Introduction

Every drop counts in the bar business. Bartenders give out free drinks to friends or to people who “look like they need one.” They “over-pour” – intentionally making drinks too strong or making mistakes as they mix cocktails. When the bar gets busy, they can lose track of the drinks they have served and fail to charge patrons for the proper amount. Add to these operational errors the fact that bottles of liquor often disappear from bar storage areas due to employee theft, and you have a major alcohol problem. In fact, according to hospitality industry experts, every year in the United States, over $7 billion is lost due to “liquor shrinkage.” Industry analysts project that liquor shrinkage across the hospitality industry runs between 20 and 30 percent. For banquet and reception operations, losses may range even higher. Thus, solving the liquor shrinkage problem can be vitally important to restaurant and bar managers, as not only can they control costs, they can also recover lost revenue (from drinks that were not counted or not charged for).

“Liquor Shrinkage”

The “liquor shrinkage” problem is creating a unique opportunity for RFID (radio frequency identification) to be applied in restaurants and bars, not just in America but all over the world. Not only can RFID provide improved control over operations and inventory, it can also provide new levels of customer satisfaction in the beverage service.

Today, there are two primary competitors vying for share in this in the marketplace. San Francisco, California-based Capton and Scottsdale (Phoenix), Arizona-based Nuvo Technologies are marketing systems that use RFID-equipped pour spouts fitted on liquor bottles in bars and restaurants. With readers positioned in the bar environment and software that compiles the data and produces analytical reports, the “auto ID” bar gives restaurant and hospitality managers new heretofore unprecedented visibility on this critical part of their operations. Each company’s system (Capton’s Beverage Tracker and Nuvo’s BarVision) can be installed for $10-20,000 per location, and the early results show significant (and quick) ROI – measured in months, not years – and vastly improved operational control.

Bringing Auto ID to the “Free Pour Environment”

There are literally millions of bars, clubs, and restaurants that have what is referred to in the hospitality industry as a “free pour environment” – in which a human bartender, rather than a machine, mixes customers drinks. While such auto ID systems are certainly within the reach of individual restaurants and food service chains, casinos, stadiums, large hotels and even cruise ships are proving to be prime venues for them. Not only are they venues where liquor sales are an important component of their revenue streams, they are also likely to have multiple bars/restaurants within their properties. In the case of large casino properties, these could sometimes range upwards of a hundred different liquor dispensing sites, making bar management – and analysis of bar service metrics – an especially difficulty hospitality management challenge.