What sits behind your bar is not just bottles and taps, it’s dollar bills. Controlling bar costs is one of the most important aspects to running a successful and profitable bar operation. It is one of the easiest ways to make sure you are making money, as well as one of the quickest ways to lose it. Regardless of what kind of business you have — nightclub, bar or restaurant — preventing losses on alcohol is key to running good bar costs and, in turn, generating bigger and better profits.
To control costs, start at the beginning. Before anything comes through the back door, you have to order it, and your ordering procedures have a big impact on how you run your costs. Do you have any pars set up? Do you have certain mandates of what brands and sizes you carry? If you are simply ordering what you “think” you need, you are taking the first step toward becoming an unprofitable bar.
When you have too much product on hand, your staff will use it; they’ll feel you have an abundance of liquor or beer and won’t be concerned about loss and waste. The same goes for any items that are not being used. Have a bottle of liqueur sitting on your shelf collecting dust? If it’s not making you money, then why have it behind your bar?
When making pars, be sure to refer to a usage report from your back office system so you have accurate numbers to guide the process. Setting up proper pars and getting rid of any excess product behind your bar will result in a streamlined ordering process and an efficient bar.
How your product comes into your business also plays an important role in your bar costs. Do you have a good relationship with your vendors? If not, start talking to them and get to know them. I have very good relationships with my vendors and talk to them every week, which builds trust and a good business partnership, but that doesn’t mean I let them drop anything off without someone checking it in. If you allow vendors to drop off product with no supervision, you risk something not reaching your cooler or maybe receiving product you don’t even need.
Simple human error or slight of hand also can cost you money; miscounted kegs coming in or deposits going out can yield loss very quickly. I once heard of a beer delivery driver who would “pay” bus boys with six-packs of beer to lug cases of beer up two flights of steps. Someone was getting shorted those six-packs. Stopping loss at the back door by imposing proper procedures also is crucial to running good bar costs.
Who are your biggest business partners in the bar? Why, your bartenders, of course. They probably have more control of your bar costs than you. They are working there every day and may be generating loss or waste. It is your job to manage them to keep this to a minimum. Many bartenders understand their role in controlling costs and take on that responsibility. Unfortunately, there also are those who unwittingly or purposefully contribute to you losing product and profits through theft, improper pouring, lack of recipe knowledge or even simple inexperience.
Bartenders play a huge role in running good bar costs and they must be held accountable. Communication is key here; have weekly meetings if bar costs are not in line, outline the dos and don’ts, and make it known that there are consequences for not controlling loss and waste. Posting the cost of sales that shows any loss for the bar is an easy way to clearly make this point and also demonstrate that you are keeping track of their performance. In addition to consequences, there should be some incentives for running good bar costs. This will promote best practices for those working behind the bar. Finally, if you suspect someone of theft, get to the heart of the matter quickly. Those with sticky fingers should not be working behind your bar, period.
These are three key ingredients to running a profitable bar; if you start with these basics you can rest assured that you are taking care of the most important aspects of cost controls. Start with and master the basics. For the ordering process, set up your pars and remove the dust-collectors. Looking at product delivery, make sure you’re getting what you’re paying for, and finally, watch the actions of those behind the bar. Properly train bartenders and then hold them accountable as your best business partners. Control these areas and you will have a money-making bar. NCB