Establishing par, the minimum amount of each product kept in stock, is fundamental to running a profitable bar. Not only does the correct par level ensure that you never run out of stock, it also ensures that you’re not keeping too much inventory on hand.
Par levels often vary throughout the year so they should be reviewed regularly.
To establish par:
First, review your usage for every product you sell for a three month period. (This is easy to do in our app simply enter the dates you’d like the report to cover and a Usage Report will display the data in a table and graph.) If you’re not using an inventory software check your spreadsheet or whatever you use to track product used. As an example, let’s say you went through 300 bottles of Kendall Jack from Feb 1st-April 30th.
Second, divide the three month period into weeks. In our example, this would give you a weekly usage for Kendall Jack of 25 bottles/week.
(300 Bottles / 12 Weeks = 25 Bottles Per Week)
Next, consider seasonality. If you’re entering into a season that is busier than the months you’re reviewing, you’ll need more stock. If the upcoming months are 25% busier than the previous three, you’d want to multiply your weekly average by 1.25. For our Kendall Jack example, you’d calculate:
25 x 1.25= 31.25 bottles (we’ll round up to 32)
Finally, determine how many weeks you’d like to have in stock. This will vary, but on average two weeks of stock is a good place to start. So par for Kendall Jack for a two week period would be 64 bottles. (32 x 2 = 64).
Using an inventory software makes it effortless to keep stock at par. With our app, after you take inventory, any product below par will be automatically added to your order. (You can, of course, edit your orders) And adjusting pars for seasonality is as easy as pulling a report to see the pars you set the previous season.
If you need a break from the numbers, check out our post on The Making of Baileys.