By Douglas Robert BrownAtlantic Publishing
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:
Many bar operators like to keep their patrons entertained with a variety of eclectic means and don't mind spending a few dollars to do so. In fact, major sporting venues have been employing these kinds of halftime entertainments for years and finding great results. If your bar can offer unique and appealing entertainment, chances are very good that you will have plenty of clientele. Better yet, if your bar develops a reputation for providing great entertainment, customers will always be dropping by your bar to look at your latest entertainment options. Consider the following:
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.
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.
New technology. Look at what's available on the market today. The dartboard has received a technological boost. Coin-operated dart systems not only keep score for your patrons, but they also bring in a new source of revenue. Turnkey systems can be purchased or brought in under a profit-sharing deal.
At the end of each month, it is important to close out all expenses and sales and balance all accounts. This process ensures that finances are being monitored and helps prevent financial problems down the line. It also lets you, the bar manager, see whether the bar is making a profit or not and what changes (if any) need to be made to operations.
New bar managers, especially those who have never owned a business before, often find the process of caring for money matters quite daunting. There are a number of ways to make the process easier:
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.
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.
Do bartenders steal? I've worked with some outstanding bartenders over the years, men and women who are honest, hard-working, team/family-oriented and loyal. I'd like to think all bartenders are like that, but according to some, I'm misguided.
Signage. From how far away can your bar be seen? If you can't be seen at least a block away, consider increasing your outside signage. While this is not a small expense, there's no point in hiding the fact that your bar is nearby. If you talk to your distributors, you might find that one of them is prepared to subsidize the cost of your signage, in return for mention of their product.
Sometimes the only element that separates successful bars from those that fail is in the small professional touches of excellence. This extra effort implies that tremendous thought has been made all around to attain the highest level of quality possible. Professional bartenders and courteous cocktail waiters/waitresses can be found in any well-managed restaurant. However, it is the small, un-demanded touches and extra procedures that separate good lounges from superb ones. Described in this section are some simple, inexpensive suggestions that will give your bar the extra touches—the finesse—that will separate yours from the rest.
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:
