Expert Advice on Hospitality Topics

Part 1 of 2: Improving Profitability Through Proper Planning and Quality Control

Money losers in a bar come in many forms, and you will want to check your financial records carefully to make sure that you are not being affected by one of these:

• No plan. Many bar owners have no clear plan of where their bar is headed and what they need to purchase and do to get there. Many say "I only want to run a bar." However, running a bar, like anything else, is a goal, and goals always require a plan. You should know where you will be expanding and how. You should know what products you need to order and when. Keeping everything on paper in the form of a business plan and purchase orders can help make it clear to you.

• Lack of local products. Many bar managers will justify their lack of local beer by stating that their bar's style or type does not call for local beer. In fact, local beer and local food products are often the best-selling items in any bar. Many customers like or support the local beer, and visitors from other areas are often eager to try the local fare. Always offer local products, even if your bar has a uniquely international or exotic theme. As an added bonus, local products are often easier and less expensive to ship and buy, ensuring higher profit on your initial investment.

• Spoiled food and drinks. Spoiled product is lost profit. In some cases, such as a major power disruption, this can be hard to avoid. In most cases, though, spoilage is caused by ordering too much. This is avoidable. Keep track of your inventory and past purchasing patterns and buy those products that you need in the quantities they were needed in the past. Frequent checks on inventory tell you when you are running low and when you need to stock up on certain products.

• Cutting corners on quality. Many bar managers use a variety of ways to reduce quality. In many cases, they do this not to consciously deprive customers, but out of the mistaken belief that low quality costs less. They think that offering less for more will result in larger profits, when, in reality, cutting corners usually keeps customers from coming back. Quality products—be it fresh fruit in drinks, generous portions of drinks, or pleasant bathrooms—will bring the types of repeat customers who will ensure that you make money.

• Staffing problems. There are many staffing problems that can cost you money. Hiring or keeping unqualified or unproductive staff (because they are friends or family members, for example) is terrible for your bottom line. Selecting the wrong staff is a problem that can cost you a lot of money.

• Poor storage, wrapping, and handling of liquor and foods. Beer that is left out to get warm, meat that is thawed and allowed to spoil, and food and drinks that are incorrectly handled can mean waste or even food poisoning for your customers. You do not want the health department investigating your bar for poor management of food and drink. Make sure that you control how food and drinks are stored and handled. Food and drink preparation areas should be clean, and staff should keep all products that need to remain cold in the refrigerator or freezer. Food and drinks should be stored and served at their appropriate temperatures to ensure that your customers stay safe.

• Poor attitude or atmosphere. Customers want a place where they can relax and get great service. If your bar is unpleasant, you will lose money by losing customers. You need to make sure that your bar is an inviting place not only to drink and eat, but also to linger.

• No customer concern or no customer market research. Bar managers are busy people, and while they may not overlook customers on purpose, far too many lose sight of bar patrons as they worry about the many other elements of running a bar. Not catering to customers, however, can ensure that a bar will lose a lot of money. Not only will unsatisfied customers not return, but they will often share their experiences with other people—potential patrons. In order to avoid losing money, it is important for bar managers to not only please customers, but to impress them enough to make them wish to return. Regular market research will reveal not only who your bar's customers are, but also what they want.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

Coin-operated entertainment machines are a great source of extra revenue for a bar. The eclectic nature of most bars means that coin-ops of all styles, sizes, and functions can fit perfectly within your surrounds while adding to the fun and flavor of your establishment. The profits that coin-ops generate can be huge; they can also run a lot deeper than just the money inserted into the machines.

Coin-ops increase traffic, generate great repeat business, and keep people in your venue far longer. Coin-ops also give people who arrive alone a chance to do something as they sip their drinks. From high-tech games to virtual reality to pool tables, anything that gives your customers added entertainment is a good option, especially if it will bring you higher profits. These machines are cheaper than renovations but can contribute nicely to your profits.

• Profit-based coin-ops. Some coin-ops don't have to cost you a cent, but they can bring in a good source of revenue. Simply open the phone book and look under "Coin-operated" and you'll find a slew of companies that will bring you games and entertainment for your customers for no charge—other than a share of the profits. This kind of a deal can only be good for your business. No maintenance worries and you get a new machine whenever an old one stops earning money—all free of charge.

• Deal directly with the machine manufacturers. In a scenario like this, your venue will handle most of the daily maintenance required of the machines and the manufacturer's repairperson comes out only as needed. While this limits your selection of game alternatives, when you want to switch games, it's only a matter of changing a couple of computer chips. The actual game casing stays the same, but a completely different game appears, keeping your customers from getting bored with their options.

• Don't forget change machines. If you are going to offer coin-ops, make it easy for your customers to use the machines without taxing your staff too heavily for change. One change machines is all that is needed.

• Responsibility. If the machine is on your premises, take responsibil­ity for it and either return the customer's money or see to it that your supplier can fix the malfunctioning machine A.S.A.P. There's nothing worse than wanting to play a machine and finding it switched off— again.

• Photo-machines. Customers put up to five dollars into the machine and step in to have their photo taken. In a few minutes, they can have their image on stickers or postcards; they can even pick a background. These machines are huge moneymakers and can even incorporate an ad for your bar within the picture. Your local phone directory will list plenty of suppliers.

• Lottery machines. If your state allows them, they can be a great source of revenue. The latest machines work much like slot machines in Las Vegas, allowing customers the chance to win big.

• Retro arcade machines and video game machines are very popular and go well with bars. Many people love these games and gladly spend extra time at a bar in order to play them.

• Dancing machines. Patrons throw a dollar into the machine and step onto a stage that features a series of lights. They then try to step on whichever lights flash to keep in time with an on-screen dancer. These machines can be very addictive and often draw a large crowd—which can't hurt your bar's takings. Again, any amusement machine vendor in your local phone directory should be able to supply this machine.

• Virtual reality (VR) sports are becoming a reality. More and more bars are installing VR golf ranges, VR batting cages, VR racing games, VR bowling alleys, VR hockey games, and VR boxing machines. These machines are the same as any other coin-operated gaming machine, except they cost the customer more and deliver a superior product. While they take up more room, they give you far greater profitability and extensive replay value.

Coin-operated games come in many varieties. Just about any game you can think of has a coin-op version available. Football, air hockey, video games, shooting games, skee-ball, basketball games, even video poker and blackjack machines that fit into your bar-top—it's all available and it's all going to bring in a newer, younger customer for a minimum investment or no investment at all.

And let's not forget the old stalwarts--pinball and darts. Going old school nowadays can seem fresh and new. Retro is in:

Pinball Machines

The trusty pinball machine has been around since the late 1800s yet still uses the same formula as the pinball machines of old. Lights, sound effects, the bounce of the ball, the sound of the flipper, and the lure of a high score. With a little smart thinking, your pinball machines can earn you a lot of money.

• Install a pinball machine in your waiting area. If you keep the noise levels down so nearby customers don't get annoyed, they can be a great moneymaker. Vendors can bring you the latest pinball machines for free and will split all profits with you at the end of the month. At 50 cents a game, a machine only needs to be played ten times a day to bring you $75 a month in profit sharing. Not a bad return on zero investment!

• Vintage machines. Invest in a vintage pinball machine rather than getting a coin-op company to bring in a high-tech modern machine on which you'll have to split your profits. Older machines cost far less to buy and a lot less to maintain, and the appeal of an old machine will bring back memories for your older patrons. Machines such as these can be purchased through online auctions such as eBay (www.ebay. com).

• Outright purchase. If you choose to purchase your own pinball machines, look in the classified ads in the newspaper or at local auctions for the best deal. Of course, purchasing your own machine will mean you're responsible for its maintenance, so look for a machine that either comes with an array of spare parts or that has been fully serviced recently. The older the machine, the tougher it becomes to track down spare parts when the time comes to repair them.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

• Offer your bar staff incentives to make sure that you are getting the business you need. Your staff can help customers find a venue (your bar) for functions or can promote a drink that is a known profit maker if they know that they will get more money for it. If a staff member books an event that brings in $500, a $50 incentive for the staff member is well-spent money indeed.

• Know which drinks make the most profit and advertise them. Knowing which drinks can help bring in the money is key. Once you have figured out which items bring in the most money, make sure that you advertise them. Have staff mention these drinks by name, and make these drinks more visible and more visually appealing. In many cases, suppliers will help by providing you with coasters, posters, or other items that advertise certain brands.

• Make sure your customers get value. Too many business owners (and bar managers) cut corners, thinking that spending less means more profit. Studies have shown that the opposite is true—if the customer thinks they are getting more than they can expect, they will often respond in kind by patronizing the bar and bringing their friends. 

• Make it easy to linger. Have interesting television on in the background. Have your staff ask "How about a round of coffee?" rather than "Would you like the bill?" The longer people linger at your pub or bar, the more they will buy. Also, if your bar has some people in it, it will be more appealing and lively to other customers. Customers are valuable—never rush them out.

• Stay flexible. Keep eyeing the crowd, and if you notice shifts in the crowd, be flexible enough to change to suit the crowd. Did a bachelor party just come in? Adjust by running a one-off special on beer or by turning on dance lights. Is there a more sedate crowd tonight? Bring things down a notch with softer music and lights. Your customers will appreciate the extra touch and will be more likely to stay if your place is just what they're are looking for.

• Make sure that there is always someone on staff who can make executive decisions. If there is a profit to be made and a customer to be satisfied by veering from the ordinary (by preparing special drinks or booking special functions), be sure that someone on staff can make the right decision for the bar, fast.

• Cut down on how often you say no. There is no way to satisfy each customer, but do try to keep a variety of things on hand so that you can make the drinks and snacks customers demand. Don't spend lots of time or money trying to buy every item, but do stock up on items that can be used in the near future (sodas, non-perishables). Make sure your staff know what is on hand and have them suggest an alternative when the customer asks for something that is not available. Whenever someone at your bar says no, they are giving a patron an excuse not to return.

• Consider merchandise. A great logo on T-shirts, pens, golf shirts, baseball caps, key chains, lighters, and glasses takes up little room but can bring in as much money (or even more) than your beverage items.

• Consider vending machines. Vending machines are easy places for customers to get anything from antacids, breath mints, phone cards, bottled water, condoms, feminine products, snacks, to cigarettes. Vending machines allow you to make a profit without taking much effort. Your local Yellow Pages can easily put you in touch with vending suppliers near you. You can even place your snack vending machines outside the bar proper so that you keep earning money while the bar is closed.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

Making the Most from Sales

The savvy bar manager knows how to maximize profits and get the most sales possible without sacrificing ethics or drink quality. You can do the same if you follow a few simple tips. One simple way to maximize profits is by offering promotions or discounts. The small cost factor involved in initiating these promotions make them a good promotional vehicle.

"Happy hour," for example, a period of time when drink prices are generally reduced, can be an effective means of increasing bar sales. However, to be substantiated, it must draw a large volume of customers. "Happy hour" is most often run prior to opening the dining room, usually between 4 and 6 p.m. Drinks are sold at half-price or at a substantial discount. Hors d'oeuvres and salty snacks are often served, which will induce the customer's thirst.

In order to offset the enormous increase in the cost of sales due to the lower drink prices, total liquor sales must be increased substantially. A restaurant that lowers all drink prices by 50 percent during "happy hour" will be simul­taneously doubling its cost of sales. When analyzing the feasibility of a "happy hour," you must also consider the additional cost of labor during a non-operating period; the food cost of hors d'oeuvres and other snacks; and any variable costs, such as the use of additional utilities.

The gross profit margin during any "happy hour" is small, though it can be substantiated with sufficient sales. An increase in revenue, small as it may be, will be created where none had previously existed.

There are other possible benefits from initiating a "happy hour." Lounge customers will be exposed to the restaurant and may wish to return at a later date to try the dining room. Customers may stay past the "happy hour" period and purchase cocktails at the full price or remain for dinner.

Employees will also benefit from a "happy hour" by an increase in income through increased hours and tips. This point is an important consideration, as employees may become discouraged during periods of slow or seasonal business. A "happy hour" that may not provide the restaurant with the desired profit may be deemed worthwhile for increasing employee morale and decreasing job turnover, eliminating the costly expenditure of rehiring and retraining new personnel.

Bar Tabs

Another way to maximize spending, and your bar's profits, is with bar tabs. Bar tabs make it easier for customers to spend without hassle, encouraging multiple orders of drinks. To allow bar tabs or not is a policy that can be debated from both sides with sound reasoning. Many bars and restaurants have been victimized by customers who walk out and do not pay their tabs. A policy of no bar tabs will alleviate the initial problem, but it will certainly be inconvenient—and possibly insulting—to some customers.

A bar tab should always be run if a customer so desires. The lounge is a place where the customer may relax and enjoy a cocktail before dinner. He should not be inconvenienced by paying for each drink order as he goes along. Drinks should also be automatically added to the dinner bill unless the customer wishes otherwise.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

Your market and competitor research will likely reveal that most bars that are successful pay a lot of attention to customers. In fact, great service is one of the surest ways of drawing repeat customers. To draw more patrons to your bar on a regular basis, you do not have to spend a lot of money. However, you do have to think like a customer; you will likely notice a few things that need to change at your establishment:

• Waiting lines. If there's a line outside the door, all it takes is a little creativity to either bring the line inside or disguise it on the outside. Remember, those people waiting outside are probably thirsty and they'd be more than happy to do their waiting in a courtyard area, at a temporary bar, or in a cordoned-off outside area where drinking is permitted. Of those who are prepared to brave the line, most will do so gladly if they know they can be inside within 30 minutes. Also, it's simple to change waiting-time perceptions by making that wait a little more comfortable or entertaining.

• Parking can be a big hassle in many venues. If there tends to be a traffic jam outside your venue, consider installing a valet service on busy nights or posting a staff member outside to direct patrons to parking around the back or down the road. Signs pointing to parking areas also help.

• Offer creative extras. Whether it is free hand massages, glow sticks, or a live band outside, making the outside dazzling will make people all the more eager to see the inside of the bar.

• Think about your TV screens and sound system in relation to your waiting area. Can waiting people catch a glimpse of the big game? Can they hear the music inside? These things will keep a waiting person keen on staying around, whereas a blank brick wall and a disinterested bouncer isn't inviting to anyone.

• Keep clientele informed. If there's a wait for a table, set up an electronic sign indicating how long their expected wait will be. Add to this anything you can think of that will make their wait more entertaining—sports scores, trivia questions, coming events. It might be a little more work, but if you can keep just five people from leaving, it'll be worth it. 

• Freebies and incentives. Offer your waiting patrons a little something extra and they won't just "not mind" waiting, they'll do so gladly. Coupons to be used on a later date are a good option.

• Create a waiting area if you know that there tends to be a wait to get into the bar. This can include comfy chairs or an outside patio where customers can wait and sit. This is a great way to make sure that customers do not get tired and leave.

• It doesn't have to be expensive. Giving your waiting customers something to do doesn't have to be expensive, high-tech, or take up your employees' valuable time. Consider offering free reading material in your waiting area or even Internet access.

• Act first. A long wait doesn't seem quite so long when a staff member keeps you informed on how long your table will take. Don't wait for the customer to ask you; go out and tell the customer.

• Make your bar irresistible. Why will some bar patrons wait forty-five minutes to get into a bar instead of giving up and going elsewhere? They have a sense of urgency to get inside. Whether you are offering a hot live act, celebrities, or some other enticement, make sure it is worth the wait

• Offer free appetizers to waiting patrons. A tray with a nice selection of different foods from your menu can actually be a great advertisement and may even generate increased food sales.

• Supply your customers with pagers. Offering waiting customers a pager to notify them when their table is ready is a great alternative to the usual "public address" announcement or a yell over the crowd. When a table becomes available, your host simply dials the waiting customer's number, and wherever they are in the building (or outside), they know that their table is ready. 

• Build suspense. If it appears as though there is something really exciting going on in your bar, people will be willing to wait to get inside.

• Make sure waits are fair. Patrons who have been waiting for a whilewill get rightfully angry if it appears as though the staff are letting in people who are paying extra or who are simply "flirtier." Make sure that your security staff respect the queue and try to get everyone inside in an orderly and fair manner.

• Keep your customers informed. Be honest. If there'll be a half-hour wait, don't tell them it will be a fifteen-minute wait and hope they don't walk out. Similarly, ensure your staff keeps them updated on the wait so they know they haven't been forgotten. Small things like this make a big difference in the eyes of a waiting customer.

Customers are your mainstay in the bar business. If you treat them better than other bars would, you are ensured repeat business. Customers love to feel like VIPs, and the more patrons you make feel like this, the more business you will have. Share these tips with your staff to ensure they treat every customer as through he or she were a star.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com

How Keeping Close Tabs On Your Liquor Supply Can Both Cut Costs & Generate Revenue

Industry studies have consistently shown that a full 25% to 30% of a bar's liquor inventory never converts into registered sales. That is the equivalent of about six to eight 1.25 oz portions per bottle (which should yield at least 25 portions.) This loss of liquor volume--due to unauthorized comps, over-pouring, spillage or theft--should be of great concern to any bar manager. 

While losing 25% of a $25 bottle may not seem like a very serious problem--an unavoidable cost of doing business--the true cost is much greater than that $6 or $7 per bottle. The question you need to ask yourself is: Where is this lost liquor going? And how is it affecting sales? For instance, if your bartender is not pouring 1.25 oz portions, but is instead pouring 2 oz portions (say, perhaps, to curry favor with clients and receive a bigger tip), you're not just losing liquor volume, you're also losing potential sales. Where the customer may have been disposed to buy three drinks (3.75 ounces), he may now be content to buy just two 2-ounce drinks. Your bartender's actions, in this case, haven't merely cost you a dollar's worth of liquor, they may well have cost you $6-$8 in lost sales revenue (depending on how you price your drinks). And that's just for one customer buying two drinks. How often is this occurring? What if your bartender also happens to be giving away free drinks without your knowledge or authorization? The point is: "shrinkage" does not only affect supply costs, it can also affect revenues in a big way. 

That's why loss prevention is so important. The profitability of your business depends on whole bunch of variables--the location of your establishment, the overall economy, ever-changing customer tastes.... Achieving profit growth can be difficult and can rarely be accomplished overnight. Increasing the price of your drinks is risky, and can prove more harmful than helpful as far as your bottom line is concerned. And growing your clientele usually takes time. The best way to increase profits in the short-term, therefore, is not to try to fiddle with pricing or to increase your client base. (Of course, this is something you should always be doing. But it is not easy to do in the short-term.) The quickest way to increase revenue is to make the most of the clients you're already serving. And one way to do this is to improve operations by getting tighter grip on your inventory. Loss of liquor supply at double-digit levels is not an "unavoidable cost of doing business". It is "bad business". And it is entirely avoidable. Put simply, loss prevention can pay big dividends. What's more, it can be achieved quite quickly through the implementation of a quality liquor inventory control system.

Myth: Bartending School Is Vital for a Bartender

Many of the best bartenders learn most of their useful trade while at work. This is because bartending schools vary widely in quality. Some emphasize the preparation of rarely requested drinks without stressing useful skills such as bar management, customer satisfaction, and customer safety. If you are hiring a bartender, you should consider the school he or she has attended, but testing practical skills will give the best clue of how many useful skills the person has for waiting on your bar. If you are considering attending a bartending school, investigate the school to make sure that you will be taught skills such as organization and techniques of serving. A good bartending school or course will emphasize dealing with customers. Be wary of a bartending school that is more of a "drink mix" school, stressing mixing many types of drinks without teaching anything besides drink preparation. There are many of these sorts of schools out there, which claim that a bartender's greatest asset is knowing how to mix an endless variety of drinks. Learning to mix the latest drink is relatively simple once one looks up the recipe, and most patrons will order the most popular drink of the moment rather than some obscure mix. A bartender with a good grasp of people and basic bartending techniques is usually more useful than the bartender who only knows how to mix hundreds of drinks from memory but has few skills besides. In some cases, an employee with a hospitality degree is better able to handle the bar job than someone who has attended a bartender school.

Myth: If You Hire Experienced Employees, There Is No Need to Train Them

 You still need to train your employees to ensure that they understand what you want them to do. In cases where an employee has worked at another establishment for a while, you may actually need to provide additional training to allow the employee to get used to the way you want things done versus how they did things at their previous job.

This article is an excerpt from the The Professional Bar & Beverage Managers Handbook: How to Open and Operate a Financially Successful Bar, Tavern and Nightclub, authored by Douglas Robert Brown, published by Atlantic Publishing Group. This excerpt has been reprinted with permission of the publisher. To purchase this book go to:

Atlantic Publishing Company
Amazon.com