Category Archives for "Bar Management 101"

10 Must Ask Interview Questions For Hiring the Perfect Server or Bartender

Here’s a fact: In the past three years I have asked approximately 50 owners and managers what their #1 pain point is in running their business. I’d say 45 of those 50 stated that managing and motivating employees was their top pain-in-the-ass issue that they wish would just go away.

If you are an owner or manager, you are nodding your head right now with a bitter sneer because we’ve all had to manager those employees that drive us insane.

“Really? You didn’t notice that table six’s Cokes have been empty for 10 minutes? You weren’t sure if it was your job to refill all the ketchups before you left?  Tell me again how much you hate kids because they’re messy, and about the 10% tip you received. And if you could please, please, please explain to me how it is that you’re entitled to a 25% tip every time someone sits at your table based on the impressive way you stand there and text your boyfriend, I would LOVE to hear it.”

(By the way, I’m aware that bitching about people who bitch is both an oxymoron and hypocritical, yet I choose to ignore it because it’s my blog).

THE BAD NEWS & THE GOOD

The bad news: the turnover rate in the hospitality industry is 85% higher than other industries, mostly because bussers, servers and bartenders are just stopping off on their way to a “real” career, and also because a lot of managers simply hire knuckle-heads because they don’t want the hassle of interviewing candidates. Translation: they don’t want to do their jobs properly.

The good news: it doesn’t have to be that way. If you know what you’re doing, finding a good staff is absolutely a reality you can enjoy. The key is to hire better so that you can hire less, and in the process you will have fewer ass pains in the day-to-day operations of your business.

After all, this is your front line. These are the people who are marketing your business and building its reputation. No matter how good YOU are with people, you’re only one person. Everyone needs to be putting a good face on the business or it will get branded with a black-eye, and those are very hard to come back from.

So, the better you get at asking the right questions, the better you will be at finding the cream of the crop employees, which leads to the less turnover and less interviews.  But make no mistake about it, hiring is just a way of life in this industry, so stop whining, hike up your big girl panties and get over it.

THE 10 INTERVIEW QUESTIONS TO HELP YOU FIND THAT PERFECT EMPLOYEE

I am now going to give you my best interview questions that I have crafted and chiseled over time until I found what works. You are welcome to form your own, and you can too, as long as you follow this one philosophy: Create questions that reveal the candidates personality and level of empathy. DO NOT ask the same canned questions you find on the Internet that are geared toward experience and things like, “If your last boss were to describe you with three adjectives, what would they be?”  ARRRRGGHHHH! Lame!

Remember, personality is king, with intelligence and hard-work close behind.

1. Who is your best friend? Why is she (he) your best friend?

Seems like an odd question, but here we are looking for statements of caring, sentiment, a big heart, and perhaps some story telling ability. Do his/her eyes light up with passion and love? Or are they like a deer in the headlights? We want to see if they can carry a conversation here.

2. What excites you about this business or this industry? Why did you choose it?

This business can often be perceived as “beneath” real jobs and careers, so I often see candidates show some hesitation about declaring their excitement about serving food and drinks. We want to see if they come back with a positive response or if they show any hesitation. Throw the hesitaters out.

3. You have a guest who is angry with the service/food/music, etc. and claims they won’t be coming back. How do you solve this issue?

Any situational question is good because we can test their common sense and experience at the same time.

4. What’s something you have done in your life that you are particularly proud of?

This one is a bit cliche, but it’s still a good one. We want to see how confident they are sharing things about themselves, and to find out if they’ve ever actually done something noteworthy. If they can’t think of anything, it’s not likely that they are going to start doing noteworthy things at your bar/restaurant.

5. When you think about this bar/restaurant, what are your impressions of it? What do you like? What would make it better?

Simliar to #2, but the 3rd question in this set, “What would make it better?” gives you a chance to see if you have a visionary or a thinker on your hands. Anyone who has ideas to make this industry a better place for both the work environment and guests is gold.

6. Why should I hire you as opposed to the 10 other people that are interviewing for this job?

This question has been around forever and should never go away. You are asking them point blank: Sell yourself to me. If they can’t, then they don’t really have that much confidence in themselves and a red light should be flashing bright warning signs to you.

7. What are your aspirations for the future? Do you have a field that you are interested in pursuing or do you have career in mind?

It’s true that you would like to know if they are going to graduate in three months and leave you, but they’re not going to tell you that anyway becaue they want the job. More importantly, this question finds out if they are a motivated person. If they say, “Ummmm, not really sure right now. Just sort of playing it by ear,” tell that person thanks for coming in, now get the hell out.

8. If you saw a fellow employee giving away free drinks or stealing, what would you do?

The #1 problem in bars/restaurants today? Employee theft and dishonesty. This should be a “Who’s buried in Grant’s tomb” question. If they hesitate at all or dance around the question or give you any other answer than, “I would report it directly to you,” then say good day to you and show them the door. Bar dishonesty and conformity is an epidemic that is contagious. Don’t let them in your house.

9. If we hired you, how many people do you think you could get to come in each week? How would you do it?

I recently started using this question because I realized that some of my most valuable employees were the ones bringing people into the bar. It’s like having a built-in ad agency. And it’s free. Many candidates will be thrown by this question, I’ve noticed, but the ones who don’t hesitate aren’t bullshitting. They know how many friends they can get in there, and the idea actually excites them.

10. How do you think you could you make this place more successful?

Another vision question that gets them thinking and talking. If they have a good answer to this question, there is value to be mined here.

My best advice to owners and managers when it comes to the interview is to ask yourself if every question you are prepared to ask gets them talking so you can evaluate their personality and intelligence. Some of the questions you really want to know the answer to (Fellow employee stealing), and some of them are set up to see how they interact with you in a stressful situation.

Best of luck, and cheers, until next time.

The RB

1 Bar and Liquor Inventory App From Bar Patrol

Inventory sucks.  No argument there. And a good inventory system will definitely make it easier so you can run your business more efficiently and profitable, but the problem is that bar and liquor inventory software is sprouting up all over the place, overrunning our industry like a legion of ants converging on a sticky counter top. So where do you begin trying to find the right bar and liquor inventory software for your bar and restaurant?

Since Bar Patrol was founded in 2011, we have seen a couple dozen or so inventory apps/systems emerge during that time and scramble to tell the bar industry how amazing they are, even though the people behind the curtain aren’t necessarily “bar industry legit”. Turns out many of them are just a bunch of Silicon Valley tech geeks jumping on the good idea wagon.

And so how do you choose one that’s right for you? As an owner or manager, implementing new procedures for you and your staff is overwhelming enough, let alone having an array of systems to choose from.

As a result, many of you will eventually throw your hands up in disgust and simply stay with the routine you know and are comfortable with: the old clipboard and tally mark routine. But that’s not good for your business. Or for you.

In the end, you must find a bar liquor and inventory system that is the best fit for you, because all these companies are claiming that their system is the best thing since the Snuggy, which is a total lie because the Snuggy is flat-out awesome.

When it comes down to it, there’s a lot to consider:

Are you a small bar or are you a mega-huge nightclub with 11 satellite bars.

Do you want you something more complex with lots of hardware, including laptops and scanners? Or do you want the ease of a mobile device and app?

Do you need exhaustive analytics that can tell you how many oz. Sally poured 9 seconds ago and the weather report for the next 3 days? Or do you just want to count your inventory faster so you can do your ordering and figure your pour cost percentage? Or somewhere in between?

That’s what I had to figure out when I first founded Bar Patrol and had to determine what type of software I was going to create for me and my clients. And after trying several other systems and software out, and after taking literally thousands of inventories for my business, I still wasn’t sure what owners and managers wanted. And that’s because I thought they wanted and needed their inventory system to have as many features as possible.

As a result, when I first started designing the skeleton of the Bar Patrol App for my developers to create, I told them I wanted it to produce every report you could imagine and integrate with every piece of software that the restaurant industry had to offer and bake me a lasagna while it was at it.

But the more features I added, the more complicated it got and the more difficult it was to train the owners and managers on how to use it (not to mention the cost I was incurring to my developers to have all these features added). Eventually the owners and managers just got frustrated and wouldn’t use it.

So I eventually stopped what I was doing and I got smart. I went out and spoke with more than two dozen owners and managers face-to-face about what they would want in an inventory system, and the same answer kept coming back. 1) They wanted inventory to be faster, 2) They wanted it to be easy to use, and 3) They didn’t want to spend a lot of money to get it. That’s it.

Message received.  And so I went back to the drawing board and came up with the new vision: Fast, simple and affordable.

After all, I realized, we’re bar managers. We’re smart enough, but we’re not accountants or micro-biologists. We have employees to lead and guests to take care of. We don’t have time to figure a bunch of shit out. We just want the systems we use to work and make our lives easier and help us do our jobs better. Is that so much to ask?

When the new app and software was finally finished, I took it back to my clients to try out and I had them use it for a month. At the end of the month, the feedback was very positive. Some of them actually HUGGED me, which is good unless you’re like Rainman and you start screaming at the top of your lungs whenever someone touches you.

Since then, the vision has remained intact. Fast. Simple. Affordable. And that’s the way it should be, considering the mile-long list you have to attend to on a daily basis.

This is not the article to list all of the benefits and features of our app and online system, so if you’d like to learn more, visit Barpatrol.net and see if we’re a good fit for you. After all, that’s the most important factor in any area of life, isn’t it? Your relationships, your clothes, the car you drive, the services you subscribe to…they all have to be a good fit for you.

We all have different tastes and needs, and what works for one person/company does not work for another. So find what works for you, and then take the action to implement it into your business so you can be more successful. And sane. That’s all we can ask for.

Best of luck.

Cheers, until next time,

Dave, The RB

Bar Inventory in 15 Minutes, My Ass!

Partender inventory

I have a standing challenge to any bar inventory software company who claims their app and software can count inventory in 15 minutes: Come do inventory for one of my clients and if you can do it in 15 minutes, I will give you $50,000. I’m not kidding. And not with 6 people using 6 devices. Anyone can do that. It still adds up to 90 minutes of labor and bars aren’t going to have 6 people taking inventory for them.

Why the challenge? Because companies like these are the result of modern-day inflated marketing tactics and an over-exaggeration of the girth they’re carrying under the hood, which always leads to a very unsatisfying experience for the user. This leads me to believe they are compensating for something.

The fact is, inventory software makes counting MUCH faster, it’s true. 50 – 70% faster, which is Awesome with a capital “A”.

But 6 hours to 15 minutes? That’s your claim? Bring it on. I’d love to see that. Can you also sell me a car that takes driving from L.A. to New York from 7 days down to 5 hours? Because it’s the exact same thing.

Here’s the truth: the inventory software you use is simply a tool for counting inventory. Like a hammer. So this would be like promising: Build a house in 3 days using our amazing hammer, but then you come to find out upon viewing the blueprints that the house is the size of a port-a-potty and that in order to build a 2,000 square foot house it will actually take 3 months or 30 guys with 30 hammers (i.e. multiple devices).

I have no problem with creative marketing, but I am extremely wary of who I crawl in bed with when choosing a product or service that I will be relying on for an extended period of time, and when wild promises are made that are direct fabrications, I wonder what else they will promise that they will not deliver on.

Perhaps I’m just being a drama queen. Perhaps I’m over-emotional because my daughter just turned 13 and I’m having sympathy hormones, but I’m all about being upfront about what your client will get and then over-delivering on the promises we make, not under-delivering and then hoping they won’t notice and will keep paying us money every month.

Like I said, $50,000. Standing challenge. Be a company that backs your promises with real action and I will pay up. Will you do the same?

Cheers, until next time,

Dave, The RB

Why is Bar Inventory SO Important? 3 Hard Truths You Need to Look at

I know you really don’t want to open up and read this article, because if you find out just HOW important your bar inventory is, it means you won’t be able to ignore it anymore. And yes, you’ve been ignoring it. That lazy count you do once per month on your clipboard is having the same impact as those shoes you buy that are supposed to shape your butt.

Problem is, everyone thinks that their business is failing for a variety of reasons, and while that is sort of true, there is really only one real reason, and it’s because they choose to ignore the issues that need to most attention.

Neglecting to monitor your inventory will have the same result as leaving your dog in the car with the windows rolled up in July.

Yes, I’m aware that is a very graphic metaphor, and despite the angry PETA emails I will receive, I need this to sink in.

Did you know at 7-Eleven stores that the franchisees are personally responsible for all of their inventory? The franchise head-honchos come in once per month and count everything, and whatever is missing, the franchisee owner has to pay for it out of his/her own pocket. Do you know why?

BECAUSE THEY UNDERSTAND HOW IMPORTANT INVENTORY IS.

In fact, the average losses in the retail industry due to theft and losses is 1 – 2%.

Bar industry? Yep, you already know it. Or you’d better. 25%. You already pay the government 30% in taxes. Why are you allowing your bartenders to bleed another 25%?

I call it the Truffula Tree epidemic. The bartenders keep chopping your profits down until one day you look up and there’s no more green. Instead, your bar is a desolate wasteland of Gluppity-Glup and Schloppity-Schlopp and everyone packs up and goes home because you’re out of business.

HARD TRUTH #1: THE POUR COST PERCENTAGE METHOD SUCKS 

I’ve said it time and time again, but let’s quickly acknowledge again that pour cost % measures your gross profit. That’s it. It does not show what’s missing. With pour cost as your major method of monitoring your bar inventory, it’s like you are looking through a keyhole when it comes to seeing how much your bartenders are raping you.

Bartenders LOVE pour cost % because they can do whatever they want and you won’t be able to pinpoint where the losses are coming from.

HARD TRUTH #2: THE AVERAGE BAR WILL MAKE 2 – 6% OF TOTAL REVENUE  

This is before taxes. That means if your bar brings in $1 Million in sales, you will clear $20,000 – $60,000, and THEN you’ll have to pay taxes. Hell, your bartenders are making $60,000, and 25% of that is supposed to be yours.

HARD TRUTH #3: THE BAR INDUSTRY LOSES $10 BILLION PER YEAR

Yep, since the bartenders are making the rules they’re making the money. If you’re not paying attention to your bar inventory, you can kiss one-fourth of it good-bye. Basically you’re the franchisee guy at 7-Eleven: you too are paying for your lost inventory every month. The only difference is, you don’t have someone coming in and holding your hand out to collect.

Instead, your bartenders are collecting thousands extra per month and pulling up to work in a new Acura.

Yes, I know I’m preaching like a Baptist minister. But the point of this rant is that I know that deep in your soul, you KNOW that tracking your bar inventory is important, and yet you slack on it because it’s a pain-in-the-ass and you don’t want to manage and confront your staff.

So you make excuses that you don’t want to get a better bar inventory system because it’s another expense. But your biggest expense is the money you don’t make. Your current bar inventory system is costing you $50,000 because it doesn’t track what your bartenders are doing, which is ridiculous when you can find a good system for $1,200 – $1,500 per year. That’s ROI you can’t ignore anymore.

What it comes down to is: you can make money or you can make excuses, but you can’t make both.

Cheers, until next time

Dave, The RB

What is Pour Cost Percentage and How to Calculate it

bar management

For those of you new to this whole bar managing thing, or if you’re a bartender who keeps hearing, “Goddammit, the pour cost percentage is too high,” and you find yourself nodding and pretending to know what that means, I’m here to help. In fact, we’re not only going to go over how to figure your overall pour cost percentage, but how to figure it for individual products so you can price them properly. So let’s go ahead and find out exactly what this pour cost percentage crap is all about.

WHAT THE HELL IS POUR COST % EXACTLY?

Pour cost % measures the gross margin of profit on your products and goods. “And what the hell does that mean?”

That means if your pour cost % for your beer, liquor and wine is 21%, that the bar made 79% in gross profit from those products.

In five-year-old terms: At 21% pour cost, for every $1 you sell, the bar gets $0.79.

Got it? I hope so, or you should stop managing bars, or be allowed to participate in society as a citizen in general anymore.

HOW TO FIGURE MONTHLY  POUR COST %

Chances are many of you at least have a notion of what pour cost % is and what it measures. Calculating it can be a bit more tricky if you have never done it before, so let’s dive right in.

HOW TO FIGURE POUR COST % FOR INDIVIDUAL PRODUCTS

Being able to figure the pour cost % for individual products is extremely valuable in helping you set your pricing. The good thing is once you have figured out the pour cost % for one product, it will apply to many of your other products as well, so you won’t have to do math for every single brand you carry.

In other words, all 1 liter bottles that sell for $8 per shot will have the same pour cost, so you only need to figure the cost for one bottle with that price point.

Once you have your individual products  figured out, you can determine if you need to raise or lower the price to meet your goal pour cost %.

With that said, let’s get to calculating.

The formula for figuring pour cost percentage for a single product is simple:

Wholesale Price / Retail Price x 100 = Pour Cost %

In order to figure the  pour cost %, we must know the wholesale cost and retail price of a product, which is easy, but you must make sure to use the same quantity for both. In other words, figure the cost and price for an entire bottle or figure the cost and price for an oz. of that product, but be consistent.

I find doing the entire container is easier, so this is the way I will teach you.

Figuring the wholesale price is the easy part: simply retrieve that information from your invoices.

Figuring the retail price of the product takes a little more effort, which I’m sure you’ll be happy to put forth because you are such an awesome, hard-working manager, so let’s go ahead and discuss what we need to figure the retail price of a single product.

 

To figure the retail price we must know:

  1. The size of the container in oz.
  2. The portion size of the product being served
  3. The retail price of that portion

That’s it. So here are some common containers and how many oz are in each:

1 Liter Bottle = 33.81 oz.

750 ml Bottle = 25.36 oz.

15.5 Gallon Keg = 1984 oz.

7.5 Gallon Keg = 960 oz.

5.16 Gallon Keg = 660 oz.

Now let’s go over an example of how to figure the pour cost percentage of the following:

1 Liter Bottle of Grey Goose

750 ml Bottle of BV Cabernet

½ Barrel Keg (15.5 Gallon) of Coors Light

Grey Goose → Wholesale Price = $38

Now for the 3 things we need to know

Bottle Size = 1 Liter

Portion (Shot) Size = 1.5 oz.

Retail Price = $9 per shot

 

Figuring Retail Price of Bottle

33.81 oz. / 1.5 oz. = 22.5 shots per bottle

$9 x 22.5 = $202.50

Pour Cost % = WS ($38) / RT ($202.50) x 100 = 18.77%

 

BV Cabernet → Wholesale Price = $9

Bottle Size = 750 ml

Portion Size = 6 oz.

Retail Price = $8 per glass

 

Figuring Retail Price of Bottle

25.36 / 6 = 4.23 glasses per bottle

$8 x 4.23 = $33.84

Pour Cost % = WS ($9) / RT ($33.84) x 100 = 26.60%

Coors Light Draft → WS Cost = $129

Keg Size = 1984 oz.

Portion size = 16 oz

Retail Price = $5

 

Figuring Retail Price of Keg

1984 / 16 = 124 pints per keg

$5 x 124 = $620

Pour Cost % = WS ($129) / RT ($620) = 20.81%

Make sense? Good. Let’s move on to figuring pour cost percentage for your entire bar using your inventory process.

HOW TO FIGURE OVERALL POUR COST %

The formula for figuring overall pour cost % via your monthly inventory is:

 

Beginning Inventory + Purchases – Ending Inventory

                                                                _________________________________________     x 100

                                                                                                    Monthly Bar Sales

 

Remember, anytime you are doing pour cost %, whether individually or overall, it is wholesale value / retail value or sales.

Let’s give a quick example:

June 1st – You take a full inventory of beer, wine and liquor and the wholesale value = $12,743

During the month of June, $11,500 worth of products are delivered

July 1st – You take another full inventory and your wholesale value = $12,158

Monthly Sales for June = $50,649

So let’s do the math:

                                                   Beg. Inventory ($12,743) + Purchases ($11,500) – End Inventory ($12,158)

                                            ________________________________________________________   x 100

                                                                                            Total Sales ($50,649)

                                                                                                      =23.86%

That’s all, folks. If you don’t know what your pour cost % is for each of your products, as well as your monthly percentage, you aren’t managing and running your business like a professional.

If you would like to read deeper into how pour cost percentage works, read What Should Your Pour Cost % Be?

Cheers, until next time,

Dave

4 Steps to Setting Pars in Your Bar

In a previous article we talked about determining how much stock you should have on-hand using the 15% rule, and now we’re going to talk about how to set your pars to keep those levels right where they should be week after week so that you can free up capital and run lean numbers month after month.

I find that many managers I work with have a vague idea in their heads what needs to be ordered for the week, but as I mentioned in the last article, these same managers are screwing this process up because they believe they need more on-hand than is necessary. WAY MORE.

Don’t take this process of setting up pars lightly. Setting pars can be a bit time-consuming, but it is a process that needs to be set-up if you want to run your place like a business and not just a bar.

STEP 1: VIEW HISTORICAL DATA
If you have a quality inventory management system, setting pars is easy, but even if you don’t, you can view the spreadsheets you use to take inventory to determine how much usage your bar goes through for each product. If for some reason you don’t keep good inventory records (which you’d better start), you can go to your POS back-office and run a sales data report to see what has been selling the best.  This can be a bit trickier because you will have to figure out how many drinks per bottle and then divide to figure out how many bottles you went through. In order to figure how many bottles used based on drinks sold, use the following examples:

LIQUOR
1L Bottle of Stoli = 33.81 oz.
Portion size = 1.5 oz.
Shots per bottle = 22.5
Sample sales data for Stoli for past 12 weeks = 983 sold
983 / 22.5 = 43.69 bottles sold

WINE
750 ml bottle of Kendall Jackson = 25.36 oz.
Portion size = 6 oz.
Glasses of wine per bottle = 4 (approximately)
Sample sales data for Kendall Jackson sold past 12 weeks = 228
228 / 4 = 57 bottles sold

DRAFT BEER
15.5 Gallon keg of Coors Light
Portion size = 16 oz.
Pints per keg = 124
Sample sales data for Coors Light sold for past 12 weeks = 4,135
4,135 / 33.35 kegs sold

Figuring usage by POS sales data is more time consuming than using your inventory data, but as you can see, it is still possible.

STEP 2: DETERMINE USAGE PER WEEK
As per the example above, you must determine how much product you are going through per week in order to set up accurate pars. I recommend taking the past 12 weeks, as this allows you to go far enough back to get a big picture of what is being used while at the same time seeing recent trends.

Using the math in examples above, we simply need to divide by 12 to figure out how many containers per week are being used.

Stoli = 43.69 / 12 = 3.64 bottles per week
Kendall Jackson = 57 / 12 = 4.75 bottles per week
Coors Light = 33.35 / 12 = 2.80 kegs per week

STEP 3: MULTIPLY USAGE PER WEEK BY 1.5 – 2
This depends on your comfort zone. Some managers I work with can’t stand the idea of running out of anything, so they need some cushion in order to sleep better at night. Others are fine running out once in awhile, as long as it doesn’t happen over and over.

My recommendation is to right down the middle and multiply your weekly usage of each product by 1.75, but let’s say you are a nervous Nelly and want to have plenty on hand, 2 times your weekly usage would be plenty, yet most bars have products with 10 times their weekly usage on-hand and it’s just plain unnecessary.

So again, based on the above examples, these would be your pars for Stoli, Kendall Jackson and Coors Light if you multiplied by 1.75:

Stoli: 3.64 x 1.75 = 6.37 bottles → Round to 6
Kendall Jackson: 4.75 x 1.75 = 8.31 bottles → Round to 8
Coors Light: 2.8 x 2 = 4.9 kegs → Round to 5

This does not always work perfectly when you need to order by the case. For example, wine and bottled beer is almost always ordered by the case, so for Kendall Jackson, you par might be 8, but if you have 4 on-hand, you can’t just order 4 bottles, so although it isn’t a perfect science, it will help you be more efficient, which leads us into the final step.

STEP 4: DETERMINE RE-ORDER POINTS
Setting the re-order point for your products is not detrimental, but it’s definitely helpful. What is a re-order point? This is the point your stock reaches that alerts you it’s time to order more product. Again, good inventory systems have this built in, but you can still do it manually and it will make your life easier.

Using Stoli from the above example, we have determined that the par for Stoli is 6. You might say that once the count for Stoli reaches below 3 that it is time to order more. I used 3 here because this bar is going through 3.64 bottles per week, so you want to make sure the levels don’t get too low before you order. So here, 3 would be your re-order point for Stoli.

That’s it, now go get started on setting your pars. It’s time-consuming, but it’s your job, so take action. If you use Bar Patrol, we set it all up for you, because that’s our job. Either way, let’s do our jobs and run our bars lean and mean like successful businesses do.
Best of luck.

Cheers, until next time.

Dave

4 The 21 Laws of Owning and Running a Bar

To all of the owners and managers online who have been emailing me, you can stop pestering me now. It’s finished. You can buy on Amazon it by clicking HERE  and download it to the Kindle app for the price of a Grey Goose and tonic. But unlike vodka, this will save your business and reduce your next day headaches.

Happy reading. Feel free to contact me for a chat anytime.

Dave, The RB

How to Determine Optimal Inventory Levels For Your Bar

Bar managers love their giant inventory. They must. Why else would they have $20,000 of inventory on-hand when they’re sales are only $60,000 per month?

I assume it’s the variety. Like owning a stamp or coin collection. It’s fun to show off your array of rare whiskeys and Scotches to people who walk in, which for some bars is fine because that’s their main theme. For instance, if you’re a whiskey bar and people are expecting a wide range of whiskeys, then you sure as shootin’ better have a nice selection. I get that.

What I don’t get are the mainstream bars that employ a bar manager who manages based on his whims. Just last week he went to this “totally awesome” classic cocktail bar he visited in Manhattan, and so now he’s inspired to create an iconic mixologist cocktail menu, and so he orders unique inventory to create this menu.  In the meantime, the bar he is managing, The Six-Shooter Country Lounge, attracts clients with skin tight Wranglers and shit-kickers. This, of course, makes this particular manager a total moron.

I work with all sorts of bars: sports bars, dive bars, lounges, corporate restaurants and upscale places, and even though all of these themes are drastically different, the inventories they carry are all tragically similar when it comes to an over-inflated inventory. Why is this exactly?  5 Reasons:

  1. Very little training is offered when it comes to learning how to manage a bar, let alone in the area of how much inventory to carry.
  2. Managers think they have to bulk order everything in order to save money.
  3. They accumulate free bottles from vendors that eventually turns into a forest of dead stock in the storage room.
  4. They feel the need to order excessive back-ups for every brand they carry so they don’r run out.
  5. The feel like every week they need to order something, even if there’s nothing that needs ordering.

The first and most basic step to improving your bar business numbers is by managing your inventory, but I’ve also found it the hardest area to tackle because owners and managers have an ego when it comes to helping them run their bar more efficiently. Every time I tell them they have too much inventory on-hand, they go into great detail defending why they need 15 bottles of Blue Curacao on-hand even though their usage numbers show that they go through about 0.5 bottles per month. And just when I think I’m making progress, another case of Creme de Menthe shows up on a Tuesday delivery. At this point I put my hands on my hips in a scolding pose while the manager slumps down and gives me that darty, shifty-eyed guilty look of a dog who just ripped the couch to shreds while I was out shopping.

HOW TO DETERMINE HOW MUCH INVENTORY YOU SHOULD HAVE ON-HAND

The first step to getting a grip on your inventory is to determine how far away you are from your goal. After 5 years in business and approximately 2,000 inventories that I have personally performed myself for clients, this is the formula I have created that will tell you how lean or fat  your inventory is. It’s simple, yet telling:

Total Inventory Value On-hand ÷ Total Sales Per Month

EXAMPLE:

Total Inventory Value On-hand for June = $15,000

Total Sales for June = $75,000

Ratio = 20% (15,000 ÷ 75,000)

If these were your numbers, they wouldn’t be horrible, as I’ve seen MUCH worse, but it’s still too high. I just took on a new client last week who’s ratio was 43%!!! That was a forehead slapper for me.

The inventory ratio that I recommend for optimal inventory is 15%. So if your sales were $75,000, you should have about $11,000 – $11,500 of inventory on-hand. In this case, that would mean you would need to cut your inventory by about $3,500 – $4,000, which is a big difference.

Figuring out this ratio couldn’t be easier, so no excuses. Simply go back and look at  your inventory on-hand (assuming you take accurate inventory and have your prices updated) and then run a P-mix report to see what your bar sales were for the same time period, and then use a calculator to determine the ratio, unless you went to MIT and can run numbers in your head like Rain Man.

Once you get this number, then we can work on setting up your par levels to get that number down. Don’t know how to figure out your par levels? That too is a formula. Give me a shout out at Dave@therealbarman.com and I’ll happily provide it for you.

Cheers, until next time.

Dave, The RB

The Secret to Cost Control That Nobody is Practicing

Liquor Cost Control

If you’ve been in this industry for any amount of time, you have at least been exposed to an insane way of thinking that doesn’t exist in any other work force I’ve ever come across. This way of thinking has become so engrained over the years into the minds of owners and managers that it’s difficult for me to penetrate the brainwashing that has taken place and change their way of thinking for the betterment of their establishment.

The mindset I’m talking about from the owners goes a little something like this: “I need to give away free drinks because that’s what bars have been doing for hundreds of years.”

The mindset of the bartenders is: “I need to give away free drinks so I can get bigger tips and buy shiny things.”

The mindset of owners about bartenders is: “Oh well, what’re you gonna do?”

Wake up, stupid! This is a mindset built for destruction. Bars have a unique opportunity to make HUGE profits because of the margins on alcohol, but instead they allow this outdated culture of charity to pull them down and be included in the nation-wide stat that says 85% of businesses fail within the first five years. People think bars are making a killing, but I’m here to tell you it just ain’t true. But I’m also here to tell you, there’s a better way.

The biggest problem is, owners and managers ALLOW it to happen. They know it’s happening, but fear keeps them from doing anything about it. They fear that if they don’t give away something for free that their regulars won’t come back. They fear competing with the bar down the street who is giving everything away for free. Worse yet, they fear confronting their staff about stealing. Yeah, it’s stealing. Don’t sugar coat it. This mindset is killing the bar business.

I remember walking into a very popular Greek bar and restaurant in San Francisco to talk to the General Manager about using my inventory services to monitor the bartenders in order to control costs. I knew that the bartenders were pouring way too heavy and were giving away enough drinks to supply a frat party. What the GM told me nearly made me shit right in my pants. She said, “Well, I don’t think your system would go over well here. The bartenders have been here for a long time and they wouldn’t like it if we brought in a system that monitored them. I don’t want to rock the boat or they might leave.”

shock face2

What the fuck did she just say to me?  I must have stared at her for a good 10 seconds, mouth hanging open, probably to the point of awkward discomfort because I’m sure the look on my face was one of disbelief, as if she had just lifted up her dress to reveal a penis.

Let me see if I have this straight. The bartenders wouldn’t like it if you told them that they were no longer allowed to be criminals and rob the place blind?

No, I guess they wouldn’t like that. That is quite the inconvenience. No wonder they had been there for so many years. They were siphoning the owner’s profits directly into their bank accounts, and this bimbo was too afraid to confront them to do anything about it. What a worthless set of standards she had set for this place. What was she even being paid for?

Let’s move on or I will start to hyperventilate if I relive that story any longer.

Controlling costs goes beyond ordering the right amount of product, creating cost-effective recipes and evaluating variances on spreadsheets. Don’t get me wrong, these are all important steps that managers need to put into practice, but these actions are mindless business operations that don’t work if there is no accountability or follow-up or discussion.

Cost control is a mindset. It is a culture of accountability that needs to be instilled into every staff member. Cost control should be a mission statement that tells everyone working at your bar/restaurant: “It is not ok to give away our products without the absolute consent of the owner or manager.”  This message needs to be stated and repeated until everyone is retrained and brainwashed into a new way of thinking.

Do you think they allow Nordstrom employees to hand out suits whenever they feel like it so that business people will come back and shop there instead of going to Macy’s? Hell no. Nordstrom’s has this revolutionary concept called Customer Service, and they do it so well that people come back regardless of price.

This is not an article about customer service, but this concept of mindset and culture does not end with cost control. In fact it doesn’t even begin with cost control. It begins with taking care of the people who come in. They are priority #1. The point is, your job is to create an entire new culture in your bar that states EXACTLY what the standards are, and then you need systems and tools in place to MONITOR and ENFORCE those standards, or you are just a bag of hot air preaching bullshit that you never follow through with.

It’s ok to go against the grain. Be a rebel, a thought leader, a visionary. Perhaps your place already has some cost controls and standards in place, but expand your thinking. Take it to a level that nobody is taking it. Call a staff meeting and lead them, inspire them. Have your culture trickle down through every vein of the system you have in place, especially when it comes to the experiences your guests will have.

Don’t sit back and let industry standards and your employees dictate the level of success you have for your business. Take control, and as someone wise I know once said, “Don’t be a little bitch!”

Cheers, until next time.

Dave, The RB

1 The 10 Best Bar Promotions Ever

Since writing this post over a year ago, I have had multiple requests for more bar promotions, so I finally got off my perfectly sculptured ass and complied.

I spent time speaking with 12 of my bar owner friends and asked them the best bar promotions they ever ran, and I then I wrote an e-book called The BIG Black Book of Bar Promotions, which has 51 of the highest profit, crowd-gathering promotions in existence.

So, feel free to check out the original 10 best bar promotions below, but if you find that you simply MUST have more, you can go ahead and download The BIG Black Book of Bar Promotions at the bottom of this post for FREE and I will email it to you immediately.

Now let’s quickly discuss the reason you’re here, which is how absolutely essential it is to not only get new people into your bar/restaurant, but to get them to come back again.

​If you haven’t heard of The Rule of Three in the bar/restaurant business, I’m going to give it to you right now, and I’d suggest you put your A.D.D in a headlock and pay attention because this rule is more necessary than cheese is to nachos.

I learned this rule from Jon Taffer, and whether you think he’s over-dramatic or not on television, the guy knows his shit inside and out, so make sure to take note:

THE RULE OF THREE

  1. The first time someone visits your bar, there is less than a 50% chance they will return.
  1. The second time they visit, they now have a 50% chance of coming back.
  1. The third time they visit, there’s a 70 percent chance they will come back a fourth time.

And one final Taffer statistic to seal your commitment to filling your bar:

Increasing guest frequency by just one visit per month increases your revenue by up to 12 percent.

12 PERCENT!

Those are some serious and exciting stats, folks. Simply knowing this frequency pattern motivates the hell out of me to hustle like a gangster and drive people into my bar.

But remember: these 51 Bar Promotions will certainly get them into your place AT LEAST once, but then you have to make sure they have a great experience so they want to come back again and again, and of course…again.

You can use multiple promotions to attract new customers and get the first and second timers to come back, but if your staff isn’t providing fanatical customer service, your promotions will fall flat because the rule of three will never occur.

That’s all for now. Thanks for being here. Enter your name and email at the bottom of the page to download the free e-book The BIG Black Book of Bar Promotions and watch new guests come stampeding through your doors like a rabbit running from a greyhound.

In the meantime, you can go ahead and dip your toesies into the promotional waters with my original 10 Best Bar Promotions (+1 Bonus Promotion).

Cheers,

Dave

Now back to our regularly scheduled program.

June 15, 2015 Post:

There are no two ways about it, the competition to gain customers and get them to give up their hard earned money is fierce among bars and restaurants. If you aren’t creative and think up ways to pull them in, you might as well pack your shit and close up shop because your job as a bar/restaurant owner is to provide an experience that exceeds your guests expectations, and if their experience at your bar involves watching a Tuesday night tennis match on the tv while the bar across the street is rocking Tuesday night blues (cue crickets here), pour yourself a beer to cry in because you won’t have guests for long.

With that said, customer service is still top dog in keeping your guests coming back for more, but here are the top bar promotions that I’ve seen work in multiple bars over several years. In other words, they are tried and true and will turn people’s attention your way like sharks to blood.

1. CUSTOMIZED ENGRAVED MUGS
This one takes some involvement on your part, but it is as badass as it gets when it comes to bar promotions. I’m talking a Viking-like kind of bad-ass-ness, which is exactly what you’ll feel like when you hoist your personalized copper or tin mug to the sky to toast your comrades while discussing village pillaging and horned helmets. I’ve seen this work best for a draft beer club, but you can use it in anyway you want.

Basically after a regular drinks 100 draft beers (or whatever you decide) they get their name engraved on the mug and they leave it at the bar. Every time they come in, you pull their mug off the shelf and fill it up with their favorite frothy draft or grog or whatever else makes them feel manly. This promotion creates a deep customer loyalty unlike any other bar promotion I’ve seen, similar to frequent flier miles for an airline.

2. HOST A WEEKLY OR MONTHLY TOURNAMENT
This is best to do during the beginning or middle of the week to draw people in. It could be anything that appeals to the competitive: darts, poker, pool, corn hole, beer pong. As long as you have an organized, energetic person running it, tournament night can turn huge.

3. FLIP-OFF MONDAYS (OR WHATEVER DAY YOU CHOOSE)
This is for the laziest bar owner in the world who’s idea of promotion is to stand on the sidewalk out front and yell, “Hey! Come here!”   This promotion requires you acquiring a coin of some sort and getting the word out.

That’s it, but people love it. When guests first come in, you flip a coin for them which they call in the air. If they’re right, their first drink is $0.25, if not, full price. So simple a bear on a unicycle could run it.

4. BARTENDING CLASSES
In case you haven’t noticed, commoners secretly fantasize about being a bartender, even if only for a weekend. Like going to rock ‘n roll fantasy camp. Of course you’ll need to have someone on staff capable of delivering dynamic lessons and who actually knows what he/she is doing, so hopefully your bartenders aren’t nitwits, but like the engraved mugs, this particular promotion is a differentiator that people won’t forget, not to mention all the people they will mention it to.

5. TRIVIA OR KARAOKE NIGHT
Sure, it’s cliché, but then again so is denim and look how long that’s been around. This falls under the category of “If it ain’t broke don’t fix it.”

6. AMAZING RACE
Putting on an Amazing Race can be a colossal task, but the rewards are worth it because the word of mouth lasts for months after, which means your bar is on the tongue and lips of local yokels for a long time to come.

The best way to go about putting on such a race is to scour the internet for competition ideas and then set up a small race in your area. A good thing to do is work with other bars and set up some of the competitions in their bar. This creates good camaraderie with your fellow bar owners, and your guests will love it too. The only problem you’ll have is the former competitors will keep asking you when the next one is.

7. GIANT GAMES
For whatever reason, the novelty of gigantic chess pieces, Jenga blocks and Connect Four pieces gets people more excited than birders spotting a red-breasted, web-footed merganser.

8. SEX NIGHT
It sounds better than it is, but there’s no reason why it can’t turn into what you’re imagining after you leave the bar. It’s best if you have a sex cocktail list made up with all the drink specials printed on there: Blow Job shots, Screaming Orgasm, Sex on the Beach, Panty-droppers, etc.

The subliminal power of the cocktail list alone will save you the pain of embarrassing yourself with horrible pick-up lines, if you’re into that sort of thing.

9. INDUSTRY NIGHT
In general, bartenders love industry night because it means people who work in the bar and restaurant industry in the area will come in and get discounts on drinks, and tip gargantuan amounts of money because it is one of their own. The main criteria for this is to get a paycheck stub and ID for anyone you don’t know so it proves that they indeed do work in the industry.

10. SPORTS POOLS
Whether you love them or hate them, sports make the world go around when it comes to leisure time activities, and if you want to take advantage of that all you have to do is gasoline that fire by doing some football squares, March Madness Pools, etc, etc, etc.

Better yet, if you can pencil in the time, run a fantasy football league and give discounts to those who are in the league when they come in to watch the games.

11. (BONUS) ANIMAL RACES
Animal races are frickin’ awesome, assuming of course no animals are harmed during the production of the promotion. You can use anything, from hermit crabs to turtles to (my personal favorite) goldfish.

Just make sure that you give the animals a good home during the days they aren’t competing and that you don’t invite any PETA members because they will go all Glenn Close in Fatal Attraction on you (except they won’t boil your bunny of course).

Best of luck.

Cheers, until next time.

The RB[

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