis said. Others are nice to friends or could just be careless.
‘‘When we find a big loss, we usually call a meeting of employees and talk to them about how to reduce the loss,” Gaidelis said. ‘‘It’s important to work with employees and get them to understand how fast things that may seem small to them, like giving a friend a free drink, can add up.”
Fairly new servicein Maryland
Bevinco Corp., headquartered in Toronto, has been helping restaurants and bars cut waste for about two decades. Formed in 1987 as a manufacturer and distributor of liquor inventory auditing equipment and systems, the company restructured to provide the services itself a year later, as bar and restaurant owners resisted making major investments in auditing equipment.
Bevinco began franchising in 1990 and has more than 255 franchisees in 45 nations. Some three-fourths are in the United States, with 10 percent in Canada. The franchise fee for entrepreneurs is $34,900, with startup equipment costs running about $4,000, a Bevinco spokeswoman said.
Besides the one in Gaithersburg, Bevinco has three other franchises that operate in parts of the state, including the Eastern Shore and Southern Maryland.
The service seems to be fairly new to Maryland — Gaidelis’ company has been operating about a year. Thompson of the restaurant association said he hadn’t heard a lot of restaurateurs talking about using alcohol auditors.
Admiral Liquor Consulting of Annapolis, a Bevinco competitor that formed about two years ago, has been successful helping improve the profits of numerous restaurants, including in Charles, Prince George’s and Anne Arundel counties, as well as in Baltimore City and on the Eastern Shore, said Meghan Rambo, a founder of the company.
Besides alcohol inventory and auditing services, Admiral offers food inventories, along with bar spotters, alcohol awareness training and bookkeeping services, Rambo said. Admiral began with three employees and has since added three more, she said.
‘‘We feel that our services really are the wave of the future,” Rambo said.
BME Business Systems, a Smithsburg inventory company, uses a system of wireless spouts with small radio transmitters and software that keeps reports so managers can check inventory against the records immediately, rather than during a weekly audit, according to its Internet site.
The technology was developed by Scottsdale, Ariz., company Nuvo Technologies to allow clients to get instant feedback, a company news release says.
Other ways to cut costs
The Maryland restaurant association provides members with discounts for such services as credit card processing and payroll processing.
‘‘Every little bit saved helps in this industry,” Thompson said.
Some restaurants, such as the Austin Grill chain, save money by improving energy efficiency.
With rising utility costs and a federal increase in the minimum wage expected to pass in Congress soon, many restaurants will likely raise menu prices in the near future, according to a recent survey by the National Restaurant Association, a Washington, D.C., trade group.
About 98 percent of respondents who operate quick-service establishments said they would increase menu prices if Congress passes a proposed $2.10 per hour hike in the federal minimum wage. About 75 percent of family and casual dining operators said they would raise prices.
And about one-half said they would reduce the number of hours their employees work.
Restaurant sales in Maryland are expected to increase by 5.4 percent to $8.1 billion in 2007 over last year, according to forecasts by the National Restaurant Association.
That growth rate is higher than projections in Delaware, Pennsylvania and West Virginia, but slightly below the increase expected in Washington, D.C., and Virginia.
Eating and drinking establishments in Maryland had about 180,000 jobs last June, about 1.3 percent more than the year before, according to state figures. The industry accounts for about 9 percent of private-sector jobs in the state.
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