Selling liquor is a competitive business, and ambitious liquor stores will often try to convince bar owners to buy all their inventory through their store. Because the inventory is identical to any other vendor, there are only two benefits they can sell a bar owner on: They are either selling for a lower price, or delivering a level of service or convenience that cannot be obtained from the other supplier.
However, there are ups and downs when it comes to buying bar inventory from a smaller liquor vendor to get either benefit listed above. Before you select a smaller vendor to be your main liquor inventory supplier, here are some things you should consider.
1. Smaller companies usually have unprofessional invoicing practices.
Smaller companies often send their clients invoices that range from printed only copies to handwritten notes to Excel spreadsheets, and Microsoft Word documents. Invoices provided in this fashion are a pain for everyone that has to manually input them into accounting or an inventory tracking system like the one from Sculpture Hospitality.
Unsuspecting bar owners will tolerate this madness because all they see are cheap prices. But what they don’t see is all the manpower and headache going into processing unprofessional paperwork on the back end.
I remember one bar I was doing inventory control for that bought all their inventory from a liquor store owner. The vendor could not provide a copy in PDF or comparable format, so I could not use my automatic invoice reader to input their invoice in a split second; it had to be entered in manually. To add to the headache, on each and every order, there were things missing from the invoice—and it wasn’t small stuff either. It was things like a few cases of beer on each and every invoice. Each week, I would have to call the liquor store owner on the phone and go through invoices with him, and he’d look back to see what was shipped. And because they weren't a professional warehouse operation, this took forever. Variance reports never worked because this guy would forget pieces of the invoices on each order, and it created such a headache. Over time, each invoice would just have a handwritten note at the bottom like: “I owe you 24 Corona,” or “I owe you 12 House Red.” Finally, one day, I had enough and showed the bar owner all the invoices with a long list of IOUs, along with several bad variance reports, and the owner switched to a local warehouse supplier that had their act together. To no one's surprise, all the variances stopped, invoices went in faster and more accurately using automated technology, and everyone was happy again.
The bigger the company you’re dealing with, the more likely they will have invoices that are accurate, available online, and easily processed. They may not be as personal, and they may also have inflexible delivery schedules and payment procedures, but the bigger guys will always have a better paper trail than smaller ones. If you are buying from a smaller supplier with unprofessional invoices, you will end up spending more time chasing down receipts that would never happen with a bigger supplier.
2. Liquor stores are not professional warehouse operations, and this can lead to supply chain issues.
Managing a warehouse and supply chain is not as simple as it sounds. There are availability and logistic concerns that need to be acknowledged.
Regarding supply, a bar owner may require products that the liquor store does not normally carry. If this is the case, the liquor store will order cases of the item only for that bar to order single units at a time. If the liquor store does not normally sell these items to the public, there is a chance they will not have it in stock, and this can be a problem for bars that carry higher-end spirits, craft beer, and specialty wines.
Regarding logistics, although it sounds feasible that a liquor store is a perfect match to be a supplier for a bar, it’s not always so due to the space required to store that much inventory. For example, most liquor stores do not sell kegs of beer to the public. If a bar requires over 20 kegs on their liquor order and the liquor store does not have space to store them, this can lead to issues of availability. In this scenario, the bar owner is the one that has to adjust and then piece their order together from other vendors. A bigger warehouse operation that has the supply and space to store all the products your bar needs, with full time buyers whose job it is to ensure inventory supplies are sufficient, seldom has these problems to the same extent that small liquor stores do.
3. Where liquor stores play a role.
Smaller liquor stores are good for one-offs and emergency purchases. For example, there are those odd situations—like if a guest comes in that wants a particular kind of vodka that you don’t normally carry, or if a group of random customers orders a bunch of shots from a bottle of whiskey no one else ever drinks, and you need to buy another one.
But bar owners should be weary about continuous small liquor store purchases made day after day after day. This is usually a sign of poor inventory management. Whether a bar carries $10,000 of inventory or $100,000, you can determine what the bar requires to order in one day per week and have it all delivered. If you are continually buying from small liquor stores day after day, that is a sign that you’re not adhering to strict ordering pars when you do your weekly counts.
Ordering pars, when set properly, keep you sufficiently stocked at all times, and when adhered to, eliminate any need for making any one-off purchases.
However, for those odd situations where you need something quick, smaller liquor stores are useful. As a personal example, many years ago when I worked as liquor manager for a nightclub, a payment didn’t go through on time to the regional distributor, so we did not receive our liquor order shipment. I was not informed of this problem until Friday afternoon, before our usual busy weekend, so getting anything shipped wasn’t happening. We got through the weekend by driving to the liquor store and making an emergency purchase. For these kinds of situations, smaller liquor stores do have a place for ensuring supply for bars and restaurants.
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