When people first get into bar ownership, there’s no instruction manual for how to manage the finances of a company.
Not everyone builds a bar from scratch. If you’re in the market to buy a bar that’s already been built, you need to know what to look for to improve your odds of a successful start in this business.
A wise bar operator once told me, “any schmuck can put together a liquor order, but a smart bar manager knows the fine line of ordering enough so they never run out of anything, but never unnecessarily purchase too much inventory and have money tied up in stock that does not sell.”
When I was given this advice, I was managing a bar with approximately $150 to $200K in liquor, draft and bottled beer sales a week. My weekly liquor order would vary from $30 – $50K a week depending on what was going on. It was one of the biggest expenses of the bar. The raw size of the liquor order made it a huge concern for the owners, who wanted to make sure it was done right every week. Every week was challenge to find a balance between making sure stock was always where it needed to be so we never ran out of anything, but also not to over spend. Over spending could have meant thousands of dollars tied up in inventory that the business could have used elsewhere.
Whether printed or emailed, many companies regularly publish newsletters in the hopes of getting customers returning for repeat business. But what differentiates an average newsletter that gets grouped with the junk mail from a great newsletter that earns its place in the “A” pile of mail? The content that a newsletter contains is the main factor that determines readership by those to whom it is sent. Plain, boring and vanilla content gets skipped over and tossed into the garbage with the rest of the junk mail.
Most operators do not collect their customers’ contact information, nor do they have a follow up strategy to continuously communicate with customers outside of their nightclub or bar. The strategy of keeping a list of your present customers is the easiest, fastest and most cost effective way to get new customers into your bar. After all, your present customers have a positive opinion of you, know who you are, and are more responsive to marketing messages from you. Operators who are vigilant about incorporating some form of list building and execute regular follow-ups reap many benefits from doing so.
With constantly increasing prices on beer and spirits, many operators are expanding upwards into their supply chains to keep their costs in check, and profits high. This strategy is largely dependent on the rules local governments have over the production, control and sale of products produced in house. In Alberta, the province I reside, recent changes in the laws regarding minimum brewing requirements have opened the door for producers to become producers for very little start up costs from what they were in the past.
When a company grows to a certain size, the way its employees are managed must also evolve. Many bar operators start out as the sole owner/operator of their business, and they often fill a labor role while they pursue opportunities to expand, open new venues, and create more value. This provides the owners with some level of assurance that things will be done a certain way because they are physically there overseeing operations. However, when a business starts expanding into different cities, success is less determined by the abilities of the owner and is more so about the abilities of the people hired. Despite the input from some management consultants who theorize about what makes good managers, bar management must be approached in a sometimes unconventional way due to the unique nature of a bar or nightclub environment.
Competition in the market has become fiercer than ever, so it is of upmost importance to operators that they ensure their customer service is of the highest quality. Delivering exceptional customer service is more than just making sure that food and drinks get out on time. Exceptional customer service is about going the extra mile and being ultra sensitive to guest needs. This becomes particularly challenging as your organization grows to include multiple venues, and it becomes nearly impossible for the owners to keep tabs on how their staffs are performing on a day-to-day basis with each guest.
Growing nightclubs and bars with complex product needs require managers with above-average skills in the areas of organization, communication and judgement. When a busy venue has multiple bookings, and each booking has special needs that must be met, a liquor manager who is tuned into the requirements of the business is absolutely vital. Keeping track of a busy venue’s liquor inventory requirements can be extremely challenging.
Two of the biggest challenges in the hospitality industry are the management of people and ensuring employees are doing the tasks they have been assigned with high-quality results. Bar and nightclub operations require a large amount of people, each with different personalities, backgrounds and work habits. It can be incredibly difficult to manage a large amount of people, particularly as a business is growing rapidly and recruiting new people.
Violence can absolutely destroy a bar or nightclub operation. When a bar is mentioned in the news due to a violent or deadly altercation, its demise is usually not far behind. Any time an atmosphere of fear is associated with a bar’s name, it becomes very difficult to attract quality guests and build a sustainable business. While it is impossible to eliminate all violence, it is entirely possible to minimize it by taking as many preventative steps as possible.
Employees can be a tremendous source for new customers, referrals and customer retention. However, not every employee invests their time into promoting the business they work for. What separates employees that simply show up to work, from those whom invest their time and energy into building relationships that ultimately result in more customers? The employees that bring down the most customers to their bar are motivated by more than money. They are fired up, proud and passionate about the bar they work at. This attitude does not happen by accident. Employees that have a positive attitude towards the bar they work at become that way as a result of the work environment the owners create. Keeping staff morale high is a strategy that is no different than a recipe for baking a cake.
Tough economic times have operators scrambling for ways to cut back on costs. With overall demand down and costs rising for some products like spirits and food, finding ways to reduce expenditures is no longer an option for operators, it’s a must. While good times always follow bad times, there is no way to tell how long economic dry spells will last. Weathering a financial storm always starts with a good, hard look at expenses, and then streamlining where possible.
Many bar operators do not collect their customers contact information for their restaurant marketing program, nor do they have a follow-up strategy to communicate continuously with their clients outside of the restaurant or bar. The policy of keeping a list of your present customers email address and preferences is a cost effective way to increase sales and get new customers into your bar. Here are three reasons why you need to keep an internal list of all your regular guests and start marketing directly to them:
To get people talking about your bar, embrace an approach to social media that goes beyond the occasional Facebook post or tweet that their daily lunch special is now available. After all, social media is no longer the new technology. Today it seems everyone is on social media, fighting for what little attention remains in a world of digital noise. How does an operator use social media to stand out above and beyond the competition? Here are three ideas to use social media to promote your bar and get your message heard.
Liquor control systems vary in techniques and methods but the ones that work best identify the differences between units used and units sold, otherwise known as variance.
Variance reports allow operators to identify where they are losing product and how they can make improvements. However, not every operator that uses variance reports is successful in eliminating losses to shrinkage.
In fact, there are many operators that have extremely sophisticated bar inventory control tools that still suffer unnecessary losses. The tools by themselves are clearly not the only answer.