Driving Profits in the New Economy:

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Driving Profits in the New Economy:




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Presentations text content in Driving Profits in the New Economy:

Slide1

Driving Profits in the New Economy:Proven Strategies for Maximizing Profitability

Presented by  Robert Plotkin BarMedia Sean LudfordBevX.com  Nightclub & Bar ShowLas VegasMonday, March 2nd, 20093:30 p.m. – 4:30 p.m.

Slide2

Bevinco estimates employee theft at 24% to 26%

of gross salesAs the recession drags on, it’s safe to presume that theft behind the bar will increaseLeft unchecked, theft can reduce your cash flow to a trickle

Preventing Internal Theft — “No Bar Avoids Internal Theft — No Exceptions”

Slide3

F&B only industry that doesn’t assess employee performance by sales/hourMonitoring bartender productivity crucial to cost control effortsAlso management’s most effective countermeasure against theftTracking productivity detects all types of theft of cash and product behind the bar

Productivity Analysis — “Measuring More Than Staff Output”

Slide4

Date

NameDay/ShiftSalesHrsSales/Hr2/07JimThurs/PM$ 876.356.5$ 134/hrAdamThurs/PM$ 966.506.0$ 161/hr2/14JimThurs/PM$ 799.106.5$ 123/hrAdamThurs/PM$ 867.386.0$ 145/hr2/21JimThurs/PM$ 781.336.5$ 120/hrAdamThurs/PM$ 903.716.0$ 151/hr2/28JimThurs/PM$ 691.856.5$ 106/hrNeilThurs/PM$ 875.006.0$ 146/hr3/07JimThurs/PM$ 745.956.5$ 115/hrAdamThurs/PM$ 905.006.0$ 151/hr3/14JimThurs/PM$ 809.886.5$ 125/hrAdamThurs/PM$ 898.906.0$ 150/hr3/21JimThurs/PM$ 891.956.5$ 137/hrNeilThurs/PM$ 955.506.0$ 159/hr

Tracking Bar Productivity

Slide5

Date

NameDay/ShiftSalesHrsSales/Hr2/07JimThurs/PM$ 876.356.5$ 134/hrAdamThurs/PM$ 966.506.0$ 161/hr2/14JimThurs/PM$ 799.106.5$ 123/hrAdamThurs/PM$ 867.386.0$ 145/hr2/21JimThurs/PM$ 781.336.5$ 120/hrAdamThurs/PM$ 903.716.0$ 151/hr2/28JimThurs/PM$ 691.856.5$ 106/hrNeilThurs/PM$ 875.006.0$ 146/hr3/07JimThurs/PM$ 745.956.5$ 115/hrAdamThurs/PM$ 905.006.0$ 151/hr3/14JimThurs/PM$ 809.886.5$ 125/hrAdamThurs/PM$ 898.906.0$ 150/hr3/21JimThurs/PM$ 891.956.5$ 137/hrNeilThurs/PM$ 955.506.0$ 159/hr

Tracking Bar Productivity

Slide6

Date

NameDay/ShiftSalesHrsSales/Hr2/07JimThurs/PM$ 876.356.5$ 134/hrAdamThurs/PM$ 966.506.0$ 161/hr2/14JimThurs/PM$ 799.106.5$ 123/hrAdamThurs/PM$ 867.386.0$ 145/hr2/21JimThurs/PM$ 781.336.5$ 120/hrAdamThurs/PM$ 903.716.0$ 151/hr2/28JimThurs/PM$ 691.856.5$ 106/hrNeilThurs/PM$ 875.006.0$ 146/hr3/07JimThurs/PM$ 745.956.5$ 115/hrAdamThurs/PM$ 905.006.0$ 151/hr3/14JimThurs/PM$ 809.886.5$ 125/hrAdamThurs/PM$ 898.906.0$ 150/hr3/21JimThurs/PM$ 891.956.5$ 137/hrNeilThurs/PM$ 955.506.0$ 159/hr

Tracking Bar Productivity

Slide7

Jim worked 7 shifts and generated an average $123 sales per hourAdam worked 5 shifts and generated an average $152 sales per hourNeil worked 2 shifts and generated an average $153 sales per hourWeekly Staff Average —14 PM shifts generated average $144 sales per hour

Tracking Bar Productivity

Slide8

Explanations for a bartender’s continued low productivity:

Bartender is too slow to keep up with sales demandBartender’s poor drink-making abilities lessens demandBartender’s service abilities and personality off-putting Bartender is giving away unrecorded drinks or stealing proceeds.

Tracking Bar Productivity

Slide9

Unrecorded sale proceeds are a significant target of opportunityCash drawer likely repository for stolen proceedsMid-shift cash drawer audits heighten risks involved stashing the cash

Preventing Internal Theft — Management Countermeasures

Slide10

Run sales report and replace cash drawer with a fresh bankBe unpredictable about what time the cash drawer audit is takenPeriodically take mid-shift readings twice in one nightHow can a bartender explain away being “over” in a drawer?No legitimate explanation for a drawer being “over” by a dollar or two

Preventing Internal Theft — Management Countermeasures

Slide11

The other primary repository for stolen cash is

the bar’s tip jarProhibit two-way tip jar transactions — money stays in until cash drawer removedMove the tip jar away from the POS; better exposes the act

Preventing Internal Theft — Management Countermeasures

Slide12

Category

Month CostMonth PercentMonth SalesMonth PercentGross ProfitGross MarginLiquor$ 5,24816.5%$ 31,72043%$ 26,47283.5%Beer$ 5,02628.3%$ 17,76124%$ 12,73571.3%Wine$ 4,55236.3%$ 12,54017%$ 7,98863.7%Alcohol-free$ 2,59123.6%$10,98015%$ 8,38976.4%Food$ 1,460--------------------Month Totals----

Beverage Operation Cost Breakdown

$18,877

$73,001

25.8%

$54,124

74.2%

Pour Cost Realities

Slide13

While analyzing cost percentages is standard business practice, it has shortcomings

Pour cost ineffective at catching theft — will only detect about 1 out of 4 scams

Pour Cost Realities

Slide14

Substitutions scams victimize guests who order drinks made with premium brands

Bartender prepares drinks with lesser products, but charges premium pricesBartender then enters sales at the well price and pockets the differencePour cost unaffected — bartender poured 2 shots of well liquor and entered 2 well salesHowever, the bartender’s productivity will be lower by the amount of cash stolen

Pour Cost Realities

Slide15

Pour cost is also unaffected by tampering or smuggling schemes

For example, bartender sells 16 drinks at $5 each and pockets the $80 cashLater he takes a 16-ounce tumbler of water and adds it to a number of the well bottlesBy replacing the stolen 16-ounces with 16-ounces of water, pour cost remains unaffected However, bartender’s productivity will be lower by $80Again, every scam and scheme affects bar productivity

Pour Cost Realities

Slide16

Liquor Pour Cost Analysis

Pour Cost Realities

Beginning Liquor Inventory $ 20,594Beginning Liquor Inventory+ $ 5,897 Adj. Beginning Liquor Inventory =Ending Liquor Inventory $ 20,519Complimentary Drinks+ $ 168Spillage & Waste+ $ 29Transfers+ $ 50 Adj. Ending Liquor Inventory= - $ 20,768 Liquor Cost= $ 5,723 Gross Liquor Sales÷ $ 25,211 Cost Percentage= 22.7%

$ 26,491

Slide17

Liquor Pour Cost Analysis

Beginning Liquor Inventory

$ 20,594

Beginning Liquor Inventory

+ $ 5,897 Adj. Beginning Liquor Inventory = $ 26,491Ending Liquor Inventory $ 20,519Complimentary Drinks+ $ 168Spillage & Waste+ $ 29Transfers+ $ 50 Adj. Ending Liquor Inventory= - $ 20,768 Liquor Cost= $ 5,723 Gross Liquor Sales÷ $ 25,211 Cost Percentage= 22.7%

Pour Cost Realities

Slide18

Liquor Pour Cost Analysis

Beginning Liquor Inventory

$ 20,594Beginning Liquor Inventory+ $ 5,897 Adj. Beginning Liquor Inventory = $ 26,491Ending Liquor Inventory $ 20,519Complimentary Drinks+ $ 168Spillage & Waste+ $ 29Transfers+ $ 50 Adj. Ending Liquor Inventory= - $ 20,768 Liquor Cost= $ 5,723 Gross Liquor Sales÷ $ 25,211 Cost Percentage= 22.7%

Pour Cost Realities

Slide19

Liquor Pour Cost Analysis

Beginning Liquor Inventory

$ 20,594Beginning Liquor Inventory+ $ 5,897 Adj. Beginning Liquor Inventory = $ 26,491Ending Liquor Inventory $ 20,519Complimentary Drinks+ $ 168Spillage & Waste+ $ 29Transfers+ $ 50 Adj. Ending Liquor Inventory= - $ 20,768 Liquor Cost= $ 5,723 Gross Liquor Sales÷ $ 25,211 Cost Percentage= 22.7%

Pour Cost Realities

Slide20

Liquor Pour Cost Analysis

Pour Cost Realities

Beginning Liquor Inventory $ 20,594Beginning Liquor Inventory+ $ 5,897 Adj. Beginning Liquor Inventory = $ 26,491Ending Liquor Inventory $ 20,519Complimentary Drinks+ $ 168Spillage & Waste+ $ 29Transfers+ $ 50 Adj. Ending Liquor Inventory= - $ 20,768 Liquor Cost= $ 5,723 Gross Liquor Sales÷ $ 25,211 Cost Percentage

= 22.7%

Slide21

Liquor Pour Cost Analysis

Beginning liquor inventory $ 20,594Beginning liquor inventory+ $ 5,897 Adj. Beginning liquor inventory = $ 26,491Ending liquor inventory $ 20,519Complimentary drinks+ $ 168Spillage & waste+ $ 29Transfers+ $ 50 Adj. Ending liquor inventory= - $ 20,768 Liquor cost Gross liquor sales÷ $ 25,211 Cost percentage

= $ 5,473

= 21.7%

Slide22

Liquor Pour Cost Analysis

To achieve the same 1% reduction in pour cost, gross liquor sales would need to increase $1,143.03

Beginning liquor inventory $ 20,594Beginning liquor inventory+ $ 5,897 Adj. Beginning liquor inventory = $ 26,491Ending liquor inventory $ 20,519Complimentary drinks+ $ 168Spillage & waste+ $ 29Transfers+ $ 50 Adj. Ending liquor inventory= - $ 20,768 Liquor cost= $ 5,473 Gross liquor sales Cost percentage

÷ $26,355

= 21.7%

Slide23

To decrease the pour cost of 22.7% by 1%, liquor cost would need to drop $250Liquor CostGross Liquor Sales÷ $ 25,211Cost Percentage… or liquor sales would need to increase $1,143.03Liquor Cost$ 5,723Gross Liquor SalesCost Percentage

Liquor Pour Cost Analysis

$ 5,473

= 21.7%

÷ $ 26,355

= 21.7%

Slide24

How Much Profit Can You Save Cutting Beverage Costs?

Gross Beverage Sales $ 600,000

Beverage Cost @

29%

- $ 174,000

Gross Profit = $ 426,000

Slide25

How Much Profit Can You Save Cutting Beverage Costs?

Gross Beverage Sales $ 600,000

Beverage Cost @

24%

- $ 144,000

Gross Profit =

$ 456,000

Slide26

How Much Profit is There in Cutting Beverage Costs?

Gross Beverage Sales $ 600,000

Beverage Cost @

29%

- $ 174,000

Gross Profit = $ 426,000

Gross Beverage Sales $ 600,000

Beverage Cost @

24%

- $ 144,000

Gross Profit =

$ 456,000

Difference in Gross Profit = + $ 30,000

Slide27

Working for blowhards is a bummer

Their caustic temperaments undercut morale, performance and foster conditions for theftHuman nature — it’s easier for bartenders to rip-off a jerk of a bossShouldn’t there be a set of commandments governing owner conduct?

Don’t Be Your Own Worst Enemy

Slide28

Owner Commandment —

“Get With the Program”When the doors are open, owner needs to work within the established chain of commandLose the phrase, “As the owner, I think I have the right to....”Statement derails constructive communication, undermines authority of managementEspecially when doors are open, rank has no privileges.

Don’t Be Your Own Worst Enemy

Slide29

Owner Commandment —

“Leave the Jag at Home”Most bar owners and restaurateurs don’t live paycheck to paycheck like the rest of usLeave the Jaguar at home and drive family sedan when stopping by the bar or restaurantLikewise, don’t hold the staff holiday party at your estate or summer home by the beachFlaunting good fortune can incite negative repercussions

Don’t Be Your Own Worst Enemy

Slide30

Owner Commandment — “Seat, Greet and Leave”

Don’t patronize your establishment during peak business hoursOwners are bound to attract an undue amount of attention from the staffBut shouldn’t that attention be lavished on the guests instead?Most owners can typically perform one invaluable function, namely schmooze the guestsDo it well and then leave the heavy lifting to the staff

Don’t Be Your Own Worst Enemy

Slide31

Owner Commandment —

“There’s No Free Lunch”Walking out with a case of wine or a châteaubriand sends the staff the wrong messageNothing’s on the house, not even for the ownerIf owner orders a drink at the bar, pull out cash and pay for it. And leave a generous tipCommandment reinforces that this is a business so hands-off the inventor

Don’t Be Your Own Worst Enemy

Slide32

Consistency of product is a cornerstone of the

on-premise businessYour drinks should taste the same regardless of the night or who’s behind the barOtherwise, the result is a loss of consistency, fluctuating costs and hit-or-miss drinks

Increasing Beverage Profitability — “No Profit, No Success”

Slide33

Find out what recipes your bartenders are pouring by giving them a test

Ask them the recipe and price for the top 20 most frequently ordered drinksWill likely reveal they’re using different portions, ingredients and charging different pricesInconsistent drink recipes lead to varying costs and fluctuating margins

Standardizing Drink Recipes

Slide34

Your

Long Island Iced Tea

$1.50 drink cost ÷ $8.00 sales price = 18.7% cost percentage

½ oz. gin$ .32½ oz. vodka+ $ .28½ oz. rum+ $ .28½ oz. tequila+ $ .32½ oz. triple sec+ $ .182 oz. sweet ‘n’ sour+ $ .102 oz. cola+ $ .02Drink Cost= $1.50

Standardizing Drink Recipes

Slide35

Your

Long Island Iced Tea

$8.00 sales price - $1.50 drink cost = $6.50 gross profit

½ oz. gin$ .32½ oz. vodka+ $ .28½ oz. rum+ $ .28½ oz. tequila+ $ .32½ oz. triple sec+ $ .182 oz. sweet ‘n’ sour+ $ .102 oz. cola+ $ .02Drink Cost= $1.50

Standardizing Drink Recipes

Slide36

Bartenders’

Long Island Iced Tea

$2.20 drink cost ÷ $8.00 sales price = 27.5% cost percentage

¾ oz. gin$ .48¾ oz. vodka+ $ .42¾ oz. rum+ $ .42¾ oz. tequila+ $ .48¾ oz. triple sec+ $ .282 oz. sweet ‘n’ sour+ $ .102 oz. cola+ $ .02Drink Cost= $2.20

Standardizing Drink Recipes

Slide37

Bartenders’

Long Island Iced Tea $8.00 sales price - $2.20 drink cost = $5.80 gross profit

¾ oz. gin$ .48¾ oz. vodka+ $ .42¾ oz. rum+ $ .42¾ oz. tequila+ $ .48¾ oz. triple sec+ $ .282 oz. sweet ‘n’ sour+ $ .102 oz. cola+ $ .02Drink Cost= $2.20

Standardizing Drink Recipes

Slide38

Your

Long Island Iced Tea

 

$8.00 sales price - $1.50 drink cost = $6.50 gross profit Bartenders’ Long Island Iced Tea  $8.00 sales price - $2.20 drink cost = $5.80 gross profit  Their version results in the guest ingesting an additional ounce of liquor Also, the drink the bartenders are serving costs $ .70 more, an increase of 46%

Standardizing Drink Recipes

Slide39

Portioning Controls

Bars are often nickled and dimed into submission — it happens with a flick of the wristLax or nonexistent portioning controls impacts costs, as well as, drink consistencyOver-pour a shot by a ¼ ounce and the drink’s cost will increase 25%

Increasing Beverage Profitability — “No Profit, No Success”

Slide40

Portioning Controls

Another issue is the drink now contains 25% more alcoholProhibit over-pouring alcohol — costly and dangerousCauses inequity — some bartenders pour “good drinks” for some guestsOver-pouring exacerbates over-service issues/increases liquor liability

Increasing Beverage Profitability — “No Profit, No Success”

Slide41

Portioning Controls

Prohibit tailing measures — rips off either the guest or the houseEither the bartender bailed on the measure early and is being deceptive……or he hit the measure and is over-pouring liquor

Increasing Beverage Profitability — “No Profit, No Success”

Slide42

Portioning ControlsProhibit under-pouring measures — a classic scam to rip-off the house and defraud guestsBartender short-pours liquor into a series of drinks, thereby creating a surplus of liquorShortage is likely to go unnoticed by guests as the liquor is poured on top of mixerSurplus is later sold and the cash proceeds pocketedPour cost unaffected; bartender productivity negatively affected

Increasing Beverage Profitability — “No Profit, No Success”

Slide43

Optimizing Draft Profitability

Draft beer yields the highest margins of any product in the houseYet industry wide, we lose 20% of the draft beer we purchase due to waste and spillageShrinkage translates to losing 1 out of 5 five kegs — negates much of the profit potentialInability to accurately audit kegs makes draft a target of opportunityMeasure bar’s waste and spillage by letting draft beer drain into 5-gallon bucket

Increasing Beverage Profitability — “No Profit, No Success”

Slide44

Optimizing Draft Profitability — FOB Detectors

FOB detectors prevents empty kegs bleeding out the beer in feed lineThey prevent kegs from draining the beer in feed line when they blowFOB detectors reduce waste and increase productivity

Increasing Beverage Profitability — “No Profit, No Success”

Slide45

Optimizing Draft Profitability — Flow MetersFlow meters work within the feed lines and are completely non-intrusive systemsSystem determines the exact volume of beer dispensed during shiftDerives pour cost for each beer, creates staff accountabilityFlow meters don’t affect quality or impact portioning; quick return on investment

Increasing Beverage Profitability — “No Profit, No Success”

Slide46

Optimizing Draft Profitability — Pouring Practices

Proper pouring practices significantly reduces draft beer wasteInadequate training results in increased costs — amount of head/unclean glassesLeads to unprofessional service Review pouring procedures often and regularly

Increasing Beverage Profitability — “No Profit, No Success”

Slide47

Bar Savvy — Bar Backs

Bar backs afford you flexibility in scheduling and will lower your payrollAren’t there shifts at your bar too busy to schedule only one bartender……yet not busy enough to warrant scheduling two?

Increasing Beverage Profitability — “No profit, no success”

Slide48

Bar Savvy — Bar Backs

By scheduling a bartender and bar back to work the shift……the bartender gets the extra set of hands he needs behind the bar…the bar back gets the experience he needs to learn the job…the house benefits by saving on payroll …and it creates an in-house program for promoting bartenders from within

Increasing Beverage Profitability — “No Profit, No Success”

Slide49

Bar Savvy — Getting More Bang Out of Comps

Complimentary drinks are a longstanding aspect of the businessComps are expensive — deprives the bar of sales, depletes product and increases liabilityWhat if you could get more mileage out of comp’ing guests their drinks?

Increasing Beverage Profitability — “No Profit, No Success”

Slide50

Bar Savvy — Getting More Bang Out of Comps

Guests realize GM or owner just wave their hands and the drinks appear…not a big dealBut what if the GM or owner pulled out some cash and actually paid for the guests’ drinks?On top of that, what if the bartender were allowed to keep 20% as a tip? There’d be good will breaking out all over the place.

Increasing Beverage Profitability — “No Profit, No Success”

Slide51

Bar Savvy — Getting More Bang Out of Comps

Before each shift, the GM or owner is allotted $100 out of a petty cash-like accountAt the end of the evening the remainder of the cash is turned in with the receiptsImagine the lasting impression it will make on guests, produces long-term good will

Increasing Beverage Profitability — “No Profit, No Success”

Slide52

Presented by  Robert Plotkin BarMediarobert@barmedia.com Sean LudfordBevX.comsean@bevX.com

Driving Profits in the New Economy:

Proven Strategies for

Maximizing Profitability


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