- Going from table to table to greet guests every day
- Updating your food and beverage menus seasonally
- Creating fun, attention-grabbing marketing inside your establishment (four walls marketing)
- Inspiring your staff to smile, remember guests’ names and upsell.
- Fixing any seating/bar/waiting areas that are too hot, too cold, too noisy or dirty.
- Upgrading your music and entertainment
- Making your website mobile friendly
Thanks to Nightclub.com for these great ideas. My top recommendation to my clients is #10 followed by #4, #7 and #9.
Often times, it’s the little things that end up causing bars and restaurants to fail. Here’s a list of ten common mistakes, errors, and overlooked areas that can quickly turn a bar’s finances into a nightmare.
1. Choosing the wrong (or mismatched) Pour Spouts – Brand, shape, speed, size, quality. Many spirit brands—even ones commonly found in speed racks—have oddly-sized mouths on their bottles, and even though the pour spout may appear to fit snugly, you can lose up to a quarter of an ounce each pour if you aren’t careful about leakage. But first, make sure you’re using a quality pour spout. I recommend the Spill-Stop 285-50 black and chrome model.
How to fix it:
- You may need to ditch the pour spout on certain liquor brands, and jigger pour only.
- Make sure to soak all of your pour spouts in hot water before use, and then every week after that. This will keep the rubber expanded, pliable, and formed—thus creating a better seal in the neck of the bottle. It may be necessary to buy a separate, larger model of the 285-60 for big-mouth bottles such as Don Julio.
- Time and test your spouts for consistency, accuracy, and defect. A perfect 1.5 oz pour can be achieved with the 285-50 using a six-beat count, with each beat being a quarter ounce.
- Use ONE standard type of pour spout. You don’t want your bartenders to have to change their count systems every time they pick up a bottle.
2. Stocking mammoth glasses behind the bar (huge martini/cocktail glasses) – Gone, for the most part, are the days of the gargantuan 32 oz margarita glasses—but some bars still employ large, attractive cocktail glasses that encourage bartenders to over-pour in order to compensate. If bartenders are consistently coming up short with their recipes, they will do what they have to in order to keep the customer happy.
How to fix it:
- Keep your glassware within reasonable size… no one needs to stock a martini or cocktail glass over 8 oz.
- Likewise, why have a Collins glass that is 15 oz? A standard Collins recipe has about 5 oz of liquid in it; that should be fine for a 12 oz glass with ice. No one needs 8 oz of booze in a drink.
- Train your bartenders on standardized, balanced cocktail recipes and insist that they use the correct glassware to make those drinks (i.e. don’t let them put every drink they make into a pint glass).
3. Failure to review invoice changes – The liquor business—pricing, in particular—is extremely fluid and subject to mind-blowing changes overnight. Many distributors favor the technique of offering a product at a much higher frontline price, and then adding commensurate value through free goods. This doesn’t always work in your favor, especially if you run a smaller establishment. Similarly, you could be selling Product A for months at a price way lower than it should be, because you assumed that you were receiving it at $20.00, when in fact it was $26.00. After about a week, many distributors are prohibited by policy or law to make any returns, exchanges, or further adjustments.
How to fix it:
- Invoices should be reviewed at the time of reception, and also the day afterwards to insure that all deals, best pricing is achieved.
4. Arbitrarily pricing—and undervaluing—inventory – Know your market and your establishment. The liquor business is not just an art or a craft… it’s also a business. Business demands a profit, and one sure-fire way not to make one is to undervalue your inventory. Countless bars across America serves drinks that are priced without rhyme, reason, or consideration of margin or cost. Each and every item and its price must be approached with the welfare of the business in mind; however, you must also consider the value that you offer your customers. Bars in lower-income demographics need to make sure not to price themselves out of the neighborhood, but should look to get every penny of return possible.
How to fix it:
- Take note of what your competition is pricing their products at, and take note of what your expected COGS percentages are, and make calculated decisions on how to create your pricing structure (and stick to it). By all means, offer specials and features, but don’t get carried away with pricing new products lower just because you don’t think they’ll sell well. If you don’t think they’re going to sell, and you can’t sell them for what they are worth, then why are you carrying them? Too often establishments arbitrarily price a product without doing the actual math on the cost percentages, and over time (and with enough products) this can erase profits.
- If you do not use a POS system, train your staff on the correct, up-to-date pricing of all the drinks. If need be, keep laminated pricing sheets near the cash register to avoid confusion. Regularly audit their actions to make sure they aren’t undercharging for your top-shelf products.
5. Providing an inaccurate POS system – What’s the point of spending money on a POS system if it isn’t correct? You might as well just drag out the old-school cash registers and hand-written checks and save yourself $25,000. A well-configured, accurate POS system can provide invaluable product mix data and increase register receipts. In other words, do what it’s supposed to do. An inaccurate POS will be the bane of your staff’s existence, and will end up costing you your sanity as well as any profit you might’ve made.
How to fix it:
- Ensure that all of your items are in the system and correctly priced, and eliminate any reason for employees to use “open liquor” items.
- Train management staff to use the back of the house POS access and have them review Product Mix data on a nightly basis to look for irregularities, but also to get a better snapshot of how the business actually works. Make updating the POS a daily part of every manager’s job.
- Select an easy-to-program POS system like the new iPad-based Breadcrumb POS or, for those who have more experience, a tried-and-tested system like Aloha.
6. Improper recording of spillage – Without tracking waste, bar managers and owners have no way to determine where they are losing money. This phantom percentage, if it goes unchecked, can cause businesses to continue bad practices and leak money without recourse.
How to fix it:
- It’s easy to remedy this one if you have a POS; simply ring in the items that get wasted. If you don’t use a POS, then a detailed waste spreadsheet (with cost per unit) needs to be created and kept at all points of sale.
7. Bad Specials – In this day and age, it is no longer feasible to run “$2 U-Call-It” specials. The pour cost on most liquor these days is in excess of $0.60 a shot, and your average beer is well over $1.00 per pint. These costs render profit margins during those “loss-leader” times are nearly non-existent, and they only bring in ultra-frugal clientele who won’t be good for your business the rest of the time.
How to fix it:
- Look to offer specials that discount premium products and appeal to the widest variety of your customers. Also, try and make sure you aren’t losing money on them. A good return of profit on a special should be at least $2.00
8. Over-garnishing – In bars that serve a large quantities of “micheladas” and Bloody Mary type cocktails, over-garnishing can be a serious drain on finances. Unbelievable as it seems, a single maraschino cherry or olive can cost owners $0.14-$0.17, which is more than some bars pay per oz for their well liquor. This can add up quickly.
How to fix it:
- Don’t let your customers graze on the fruit trays
- Create an upcharge for extra olives, cherries, cocktail onions etc. They aren’t free bar snacks, and should not be treated as such.
9. Failure to factor non-alcoholic product cost into pricing – Energy drinks, ginger beer, fresh juices, purees… the bar world is awash in these great additions to any drink—but at a cost. An average energy drink costs between $1.25 and $1.50 for an 8-ounce can, meaning that you’ll likely only get two servings out of each can. That is more expensive than the liquor that is going into the drink. If you fail to charge appropriately for these additions, you’ll soon find your profit margins disappear… you might even end up losing money on a specials night.
How to fix it:
- Individually cost out your mixers by the ounce, determine how much of each will be going into drink recipes, and develop an ideal profit margin on each serving. Then charge for it.
10. Habitually Under-staffing – This is a problem that it seems nearly every bar goes through during some phase of its existence. Many bars try and cut payroll, seeing it (rightfully) one of the most crucial costs to control. But understaffing can have an even more negative effect; without the appropriate staff, you simply cannot make the money you should be making. Customers will walk away unhappy in droves.
How to fix it:
- Make a calendar of last year’s sales and use it when scheduling to determine what you should expect this year.
- Staff heavier then cut appropriately. You never know when you could get popped.
By Aaron A DeFeo, April 23, 2013
If you want to open a successful new bar or nightclub, or want ideas to improve your existing establishment, look to the best music festival, Chicago’s Lollapalooza, for inspiration. It’s a giant version of everything that makes a nightclub or bar popular and durable.
I live in Chicago and never miss this fest. I love the music of course, but being in the nightclub and bar business I am impressed with every aspect of how this event is created and executed. It’s a pleasure to experience. Here are 5 key things we in the bar and nightclub business can learn from Lollapalooza:
Friendly, fast service creates loyalty and profits.
Notice I said “Friendly” before “Fast.” Fast gets money in the till and is vital. But Friendly AND Fast makes the customer feel good and builds loyalty. Making people feel good about spending their money is the route to truly impressive profits and longevity! Lollapalooza pays greeters at the entrance just to welcome customers and get them fired up about the event. Keep in mind this is a sold out event and everyone walking up has already paid their admission! Still the fest makes extra effort to welcome their guests. There is zero arrogant attitude throughout the entire event! We get more smiles and chat at the gates, food and drink stations and vendor booths at Lollapalooza than at 90% of the bars and nightclubs I’ve visited. What’s wrong with that picture? If a huge pre-sold show can be friendly, how much more valuable would relentless friendliness be for a bar or nightclub where the money is still in the customers’ pockets when they walk in the door! Sure, Lolla is a huge festival so you are bound to have some lines for restrooms, food, drinks and other discomforts, but in all my years of going to shows and festivals, and also night clubs, I have never seen anyone do a better job of minimizing inconveniences and making the waiting and purchasing experience as pleasant as possible. Their efforts pay off.
Excelling at entertainment is worth it.
Lollapalooza could probably book half the acts it does and still sell out. It could probably make plenty of money as a big rave with all DJs and be a lot simpler to execute. Or they could feature only the top bands and still do well. Lollapalooza over delivers with a wide variety of top acts and hot newcomers in multiple musical genres, and also adds a farmers market and many vendor booths with a wide range of entertaining customer experiences (and shopping opportunities of course). When was the last time you visited a local bar or nightclub where the entertainment was better than just “OK?” When have you seen a local DJ or opener that injected obvious, unique energy into a room? How often do you see unusual entertainment options for bar customers to have fun and interact?
When we opened Vision night club in Chicago (2002-2012) I noticed right away that we made the most money when we had the most “expensive” DJs and the largest variety of entertainment options within the building. The most unprofitable nights were when we skimped. Over 10 years of bookings that trend remained consistent. Of course you have to book wisely and not waste money. But superlative entertainment tends to more than pay for itself, building customer loyalty and a reputation that leads to longevity – the hardest thing to achieve in the hospitality business. This applies not just to big venues, but also down to the simplest corner bar avoiding lazy music programming. BONUS: Since most bars and nightclubs don’t invest in entertainment excellence, it’s a prime neglected opportunity to beat the competition.
Adapt to succeed.
Lollapalooza started out as a traveling rock festival. With the rise of single location fests such as Coachella and Bonnaroo (not to mention fuel prices), Lolla changed with the times and became a single location festival. But it did not simply mimic, it actually improved the new model by placing the fest in a vibrant urban area instead of a country field. We live in a time of rapid change. In the businesses I own, I have changed 80% of our marketing and business practices over the past 5 years. How many bars and nightclubs can say they have kept up with their changing customers and maxed new marketing, entertainment and operational options? This is an opportunity for big profits for the few bars and nightclub willing to do the work to adapt and excel.
The Vibe erases all sins.
Sure, we had to wait in line for porta-potties. Sure the food was expensive. We didn’t like every musical act. There was some mud. Last year it rained. You can only get the sponsors’ liquor and beverage brands at the bars. Hey, some people threw up on the sidewalk. The friendly, comfortable, welcoming vibe turns all those irritations into footnotes. At Lollapalooza, guests are made to feel so comfortable they smile when bumping into each other, happily step over mud and garbage, and have fun conversations in the restroom lines with people they have nothing in common with. We are older than most Lolla goers and never feel awkward. I’m sure with 200,000 people there are a few incidents, but in all the years I’ve seen minimal negativity. A positive vibe rules, created by the Lollapalooza team. Ever been to a nightclub or bar where you were packed in like sardines, had to wait for a drink, maybe the music was not to your taste, but you had a great time anyway and felt you were in the place to be? That’s the Vibe, and as operators that’s our pot of gold.
Systems, more than people, are the key to success.
How do they do it? Where does this great vibe come from? As good as their people may be, it’s their systems that enable excellence. Nightclub and bar professionals please think about the following as it applies to our business. Lollapalooza does not have 3 genius owners that everyone has to speak with to decide every issue that arises. It’s obvious that festival management does not wait for problems to happen, they anticipate and pre-train their team to deal with issues quickly and properly. They don’t “wing it.” They train and practice. They train and practice. They plan extremely well as a group and then stick to the plan. But it’s also obvious the fest’s systems are flexible, constantly evaluated in an organized, thoughtful way. You see changes each year, such as this year’s new double entry line configuration for those with and without bags.
They clearly hire experts in each area and respect their expertise. Qualified specialists masterfully manage all inventory, money, staffing, entertainment, security, staging, food, beverage and traffic flow. Perry Ferrell does not decide the day before the fest that he’d like to move his “Perry Stage” to another part of the park cause he’s the boss. He sets the overall theme and goals and lets everyone do what they are best at. It’s business organization, control and customer centered execution at its best.
I like the music at Lollapalooza but I love their system. It’s a thing of beauty, and an inspiration to all of us in the hospitality business.