Restaurant Profitability Blog

5 Ways You’re Running Your Bar Into The Ground

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You thought that adding a bar to your business was going to be fun.

Maybe even easy.

Perhaps you were reminiscing about those crazy nights out in your 20s… Or all the good times you’ve had at your neighborhood watering hole.

Or you’ve been blown away by the craft beer movement, or inspired to create a swanky cocktail lounge. It made sense though, right?

The bar is a great spot for customers to enjoy a new cocktail, spend time with friends, wait for a table, watch the game, and even meet new people. And hey, maybe your bar is doing very well.

But is it running as efficiently as it could? You realized pretty quickly that running a bar is definitely NOT easy – and it’s a totally different beast than running a restaurant. Sure, the moving parts feel similar, but it’s not quite the same.

When you’re running a bar, there are a lot of new things to focus on. And that means even more room for slip-ups and bad habits. If you aren’t careful, the bar can drain your cash faster than your regulars can drain their glasses. Get a handle on your bar business, or it will be the last call…permanently.

You don’t need to panic.

Check out the 5 Ways You’re Running Your Bar Into the Ground, and our advice on how to fix them. Live ‘em, learn ‘em, and run that successful bar you’ve always dreamed of.

1. Weak Links in Your Staff

You’ve got too much going on to check every detail, but you’ve noticed that your bottles are running dry faster than usual, and your sales don’t show why. The problem could be on your staff.

But how can you spot one of these weak links in your team?

First, check your training program. Are you providing your new hires with ample training to avoid unnecessary slip-ups? A newbie bartender can make some costly mistakes…without even realizing it. Haphazard pours can lead to spillage, overuse, and wasted inventory. At the other end of the bar, a veteran bartender can make some heavy-handed pours, blowing through your booze and drying up your profits. It may seem like a few ounces here and there is no big deal. But when a bartender eyeballs it, or “free pours”, those few ounces can add up big time in shrinkage costs.

In this case, it’s a bit less about training and bit more about knowledge of the proper drink proportions (and sticking with them).

Another question to ask yourself about your bartenders: Are they giving away too many free drinks? A drink or two on the house isn’t a bad thing…it’s called customer service. But too many comped drinks on a regular basis? You’ve got a problem. Your POS numbers will be totally out of whack, so you’re ordering more bottles without the dollars to back it up.

On top of all this? There’s a chance your staff might be stealing from you. If your team doesn’t feel supported, maybe they won’t feel so guilty taking a little booze home. 

SOLUTION: Maintain a constant, ongoing training program.

  • Don’t just send a bartender out into the jungle without at least 1-2 days of training. Build a program that teaches proper techniques and tricks.
  • Train on pours and randomly test bartenders to keep good habits in check. Keep it fun, though. Turn training into a game or competition, and offer some rewards to sweeten the deal. This will keep your staff involved, smiling, and pouring correctly.
  • Those company policies you wrote and forgot about? Keep them updated, and stress the importance of accurate numbers and consistent pours.
  • Make your staff feel like a part of the business to boost morale. Satisfied employees are way more likely to be honest and care about your business.

2. Your Marketing May Not Be As Effective As You Thought

So, you’ve got a happy hour. Great! So does every other bar in town. Sure, it’ll work sometimes. 

That’s enough to keep the business flowing. But, happy hours don’t showcase the things that make your bar special or unique.  It’s just a discount on booze, which means less cash per customer.

You’ve probably also got a website and some social media pages. When’s the last time you updated them? Have you ever even done any advertising?

If the answer is no, you’ve got some changes to make.  it’s a good idea to update your social profiles to look relevant, and some ads and promoted posts could reach new customers that hadn’t considered your bar before.

SOLUTION: Get creative with your marketing.

  • Try putting a triangle board outside with witty sayings that make you stand out. People will remember it and start to look forward to reading them.
  • Here are 40 examples to get your creative taps flowing.
  • Find new ways to get people in the door and at the bar: Create special menus and host special events. Rake in the bucks by establishing partnerships with local companies and sports leagues.
  • It’s the 21st century – get with the times. Update your website, your Facebook page, your Instagram page, and everything else. Post your specials, take photos, share your events. Get your patrons involved too, and create a hashtag for your brand.

3. You’re Disorganized

Bars love to show off their wide array of bottles behind the bar – and most have almost 120 different liquors on the shelf. Sure, it looks cool to color-coordinate, but is there a method behind the madness? If your bottles aren’t organized well, it makes life brutal when it’s time to do a count. Be ready to tack on a few extra hours just to sort through it all.

Not only that, but when the bar is busy, your bartenders might have a hard time finding what they need when they need it. When time means money, why make your staff hunt for a specific liquor and keep customers waiting? 

SOLUTION: Organize your liquors by volume.

  • Keep your 10-12 “highest volume” liquors in one easy-to-access place. They’re going to account for 60-80% of your spend, so it’s good to know where they are.
  • Plus, if you want to know your usage, you’ll have to count ‘em every week. It’ll also make things easier when orders arrive, especially when you’re ordering multiple cases.
  • Keep your 60+ “mid-volume” bottles in another spot. These you order about every other week, and they should be pretty easy to spot.
  • Find a home for your 40 or so “low volume” drinks. They’re more expensive, and you’re only ordering them about twice a year… And not serving them often, either

4. Price-blindness on Booze

Are you tracking the costs of all your booze?

Blindly buying liquor, beer, and wine can be a costly bad habit. It’s a pain to keep track of all the numbers, for sure.

But, keeping tabs on your costs will make you smart about your pricing and your profits.

Unfortunately, suppliers might try to take advantage of the fact that you’re ignoring your pricing. But when you ignore the costs on a regular basis, how will you know if you’re being taken for a ride?

First, there’s price creep. You negotiated with a vendor to get a better cost. Before long, that cost starts to rise back up to where it was…maybe even higher. The rise is slow enough that you might not notice it at all… which is exactly what the vendors are banking on.

Then, there are price spikes. Out of nowhere, you find out you’re paying 15% more than you were a month ago. We’re guessing that your supplier didn’t call you up to tell you about that increase… When you aren’t keeping tabs of your spend, you run the risk of getting stiffed.

SOLUTION: Follow price trends and keep track of your costs. Or, just get technology that will do it for you.

You’re working crazy hours and your to-do list is endless. Hiring and training bartenders. Planning your craft beer list. Ordering new barstools. Fixing the leak in the men’s bathroom. Purchase orders. Payroll. Marketing…it goes on and on.

That doesn’t leave a lot of room to monitor your costs, even though it’s extremely important. You can’t do it all…and you don’t have to. That’s where technology comes in. Find a solution that does the work for you so you can call the shots. No more shady suppliers.

5. Not Paying Attention to your Variance 

Let’s talk about variance.

Basically, it’s the difference between what you actually have and what you thought you had. Your variance is related to your portions and your loss. Just like in a restaurant setting, you need to know what ingredients to check so you can figure out individual problems.

The bottom line IS your bottom line…managing variance is crucial to profitability. Focus on alcohol usage to size up your variance, especially for your key, high-volume ingredients. That’s right, you don’t have to measure EVERYTHING every time. Also, keep in mind that liquor and beer are totally different.

For liquor, pay close attention to the portioning, or how much your bartenders are pouring. This is where you can find those heavy-handed bartenders we talked about. Better portioned drinks not only taste better, but it will keep your variance in check.

For beer, it’s all about the loss. Sloppy pours can lead to too many spills. Or maybe your problem is too many free pints. If you’re going through more kegs without the sales to support it, you’ll have to do some investigating.

SOLUTION: Pay attention to those high-usage items. That’s what you’re ordering constantly.

Worrying about counting a liquor you only order twice a year is a waste of your time. It just doesn’t make sense. Instead, target your popular drinks – your well vodkas, basic bourbons, and light beers. That’s where the big impact on your revenues can lie.

It’s called Pareto’s Law, or the 80/20 rule. You count the top 20% of your inventory (those items) because they account for 80% of your costs.

Pareto’s Law helps you focus on a smaller amount of booze that takes up more of your spending costs. But don’t forget you’re still managing an entire bar. You can’t totally ignore those expensive liquors, either. Keep them locked up to protect your high-spend spirits from theft, breakage, or spillage. And give them a count every now and then. 

Conclusion: Save your Money and Save Your Bar

Like we said…managing a bar isn’t all fun. It’s a tough business.

The good news is, there are some simple solutions to all the ways a bar can fail. And Orderly can help with almost all of them.

We can’t write your next marketing slogan…or train your bartenders on mixology. But we DO provide the tools to help make your bar pay off. Just like in your restaurant, your bar’s Cost of Goods Sold is essential to knowing your restaurant’s health. To get your COGS reports, all you have to do is snap your invoices and enter your sales.

That’s it. It’s, dare we say…easy? Then, the Orderly app gives you a report on how your COGS has changed over the last few weeks. It can even help guide you on your orders. Orderly takes care of your restaurant, too. 

We’re in the business of making you money, both in the kitchen and behind the bar. With just one, easy-to-use service.

Oh, and when you need to know your booze usage, you don’t have to stand behind the bar for hours and hours counting every week. The only thing you’re counting weekly is your high-volume drinks. You’ll rotate counting all the other ones – giving you back your wasted time. Based on your use and the last time you ordered, we provide the information you need to better manage orders.

This saves you time and dollars, and a bit of sanity. Did we mention you can start on the house?

Download the Orderly App for FREE.

Danny Barry5 Ways You’re Running Your Bar Into The Ground

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