You finally did it: you built your dream bar where you hope everyone comes together. The jukebox is filled, the kegs are tapped and the only thing left to do is switch on the neon light that says “OPEN.” But before you get a few weeks or months into operation and realize bar ownership is more financially complex than you bargained for, you should set up a routine for calculating your bar profit and loss statement.
An average bar’s net profit margin is between 10-15%. To break it down, a bar’s gross profit margin is the difference between total restaurant sales revenue and the cost of goods sold. You get the net profit margin from the remainder of the gross profit margin after all operating expenses have been tallied.
It’s a good idea to create a routine for calculating your bar’s profit and loss statement, whether it’s weekly, monthly or annually. If your bar is just recently opened, it wouldn’t hurt to do a profit and loss statement weekly, so you can keep track of the most profitable and most costly operations for your bar, finding ways to continue the former and address the latter.
We’ve put together a handful of tips you can use to help streamline your bar operations so your profit and loss statements show the best net profit possible.
Improve Your Inventory Management
Running out of stock is a drag. If the customer orders something and you’re out, not only are you not getting the money for it, but the customer isn’t satisfied, and worse—they might go to a different establishment next time. Having too much of certain items is equally as bad since that’s essentially money wasted while they sit on your shelf or in the fridge unsold.
If you use a beverage inventory management and ordering system like Provi, you can make sure your bar is stocked with the exact items you need. Custom lists help you order faster with just the click of a button, while rep communication and PAR management tools let you take the disorder out of beverage ordering so you can devote more time to the fun part of managing your bar.
Diversify Your Offerings
Pleasing the customer (and getting them to return to your bar again and again) is one of your top priorities as a bar owner. This means creating a menu that caters to everyone who steps inside. Make sure to have the staples that every bar should, but also create some signature offerings unique to your establishment, whether it be a couple of craft cocktails or mocktails (the DD needs some love, too), eclectic menu items, or the promise of rotating seasonal selections to keep regular clientele interested. Diversifying your offerings goes hand in hand with inventory management to make sure you have a good balance between items that entice and still sell while making sure you aren’t left with a surplus of stock at the end of the month that could affect your bar profit margin.
Involve Your Staff
Whether it’s teaching and promoting the art of the upsell or getting bartender and server feedback on the food and drinks you offer, keeping your staff involved and motivated is a huge boon for your business. The best bartenders are masters of small talk, so they should have enough conversations with clientele that at least some of them will touch on your customers’ favorite drinks and might include requests for beverages to add to your program.
Similarly, servers might have menu suggestions based on what customers rave about or what they find at similar establishments around town. Incentivize your staff to sell more through reward programs and you could see your sales climb.
Accentuate Your Atmosphere
Does your bar give off a “feels like home” vibe? Is there an event schedule that’s sure to create FOMO? Are the facilities cleaned regularly? Everything from décor to events to general cleanliness will help get customers in the door and keep them around longer.
-
A prime event schedule can get regular customers pumped to head to their favorite bar and also entice new customers to check in often. Book some local bands for regular music nights, hold a “Bill Murray Movie Trivia” contest, have the local sports teams’ games on the TV and the list goes on. Getting more creative than just throwing a pool table in the corner can help boost your customer count and sales.
-
Offer freebies to make your customers feel loved. Whether it’s a sample pour or an extra appetizer, the cost you eat by giving away small samples can be returned by as much as 2,000% according to some studies. How’s that for a quick increase in your bar’s profit margin?
-
Create comfort by adding high-quality chairs and booths. These aren’t just a good way to improve your décor but might help customers stick around longer and order one more round.
Decrease Costs
When all else fails, increase profit by decreasing costs! When was the last time you spoke to your vendors about your business relationship? There might be some money to be saved by switching up suppliers. Take a look at your vendors and see if you can get better pricing elsewhere. You could also try to make smarter decisions to control inventory waste. Noticing patrons leave behind large amounts of fries on their plates? Maybe do a portion control check. You can also keep track of and try to reduce drink spillage, as we all know booze ain’t cheap. Even if you’ve got these things under control, there are more than likely one or two areas you can pinpoint to cut down your bar spending.
Comments