San Diego Padres Baseball Stadium

As part of my internal control review at San Diego Baseball Concessions, I walked around the various clubs during a San Diego Baseball game to observe the Sportservice bartenders in action. Things were really hopping, and the bars were packed with patrons ordering draft beer, bottled beer, mixed drinks, and cocktails.

The bartenders seemed to do a pretty good job of pouring draft beer. The equipment was working well and it appeared all beer was going into the cups, with no spillage. However, as I was observing some bartenders prepare multi-liquor cocktails, I noticed that they were only charging for a mixed drink. According to Sportservice’s bar pricing policy for this venue, bartenders were to charge full price for every shot of alcohol dispensed from the Wunderbar system.

The Wunderbar system was a liquor dispensing and metering system that the client requested Sportservice purchase for the 18 full service bars located in the clubs. The 1.75 liter bottles were inserted upside down into the Wunderbar system located in a locked room behind each bar. Tubes ran from the back room to a gun in the bar that the bartender used to dispense the selected liquor. When he pressed the appropriate button on the gun, a 1.25 ounce shot was dispensed into the glass. A separate gun was used to dispense the mixer into the glass.

Since the Wunderbar system had meters that tracked the number of shots poured, there should be a report comparing the retail value of liquor dispensed to Point of Sales (POS) revenues. The bartenders who were undercharging for cocktails should have significant shortages.

When I asked the Site Controller for the Liquor Usage Report that compared the value of the liquor used to POS sales, he told me that there was no comparison performed.

No wonder bartenders were undercharging for drinks; they were hoping to get bigger tips! No one was checking on them and they were only accountable for what they recorded on the POS system. Their cash always balanced to sales because they turned in what they had recorded on the POS terminal. However, the Company was not receiving the full sales value for what the bartenders were selling!

In my report to management, I explained that the Wunderbar system was only used as an expensive means of pouring a standard shot. The Site Controller should design an Excel spreadsheet for each bar where the Club Manager would list the beginning and ending meter readings for each bar, subtract the beginning reading from the ending, and multiply the difference by the selling price of a shot of liquor. This theoretical sales value should be compared to the POS sales and a variance calculated. The Liquor Usage Reports should be signed by the Club Manager and sent to the Controller. Any shortage greater than $25 should result in progressive discipline (verbal warning, written warning, final warning, termination) taken against the offending bartender.

As a result of my report, the Controller designed the recommended Excel spreadsheets and demanded that the Club Managers complete them and submit them to him after each game. Management was able to hold the bartenders accountable for collecting the full price for every cocktail served. After a few bartenders were disciplined, the message got out that the Company would not tolerate undercharging for beverages served. Implementation of my recommendation increased liquor revenues in the clubs by $50-100,000 per year.

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