Why Bad Things Happen to Good Bars
And why creating a great beverage program is just the beginning of the battle
My grandfather once told me, “If you want to be successful, watch carefully what the majority of people do, then do the opposite.” I confess it meant little to me at the time, but, fortunately for me, I remembered his advice, and I’ve made it the cornerstone of my professional career.
How can you benefit from this same wisdom? The restaurant and bar business is a highly competitive industry, with a failure rate that exceeds the norm. It demands hard work and forgives a minimum of mistakes, which seems to trip many people up.
While avoiding the mistakes of others and steering clear of the pitfalls might not necessarily lead you on a straight line toward success, it may very well lead you away from failure.
So we posed the question to some well-tested beverage pros: why do bad things happen to good bars?
The Right Stuff
“I’ll tell you one reason so many potentially good bars hit hard times–because the business lacks leadership,” says Mark Pollman, head bartender at the Fox & Hounds in the Cheshire Lodge in St. Louis. “Most managers today lack leadership ability. They don’t understand that a bar has a lot of moving parts, most of them living, breathing individuals. People need to be lead, not managed. It requires character, experience and the desire to do whatever it takes to get the job done. People respect that and respond accordingly.”
Deven Black, long-time general manager of the North Star Pub in New York City agrees. “I’ve made more than my fair share of mistakes, but if I’ve done anything right, it’s that I’ve learned from those mistakes. I seek advice from those around me with more experience and perspective, and I let the good, competent people on my staff do their jobs. It’s a management philosophy that has worked well for me.” With Black at the helm for the last 15 years, the North Star Pub has become one of the city’s most popular watering holes.
Black contends managers must respect the limits of their authority. “I think it’s important not to inflate the importance of your role in the business. My job is to ensure that we’re doing the things necessary to be successful. I watch, I listen and I take care of the business end of the bar. That’s my job. The challenging part, like working the bar and taking care of our guests, I let our service professionals take care of that.”
Veteran bartender and bar manager Tracy Finklang, who has been the corporate beverage manager for Rock Bottom Brewery for the past several years, contends the most critical mistake most beverage operators make is not paying close enough attention to their inventory. “We, like all bars and restaurants, invest a great deal of working capital into purchasing and replenishing our beverage inventory. From a business standpoint, it’s imperative that we track the flow of inventory through the operation to make sure we’re getting the return we need on that investment.”
After years spent behind the bar, Finklang knows what fate awaits many products. “It seems it’s always open hunting season on alcohol. Your inventory can get ripped off even before you put it into the store room. I think tight inventory controls are an effective deterrent–people know that any losses will be detected quickly. I can only imagine the losses beverage operators must suffer without these systems in place.”
Black agrees that lack of adequate inventory control is a major source of problems. “For example, several years ago I found some considerable discrepancies between the number of bottled beers our registers said we sold, and the amount of beers we actually depleted from inventory. So I started to count all the bottled beer at the end of every day. You know, the problem all but disappeared.”
As the labor pool continues to shrink, and the number of qualified job applicants diminishes, employee training will have an increasingly significant impact on day-to-day operations. “There’s no question in my mind that the number one challenge facing beverage operators today is training,” says Al Ferrone, food and beverage director for the Promus Hotel Corporation, operator of the Doubletree Hotels. “Allowing uninformed, marginally trained employees behind the bar, or on the floor, is the ultimate in mismanagement. Essentially you’re putting people in pressure situations that they’re totally unprepared to handle. The only possible eventual outcome is financial failure.”
Ferrone contends employee training provides the bridge between concept and execution. Few managerial strategies can be effectively implemented if the staff lacks the tools and knowledge to execute the program. Training encompasses everything from product knowledge, sanitation procedures and alcohol awareness to menu familiarity, handling guest complaints and offering proper customer service. Ferrone stresses that any important component of beverage and service programs must be incorporated into an ongoing training program to meet established professional standards of the business.
The operational impact of poor employee training can be devastating to a borderline business, say Rick Fogel and Phil Raimondo, owners of Bar Starz, a leading beverage consulting firm specializing in training and beverage program development. “The amount of dollars being invested into training bartenders today is dropping,” says Fogel. “As a result, employers are lowering their standards, so we’re seeing far more order takers behind the bar, people with little technical proficiency or sales abilities.
“This causes a ripple effect,” he observes. “Their lack of professionalism inevitably lowers gross sales, especially during peak hours, and negatively affects guest satisfaction. Without training, the most you can expect behind the bar is a smile and a heartbeat.” Adds Raimondo “And often, you may not even get a smile.”
In industry parlance it’s referred to as shrinkage, an innocuous sounding word with dire ramifications, referring to tangible losses due to overpouring or theft. “Just because you purchase a bottle of liquor doesn’t mean you’re going to get any where near its potential sales value,” says Finklang. “The liquor can get stolen, spilled, wasted, given away or drunk by employees. Theft and overpouring alone can chew up between 10% to 20% of your bottom line, and that’s in operations with good controls and managers who know what to look for.”
While the Rock Bottom Brewery allows its bartenders to free-pour liquor, they are tested for accuracy on a regular basis. Those who don’t measure up must use a jigger until they are capable of pouring with precision. Being a former bartender, Finklang entertains no illusions that testing alone will curb over-pouring, “but it does convey to our staff that we’re aware of the problem and taking reasonable precautions to deal with it.”
“Most bartenders think that when they give away a free drink all the bar is losing out on is the cost of the liquor,” observes Ed McCullough, owner of the Balboa Cafe, Tempe, AZ. “It wasn’t until I took over this place that I realized there’s a hidden opportunity cost tacked on as well. If a customer’s personal limit is four drinks, for example, and the bartender gives away one, for whatever reason, I’m potentially out 25% of my sales. Either that, or the person will consume five drinks and now we’re looking at an over-service situation.”
Another insidious problem is theft. Bartenders control both ends of every bar transaction. They portion and prepare product as well as handling all sales proceeds. McCullough, like many, says he has been burned bad. “I’ve learned the hard way that some bartenders operate with a hidden agenda. It has been an expensive lesson, but now I’ve implemented solid cash controls. I randomly pull cash drawers and take mid-shift readings of the registers. I think these types of security measure help keep the honest bartenders honest.”
Business is challenging enough without flying blind. Sophisticated registers and point of sale systems are capable of generating operational data, which can provide insights into what transpires behind the bar.
“Because we have tight inventory controls, I’m reasonably confident that our cost of goods figures are accurate,” says Black. “As a result, I use the pub’s pour cost percentages as reliable indicators of our profitability. They’re remarkably consistent, so if one of the percentages slips out of variance, my curiosity is piqued, and I look for the explanation. I even post the percentages for my staff to see. They take pride in hitting our target cost percentages.”
At a high volume college bar like Balboa Cafe, speed of service and theft are constantly on McCullough’s mind. “When I learned about tracking bartender productivity, the idea just clicked with me. So now I calculate their sales per hour for every shift and use that as a running basis for comparison.”
According to McCullough, it didn’t take long for interesting patterns to develop. The figures showed which bartenders consistently registered the highest sales per hour and cast suspicion on several individuals who regularly fell short of the staff average. “Once I saw those patterns, we started to watch a few of the bartenders more closely, and it became apparent why their sales figures were so low. They were ripping us off.”
Al Ferrone also believes in tracking staff productivity, but he focuses on sales per hour during peak hours. “I think analyzing staff performance during prime hours is a highly revealing statistic. That critical period of time affords us an opportunity to analyze employee performance on a level playing field. It reveals volumes about their level of technical proficiency, their sales abilities and their cash handling propriety.”
“We see so many operations, chains included, that haven’t updated their beverage programs in 15 years,” says Rick Fogel of Bar Starz. “Their bar menus and specialty drinks are old and tired. Drinking trends change. New, interesting products enter the market; others drop out of fashion. It’s vital in this industry to stay fresh and keep pace of what people want. Innovation is the key to developing a dynamic beverage program.”
Beverage innovations are Mac Gregory’s stock and trade. Beverage manager of the upscale Hyatt Regency Scottsdale at Gainey Ranch, Gregory is responsible for, among other things, developing seasonal specialties for the resort’s numerous outlets. “We cater to a discriminating clientele from around the world, so our signature drinks must be enticing and truly unique.”
Creativity alone is not necessarily enough to breathe life into a beverage program. Once you create outstanding signature drinks, it’s important to announce your success. Gregory is an advocate of stimulating sales through on-premise marketing. He frequently changes the look of the back bar displays and insists that bartenders keep all labels facing the guests.
“We’ve also had particular success promoting our business from within. We use table menus in the various lounges to market our specialty drinks, top-end spirits and varietal wines by the glass. The menus are seasonally oriented and in keeping with the decor and motif of the outlet,” he explains. “The sales of whatever we actively promote increases sometimes over 100%. Not marketing from within is like leaving money on the table, and in this business, that’s a serious mistake.”
A. S. Crockett is a writer and food and beverage consultant. He lives in New York City.