Bar

Frauds

Profit Potential of Alcoholic

Beverages
Lower Product Cost
Lower Labor Cost
Lower Labor Wages for Bar Production
Personnel
(Bartenders) as Opposed to Food
Production Personnel
Lower Operating Costs (Ware Washing,
Linen,
Maintenance, Cleaning, Supplies, Energy
and So Forth
Lower Investment Expense
Beverage Systems Less Complex;
Therefore, Should
Be Easier to Control
BUT!!!

BAR FRAUDS

BAR FRAUDS

Substitutions
Under pouring/Over pouring
Bring in Own Bottles
Free Pouring
Free Drinks
Unrecorded Drinks
Watering Bottles
Banquets
Ringing Wrong Price
Full bottle versus portion

BAR FRAUDS - Continued

Alteration of Checks
Draft Beer
Misuse of Promotional Materials
Soft Drinks
Reusing Guest Checks
Breaking Empty Bottles
Assume guest is gone

STANDARDS
Glassware
Measuring Devices
Pouring Procedures and
Techniques
Garnishing
Pricing
Ordering and Calling
Check Writing
Drink Formulas - Recipes

STANDARDS
Station Setup
Cash Handling
Register Procedures
Replenishment of Bar Stock (Par
stock)
Ordering Stock from the
Storeroom
Bottle Arrangement in Bars and
Storage
Areas

STANDARDS
Back bar

Front bar

Under bar

Automatic
Beverages

Control System

Controlled access to the system

Every waiter has its own
personalized ID device
There are several access levels,
depending on the responsibility of
each user

Various
Forms

Facing the
Law

Approaches to Monitoring Beverage

Operations
Cost: determining the cost of
beverages sold and comparing that
figure with standard cost
Liquid measure: comparing the
number of ounces sold with the
number of ounces consumed
Sales values: comparing the
potential sales value of beverages
consumed with actual sales
revenue recorded

The Cost Approach

Are cost-to-sales ratios being
maintained?
Beverage cost is determined from
inventory and purchase figures (like
food)
Opening inventory plus purchases =
value of beverages available for sale
Bar inventory differential must be
included
Beverage cost percent %= beverage
cost / beverage sales
Calculation per category is possible

The Cost Approach Adjustments

Food and beverage transfers

Cost of mixers
Cost of garnishes
Consumed by management or
employees
Beverages used in promotional
activities

Exercise
The Boss Bar

 Standard Portion Costs

750 ml bottle contains 25.4
ounces
Portion size = 1.5 ounces
25.4 1.5 = 16.9 drinks per
bottle
Allowing for evaporation and
spillage of .4
oz.
16.9 0-4 = 16.5 portions

Standard Portion Costs

Calculation:
$13.85 16.5 oz. = $ 0.83
standard cost per drink (for
straight drink with no mixer
Or
$13.85 25.4 oz per bottle =
$ 0.55 per ounce
$ 0.55 x 1.5 portion size = $
0.83 standard portion

Liquid Measure Approach

Ounce control method
Involves taking daily
inventory of bar stock to
determine actual usage,
which is then compared to
usage that should have
occurred relative to
revenues

THE QUANTITY OUNCE METHOD

The manager of the Daiquiri bar wishes to make a

spot-check of rum sales record for comparison with

rum inventory records for May 25th.
Opening rum inventory on that date was 6.4 bottles
and closing inventory was 4.1 bottles. Five full bottles
of rum have been requisitioned for the storeroom on
that day.
Bottle of rum contains 25 ounces.
Analysis of the sales checks revealed the following:
Drinks Quantity sold
Straight rum (1 oz) 144
Daiquiri (1 oz) 8
Cuba libre (1 oz) 8
Rum Swizzle (1 1/8 oz) 8
As manager would you be satisfied with the results?

Potential Sales Value

Approach
Determine the
potential sales value of
each bottle and
compare to actual sales

Potential Sales Value Approach Example

1 btl of Chivas Regal
70 cl
1 drink = 4 cl
1 bottle = 70 / 4 = 17.5 drinks
1 drink sales price = CHF 20. POTENTIAL SALES OF THE
BOTTLE
17.5 drinks x 20.- = CHF 350.-