There are three main areas of costs that should be the biggest concerns when owning a bar: labor cost, food cost, and beverage cost. In financial terms, these costs are considered a variable, which means that they can change daily, weekly, monthly and yearly. There are fixed costs associated with operating a successful bar, but those are easy to monitor and rarely ever change on a daily or weekly level.
The key to being successful in such a competitive industry is managing the costs and bringing in as much revenue as possible. When so many things are hard to control, learning even the smallest cost-saving tips can make a huge difference. Bar waste incorporates a variety of different aspects that can all add up individually to make a huge impact on your profits at the end of each night.
Beverage costs and bar waste fall somewhere between labor and food, in terms of manageability and degree of control, but by no means is it easy to do. A shocking, key statistic when it comes to beer at your bar (if you serve draft), is that as much as 20% of the profits from a keg of draft beer is wasted. The price of beer is relatively low per ounce, so think of how much money you might be losing from wine and liquor.
Spills, over-pouring, free drinks, and inventory management are just a few of the aspects of bar operations that are very hard to control. These aspects are all related to the behavior of your employees, and if you have the wrong employees, your costs can go through the roof very quickly. Here is a closer look at the top reasons why.
Why are your profits hurting from bar waste?
Unresearched Tap Lineups
When it comes to beer, there is a set length of time that it remains “good” in a keg before it loses its carbonation and flavor. If you and your bar managers are making random selections or taking the word of beer reps for your beer taps, you may find that some of your beer goes bad before selling it. Understand your customers and build your tap lineup to offer a variety of beer, to accommodate your patrons. Buying a keg of beer that doesn’t fit your clientele will likely result in large amounts of beer being thrown out.
Not only is foam unappealing to your customer, but it is the cause of a lot of waste. Nearly 25% of beer foam is actually drinkable beer but is wasted. Check the CO2 regulator pressure, make sure it is set in the right setting, in order to avoid producing foamy beer.
Also, the right temperature causes excess carbon dioxide to be released from the beer, which results in extra foam. Keeping your kegs at the right pressure and temperature to control for foam, can dramatically improve the quality of beer, satisfaction of your customers, and bottom line profits.
Your pricing strategy may not be as economical as you think, but you’re unsure of how to fix it? Craft beer is much more expensive per ounce than one of the main commercial lager’s, which means that it might be more difficult to sell. Just like any consumer product, the optimal price point is going to be where most customers buy the product at the highest profit value.
The key to this approach is pricing your beer and drinks by the ounce. You know exactly how many ounces of beer, wine or liquor are in each, and you know the cost per ounce, so it is easy to set your profit margin based on the ounces. This will lead your drinks away from being priced at $4, $4.50, $5, etc. and be more exact like $6.35, to make sure that each drink is hitting the desired profit margin. This strategy yields higher profits, selling as it should, and less waste.
Free Drinks Management
Handouts, overpours, and theft are the biggest drains on profits when it comes to running a bar. Theft can be employees helping themselves to drinks, pouring more expensive drinks and ringing up cheaper ones, or just not entering drinks that they hand out. It may seem that employee behavior can be difficult to monitor, but Glimpse has developed a POS-integrated solution to help identify profit killing behavior by your employees.
When it comes to managing inventory, it is more of an art than a skill (unless you are fortunate enough to have a system that tracks every ounce that is poured in real-time), and poor inventory management can lead to a lot of consequences, resulting in dollars wasted. Without having a good handle of the variance between the ounces of alcohol that you pay for, versus the ounces of alcohol sold, you could be losing large amounts of money without even knowing.
At Glimpse, we have developed the perfect solution for your bar and restaurant needs, when it comes to identifying areas of high-risk within your restaurant’s operations such as employee behavior and inventory management. With the help of audited reports provided by us, your management can clearly identify the areas of improvement for each employee or identify high-performing individuals on the team.
Let Glimpse help your bar increase actualized revenue while minimizing the costs associated with running a bar. Not all costs can be controlled, but by focusing on the ones that you can control will make a noticeable monetary impact. To see how Glimpse can efficiently help you manage your bar inventory, and identify other areas of high-risk, visit our website today, and schedule your free demo.