From St. Thomas to St. Louis, Santa Fe to Monterey, Denver to Dallas, I’ve spent a few decades hanging around bars and taverns–on both sides of the pretzels. Owner, operator, manager, bartender and, yes, patron; you name it, I’ve done it.
Now, as President and CEO of Pencom International, a training solution provider for the hospitality industry, I get to ponder the many business lessons I’ve learned over the years and, on occasion, dispense a little wisdom to anyone interested in pulling up a bar stool.
A recurring theme lately has been the importance of executing cost controls. For starters, it’s critical to establish well-defined procedures and systems that protect your bottom line. Within the framework of those do’s and don’t’s, however, exist numerous opportunities to maximize profits a nickel at a time.
Believe me, those nickels add up. Consider the following ideas, each taken from my own experiences or respectively borrowed from the best in the business.
Establish promotional partnerships with suppliers. Beer and liquor suppliers are known for their giveaways to support product rollouts or invigorate brand awareness. But what’s in it for you when they do? Promotional trinkets and key chains don’t pay the bills—guests do. The next time you’re presented with a joint-marketing opportunity, make sure it’s truly joint. Ask yourself: How will it increase traffic and create an opportunity to build the bottom line? If you don’t know the answer, don’t bother.
How about using coasters instead of napkins? Napkins imprinted with your operation’s logo make lousy souvenirs. Who wants a soggy keepsake? Besides, every time there’s a spill, your bartender wastes about 50 to blot it up. Keep a few extra towels on hand and stock up on the coasters instead. They’re durable, reusable and, bearing your logo, more sought after as souvenirs. What’s more, you can often have them provided, at little or no cost, by manufacturers of the products you feature.
Before you purchase new glassware, run samples through a fitness test. Subject them to the same rigors they’d encounter on a busy night. Selecting carefully on the front end will save you big on the back end.
If you adorn glassware with your logo, consider placing it at the desired pour level. Doing so will cut down on over-pouring and ensure consistency in your beverage servings.
Assign three people to receive your liquor shipments. It takes two to handle heavy cases of liquor and beer effectively. The third person, ideally, is you (or the manager in charge of the order.) If you don’t have to pick up a box or bottle every other minute, you’re less likely to lose your train of thought as you’re double-checking the shipment against the invoice. Mental oversights lead to costly mistakes.
Never allow free pouring. Use pre-measured dispensing systems and jiggers. Buy shot glasses with pour lines. Monitor your bartenders. Some advocates of free pouring say that using a jigger in front of guests communicates a negative message about your operation’s frugality. The fact is, drink recipes are written with a one- to one-and-one-quarter-ounce measure of liquor in mind. A consistent pour not only controls costs, but also produces the best-tasting drink possible.
Up-sell like crazy during Happy Hour. Just because you’ve narrowed profit margins to attract early-evening traffic doesn’t mean you can’t make it up. Large beers. Top-shelf liquor brands. Varietal wines by the glass and bottle. Train your wait staff to upgrade orders and pair appetizers whenever possible. Guests are more receptive to suggestive selling when Happy Hour specials heighten their perception of value.
Use big straws. If you use the swizzle variety, guests will have no choice but to sip slowly. Switch to a malt-buster size, however, and guests will tend to gulp, breezing through the first round and becoming more likely to order a second. It’s particularly effective with Frozen Daiquiris, Margaritas and other frozen drinks.
Preserve your lime wedges and lemon twists. Try storing them in their trays on a napkin saturated with club soda.
Adopt a “water served only upon request” policy. A ‘free’ glass of water actually costs your operation a fortune. After all, each glass has to be ordered, inventoried, filled and washed. You also have breakage costs to consider. If you dress up your water with a wedge of lemon, costs soar all the more.
Use two small ice machines. Ice volume tends to vary seasonally, depending on your geographic location. To save on electricity costs, operate two smaller ice machines in the summer, then shut one done over the winter months.
Track credit-card volume. Determine the card most widely used in your operation, then use the figures to negotiate lower merchant fees.
Train your bartenders not to warm up the lines before drawing a beer. This bad habit can send up to 10% of your highly profitable product down the drain.
Set par levels for aprons and towels. This will let your staff know you’re serious about controlling costs and reduce the number of occasions when someone asks you to unlock the closet and sign out another towel.
Offer incentives for zero-breakage weeks. First, determine your monthly expenditure on physical inventory. Then challenge your staff to lower the figure by, say, 30%. Offer 10% of the savings as a cash bonus to be shared by all.
Don’t cut corners on your training expenses. A well-trained staff works efficiently, safely and profitably, rewarding your top-line costs with bottom-line results.