An Interview with Jon Taffer on 2016 Trends and Boosting Bar Revenue

Jon Taffer thinks mixologists take too long and that craft beer is coming up on a bubble.

And this long-time industry veteran tends to be right.

Taffer is perhaps best known for his starring role on Spike TV’s Bar Rescue. He helps failing bars reverse fortunes by dishing out hard truths coupled with savvy business advice.

During his decades in business, Taffer has been behind numerous on-premise innovations that improved guest experience while driving revenue — including helping launch the NFL Sunday Ticket. Most recently, Taffer and his company partnered with BAR16 at the National Restaurant Association Show.

Cheers Magazine recently spoke with Taffer about how bars can improve, and what 2016 holds for the alcohol industry.

CH: What is something bars can do right now to improve their business?

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“Revenue is the cure-all. That’s why I always stress top-line promotions,” says Jon Taffer.

JT: Promotions. As I always say, focus on dollars, not dimes. In the bar business, a good promotion can increase a night’s revenue by 20%.

In other industries, it can take three to four months to roll out a promotion. In the bar business, you can roll out a promotion within two weeks and immediately start increasing revenue.

And revenue is the cure-all. That’s why I always stress top-line promotions. A promotion isn’t $2 beers. That’s discounting. And that comes with diminishing returns. The next bar over will start offering $1.50 beers, and then where are we? We both lose.

Promotions have to be experimental and environmental. Let me give you an example. I believe that if you can have a bar with 200 women in it, you’ll never go broke. I try to build promotions around women.

So let’s take Monday Night Football. Say you own a bar in the Dallas area, and the Cowboys are playing on Monday night. Every bar in Dallas will be showing the game, and advertising it. That doesn’t attract women. So I would promote a “I Hate Football Mondays” in my bar. That’d fill the bar with women. And then I would still show the game somewhere! Tell me, which bar would you rather go to on Monday night?

CH: What trends do you in 2016 see for on-premise?

JT: When we talk about 2016, we have to look at certain trends. Nightclubs and dance halls are taking a huge hit. Even in Los Vegas, where the market is now looking to go in a different direction.

There is an environmental change happening right now in this business. Millennials do not respond to the traditional “thump” environment of a nightclub or dance hall. Rather, they prefer environments that are more “mix and mingle,” energetic, or more casualized. These are the trends of today. They’re much more story-based, image-based.

CH: What is something that many bars are doing wrong?

JT: Besides discounting, I would say that the days of sexualized promotions are diminishing. And listen, this is coming from someone who once gave away breast implants at a bar and had midget tossing. In other words, I’m no prude. But overly sexualizing is not working anymore.

Instead, it’s about “fun sexy.” Or product-based, which is behind craft beer. It’s fascinating. A lot of the craft beer that gets drank in bars is terrible as far as the reviews go. But people drink these beers and say they enjoy them because the beers are from a hip brand. Bars should focus on what fascinates their audience in terms of culinary products.

Because at the end of the day, it’s all about ego and image. Especially for Millennials. It’s all about maintaining an image that is cool. Think about it this way. You would still go to a steak place that isn’t cool if it had great steaks. But you would never go to a bar that isn’t cool.

CH: What do you see for craft cocktails in 2016?

JT: The speed of mixology has to be addressed. Listen, I work with some of the best in mixology, so I’m not anti-mixology. I’m just anti-ticking clock.

Think about it this way. A bar makes 70% of their weekly revenue 16 hours per week — happy hours on Thursday through Saturday. Now take two bars. One is a mixology bar. The first bar can make a cocktail in one minute. The mixology bar takes three minutes. Well, that second bar had better charge 300% more for their cocktail, or they’ll never make as much revenue as the first.

That’s why I support craft-cocktail batching, cocktails on tap, work stations, anything to speed it up. It drives me crazy when I see a bartender making love to their orange peel as they make a four-minute cocktail. Instead, I use quality mixes in my pre-batched cocktails, and mixes that mix in the glass. You gotta look at ways to get things out quicker.

CH: What are your thoughts about beer in 2016?

JT: I find the whole craft-beer craze fascinating. A lot of the core beer brands in America — Budweiser, Coors, etc. — have taken a real hit from it. Some of these brands, they’ve never lost market share in their entire existence. They’re scared by it. So they panic and turn executives over.

Craft beer has created a culture, not a trend. A trend grabs market share and then disappears and gives it back. A culture grabs market share and then keeps it. The craft-beer culture isn’t going anywhere in America.

That said, I think that about 60% of craft beer basically sucks. I’ve been to a lot of the facilities. They’re not exactly clean. They’re rookie-run. The problem is that people are now looking at craft beer as an investment opportunity. They’re getting into it to make money. Many people don’t get into it for the love of making beer. Of course, that’s not how it began. Jim Koch founded Boston Beer because he loves to make beer. But today, it’s much more in the investment space.

That’s why I think there’s going to be a wash out in craft beer over the next two years. Half of the craft breweries are going to disappear. And the word “craft” will become known more for spirits.

CH: What’s in for spirits in 2016?

JT: I work with many of the big spirits companies and they’re very excited about scotch becoming the next big thing in the next few years. Especially flavored scotch.

I really like flavor-infused spirits. If you match that with local breweries and small-batch products, it’s very exciting.

I think we’re going to see products made with fruit inside the bottles. I remember one brand came out with a pear sitting in the product in the bottle. We’ll also see more blends, like vodka and tequilas mixed together.

Kyle Swartz is the associate editor of Cheers Magazine. Contact him at kswartz@epgmediallc.com and follow him on Twitter @kswartzz.

The feature photo of Jon Taffer photo was courtesy of by Spike TV.

14 Comments

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  3. Julia Reply

    Jon,

    So great to hear your thoughts on the advancing beer scene in the U.S. today. I love your statement, “Craft beer has created a culture, not a trend. A trend grabs market share and then disappears and gives it back. A culture grabs market share and then keeps it. The craft-beer culture isn’t going anywhere in America.” Awesome.

    I want to respond to a few statements contained in your interview.

    On: “I think that about 60% of craft beer basically sucks. I’ve been to a lot of the facilities.”

    60%? How many breweries have you toured? There are 4,100 in the U.S. today. Please tread lightly when making a statement like this as it takes to task an entire movement and community. I’m here to say I’ve toured more breweries than most, and I disagree. Quality is top of mind for most breweries.

    On: “…there’s going to be a wash out in craft beer over the next two years. Half of the craft breweries are going to disappear.”

    Really? First off there are 8,000 wineries in the U.S. today. Second, if we had equal population compared to the 1880’s when we also had 4,100 breweries then the U.S. could support more than 30,000 breweries. Granted most of today’s breweries and those of yester year are very, very small with 96% of breweries in 2014 making less than 15,000 barrels of beer.

    Here’s a stat to chew on. 60% of restaurants close in the first three years of business (Ohio State static) whereas only 46% of the 2,482 brewpubs that have opened in the past 35 years have closed. Brewpubs represent an estimated 1,500 of today’s 4,100 breweries. They must be doing something right!

    Also from a sales perspective in 2014 beer eclipsed wine and spirits practically combined. So whenever you talk about beer it’s important to remember we are still a beer loving nation first and foremost. That is why it is so important for our on-premise establishments to lead in beer. Beer was $101.1 billion in sales and wine was $37.5 billion. (Small and independent craft brewers were $19.6 billion of the overall beer sales figure).

    You are a beverage icon. You have inspired so many. You are a influencer. As such please remember today’s 4,100 breweries (with 99% being small and independent) merit all the belief and support you are willing to muster as these breweries are instrumental in the success of hundreds of thousands of great beer establishments.

    Cheers, and anytime you want to have a beer to talk further just let me know.
    Julia Herz
    Craft Beer Program Director
    Brewers Association/CraftBeer.com
    @HerzMuses

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