Whether you’re planning to open your doors for the first time, are in the midst of your first year of operation, or are a veteran operator, you know one thing to be true: this is a risky business.
The survival rate for bars and restaurants can give even the most optimistic among us reason to pause: 60 percent will close within five years of their open date.
However, the entrepreneurial spirit is strong with operators. Despite the odds being stacked against them, they keep looking forward to success.
Fortunately, operators can tap into something beyond hope and grit to take their business from merely surviving to thriving. That “something” is systems.
Sean Finter, founder and CEO of Barmetrix, a hospitality services and coaching business, is headed to Nightclub & Bar Show 2020. On Monday, March 30, Finter will teach an in-depth workshop titled “Risky Business: The Systems for Beating the Odds in the Bar Business.”
Barmetrix offers several hospitality industry services aimed at improving bar and restaurant operations: outsourced liquor and food inventory control; guest service and bartender evaluations; the creation of guest service strategies; team training; pricing analysis; and management workshops.
What do all those services have in common? They’re systems based and they’ve been tested and proven in the real world. Finter is an operator himself, having owned and operated bars and restaurants in the UK, Canada, Australia and the United States. Barmetrix has worked with more than 7,000 hospitality teams across the world, and Finter counts several award-winning owners among his students.
Like most operators, Finter has a deep-seated predilection for optimism. “I remember all the good times—I've conveniently forgotten all the pain of having a 31-million-dollar business and a few hundred staff,” he says of his love for operating bars and restaurants.
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The difference is, he and his students know that optimism must be paired with effective systems. In fact, one of the top three operator mistakes Finter has identified is tied to hope: profits just sort of happening.
“That really is one of three of the biggest mistakes—they think that profit is a fortunate consequence,” explains Finter. “You know, like just something that happened as a result that we made it this month.”
The solution to that mistake is engineering the business to be reliably profitable, which means, in part, having systems in place to evaluate and track performance.
The second biggest mistake is failing to put focus where it belongs.
“They don't focus on the right things all the time,” Finter says. “If you don't have someone designated in your business to focus on optimization and constantly looking at your targets and budgets, your business is definitely underperforming.”
Again, there are systems that can be implemented to combat this mistake. The earlier such systems are adopted, the quicker operations can be optimized, turning the tide from failure or just surviving to running a business that truly thrives.
The third biggest mistake? Expanding operations before doing so is a viable option, whether that means opening a second store of the same concept or opening an entirely new concept.
“You get some success, someone tells you how great you are, you won a couple of awards, and then you start expanding, right? Way before you're ready to expand.”
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Finter and Barmetrix have a system to evaluate whether an operator is ready to expand or should put that task on hold. The process includes extracting the operator from the business for several months, limiting the hours they focus on the business to four per week. It also entails evaluating financials: if the business isn’t generating a reliable minimum of 15 percent month-on-month net profits, the business isn’t ready for expansion.
Part of understanding the financial situation of a bar or restaurant, regardless of the desire of an operator to expand or focus on a single venue, is evaluating the performance of the team. A players—those people on the team who outperform everyone else—want to work with teammates who perform at their level. A key aspect of Barmetrix systems is identifying A players, developing a culture that keeps them engaged, and leveraging that culture to attract more A players.
“If you had three bartenders on, one of them was newer and he can only ring in $250 bucks an hour, you've got one person that can do $600, and another that can do $1,000, the spread between A and C is $750,” Finter explains. “And over the course of three hours, they have Friday night, that's $2,200 bucks of revenue that you're not realizing in the register.”
If one bar team member can’t ring more than $400 an hour, says Finter, and one can ring $1,000 per hour, an operator is losing $600 per hour because they don’t have two team members performing like the A player.
The solution is, yet again, systems. Evaluating a team and setting benchmarks is a systematic approach to operations that identifies what’s working and what’s not so changes can be made, and the business can be optimized. Without systems in place an operator is guessing, hoping and, unfortunately, not just leaving money on the table but hemorrhaging it.
A month after he opened his first bar in Sydney in Australia, Finter visited another bar for a drink. He was so impressed by what he saw that he offered the bartender who had served him $200 to work a three-hour shift at his bar. Why? To create a benchmark, to come up with the standard for his bar. The result? The visiting bartender was twice as fast as Finter’s best bartender. He now knew what was possible, so he retooled, started to develop and implement systems, and provided his team what they needed to turn what was possible into the standard.
During his workshop, Finter will share the “eight principles that really multiply your chance of beating the odds of the industry.” He’ll also tackle how to ensure an entire organization is financially literate, from the basic construct of costing to hidden profit killers and forecasting. Attendees will learn how to drive profits by focusing on the 20 percent of the time their bar or restaurant is generating 80 percent of its revenue, how to attract A players, and much more.
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Operators of every level will go back to their businesses with the tools to optimize them and make them more profitable. Don’t miss out on this opportunity to take your bar or restaurant to the next level—register today for Nightclub & Bar Show 2020 and secure your spot for Sean Finter’s workshop!