Toronto - 18 November, 2003 -

In the early days, when he was struggling to get his fledgling company off the ground, Barry Driedger spent many evenings each week sitting in bars, nursing a drink and watching the action. He wasn't there to unwind after a tough day at the office, however. For him it was strictly business. Driedger is the founder of a Toronto-based company, Bevinco, which supplies a franchised liquor-audit service to bar and restaurant owners across North America. Frustrated by an average loss of about 20 to 30 per cent of gross sales, they pay an average of $200 U.S. a week for Bevinco franchises to keep an eye on their operations - and their bottom line. "For the first three or four weeks, we stay undercover and get a picture of what's going on," Driedger said. "Then, we report the results to the owner and then they typically inform the staff they're under scrutiny. That usually has an immediate impact on the problem." The problem in question is a huge one: it's estimated that the cost of "shrinkage" in bars is as much as $10 billion annually in the United States. In Canada, it's an equally impressive amount if you consider the sales of alcohol and beer amount to about $14.5 billion Canadian a year. But as the hospitality industry grapples with financial losses in a market that's been battered by lower tourism and travel activity, Bevinco has been profiting. After a shaky start, Driedger has sold about 200 franchises in 16 countries, principally in the U.S. and Canada. The company is poised to move into the food sector in early 2004. And there's talk of a public share issue if stock markets continue to show signs of recovery over the next few months. While Bevinco auditors might produce prompt results, repeat business remains high, even after the initial losses have been addressed, according to Driedger. "Bar owners are often shocked at the extent of their losses," he said. "And the thing about people is that as soon as you plug one hole, you spring a leak elsewhere. In the end, it's cheaper to keep us involved." It took owners considerable time to come around. Bevinco was formed in 1987, but Driedger found it tough to convince bar owners to pay the $15,000 price tag for what he admits was a cumbersome package of software and hardware. Not only was it too much capital outlay up front, before the widespread use of laptop computers, the units - which include scales for the regular weighing of bottles of liquor - were too obtrusive. "They wouldn't pay the full freight, but they would pay $150 a week or so to keep a close eye on things," he said. So, Driedger was forced to re-position his dream. He sold his house and his car to keep Bevinco afloat, and he quickly built a client base among 15 Toronto bars. By 1990, he started to sell franchises. A franchise costs about $35,000 U.S., plus an additional $4,000 for the gear: a laptop computer, two scales, a Palm Pilot for full-bottle data collection, a printer and a bar-code scanner. In return, franchises get training, regularly updated software and a protected territory of about 250 to 300 bars and restaurants. Although auditors visit client establishments regularly to keep an eye on things, the bulk of their work is done after closing time. Every week, they spend three or four hours weighing hundreds of bottles for each client, comparing them with their previous weight and calculating - to within a fraction of an ounce - how much has been dispensed since the last audit. Those amounts are also cross-checked against register receipts. According to Driedger, this careful quantification usually yields a five- or six-fold return on investment - about $1,000 for the $200 weekly fee - as Bevinco brings losses down to three to five per cent from the 20-per-cent average. As part of the service, Bevinco franchises also affix stickers to bottles as a notification to bar staff that they're on the job. Driedger concedes it often takes bartenders a while to get over their resentment at being audited. While he says some are "just careless" with measurements, others deliberately pour extra strong drinks to earn bigger tips or to accommodate friends and regular bar patrons.

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