Beverages should be a fantastic profit driver in your business – but too often, the high margins are reduced by wastage, poor service and stock security problems. Whether it’s wine, beer, spirits, coffee or soft-drinks, there are plenty of ways to improve bar profits and profit-margins of your beverage sales. When you analyse the profit figures, stock levels and stocktake shortfalls, staff sales performance and service workflow, the problems will quickly become apparent, and improvements can follow.
First you need facts: if there are problems, you’ll need to examine your KPI’s to locate the cause. Can you produce the following Key Performance Indicators?
KPIs to Improve Sales & Productivity
Average Sales per Customer. Check separately for alcohol beverages and non-alcohol. It’s the perfect indicator of two things – how much your beverages appeal to your customers and how well your staff are selling. This KPI can be a good basis for a sales bonus system.
Staff Training Activities – how often does this happen? Is it regular each week or month, or random and usually forgotten? Who is responsible? As we often say at Foodie Coaches, many cost problems are actually SALES problems – a boost in Average Sales per Customer can make a dramatic improvement in profit margins, even without fixing other issues.
Total Sales and Overall Gross Profit % on Sales – the main KPI to show – are results holding steady, improving or declining? Ultimately, the actual Gross Profit (real money) will matter the most.
Sales per Point of Sale Terminal – in a fast-moving bar, efficient bar layout and nimble staff will make a huge difference to sales per hour. It may be worth keeping staff on their own till and comparing the results. Make sure till screens refresh quickly and products can be found quickly – bad keyboard design can be a big drag on sales!
Staff Costs per Hour and per Customer. You measure total labour cost, now divide it by the number of hours and customers to have a useful comparison with last week or last year. Do you have customer numbers? It can be tricky to work out exactly in a fast moving bar – an electronic door counter can help with this. When you get (fairly) accurate figures, a whole new way to measure productivity opens up.
Top 3 Ways to Improve Bar Sales in the next 7 days:
Have good booze. Sounds simple, right? You’ve already stocked it full of your favorite suds, and now you’re wondering why the people aren’t flocking. Make sure you’re covering the bases. A big IPA drinker won’t touch a generic lager, like a VB drinker isn’t likely to touch an Imperial Fruitcake Gose. Some people only drink Rose. Make sure you’re listening to your customers when they’re struggling to find what they want. This doesn’t mean you have to get exotic indie bottlings of Islay Whiskey, but you will hear trends. Don’t poo-poo them.
Invest in the right glassware. Don’t have pints? Get them. Assess what you can do to cater to your customers. The easiest upsell I hear is for when someone asks for a beer is, “Pint?” It’s an automatic upsell. McDonalds do the same when you try to order a single item. “Is that a meal?” Learn from the best, right? Just as a side note: The right glassware can also help your team to not accidentally (or be pressured into) overpouring. They’ll pay for themselves.
Upselling through passion. We have an almost unique business where we can sell things we are truly passionate about. Just listen to your staff talk about products – Some staff will be naturally enthusiastic about selling certain things. See if you can lean into their passion, or even get them to do some light cross training with the other staff. If a customer is after a banging whiskey, they WANT to be sold one. They know there’s a price involved, and to be honest, few patrons will have the pallet to understand an amazing whiskey, what they’re after is a story. Reps will 100% also do this training with your staff, and your staff will get to get some free grog. How good! fromSam Robertson, experienced bar operator and now a coach with Foodie Coaches
KPIs for Controlling Bar Costs
Gross Profit on Individual Items. If you’re selling two bottles for the same price, but one costs $5 to buy and one costs $7, obviously you try to maximise the sales of the one with the highest margin. How do the margins on cans of Coke compare with post-mix Coke? How much post-mix gas do you use for every 1000 serves? What are the margins on mineral water poured by the glass compared to served by the bottle? How much do you really make on fresh-squeezed juice? How do you compare faster-serving bottled beer and tap beer?
Stock Value – how much cash is locked up in your cellar? Are there more items you could order ‘just in time’? As freight costs rise and minimum orders are more common, compare the benefits of more stock or smaller deliveries. The romance of long wine lists and ‘special deals’ can lead to bulging shelves – be strong, and stay lean!
Stock Turnover – how fast is the stock selling? If you are carrying wine stock worth $50,000 and the value (not sales) of what you sell each week is only $10,000, it’s taking 5 weeks to turn over your stock. Too long?
Carrying Cost of Stock – what is the cost of financing $50,000 of stock? Take the current interest rate for borrowing money, apply it to your stock value, and divide by 52 to get a weekly figure. If stock is valued at $50,000 and the business borrowing rate is 12%, annual cost of financing the stock is $6000 or $115 per week.
Sales and Stocktake Discrepancies. Alcohol means security problems. As an essential KPI, measure the difference between what you used (from the stocktakes) and what your POS system says you sold. What’s the difference? Best practice will bring the variation down to below 1% – how does yours rate? There is often value in employing external stocktakers.
Improve Bar Profits by Cutting Excess Stock
We’ve all been there – accumulated a ton of booze, or our Manager ordered a ton of a product for whatever reason, and now we’re stuck. What are our options? Sell it. Seems simple, right?
Here are a few ways that work every time: > Got some beer you need to move in a hurry? Put it in a big ice bucket on the counter with a Special Sign for $5 Tinnies. This would be ideal if the beer is nearing its Best Before. Don’t try to sell it warm. Don’t be gross. > How about spirits? Depending on the product, you could put it into cocktail prebatches. .Got a rum you don’t want to stock anymore? Pre-batch it into your favourite spin on a Mai Tai. Got a function coming up? > Once again: Cocktail pre-batches. If it’s too premium for bulk recipes, you could always make it your Whiskey / Spirit of the month, and get some interest in it. Who knows, you could be ordering more of it instead of getting rid of it!
Talk to your Reps. Their job is to move product. You’re having trouble moving that product. Let’s start that conversation. If you’re struggling to move excess bar stock, AND you’re keeping that product, have a talk to your supplier and see if they’ll jump on board. They may be able to help you through sponsored events or promotional material. If your relationship is good, you can ask to return undamaged stock to suppliers. Obviously, this will be easier if you’re still buying stock from them and the items are non-perishable. Have a chat.
Ordering. How you order, or more precisely, not order, will be key to maintaining stock levels. Make sure whomever is doing your ordering has a budget based on previous sales to go off, and isn’t ordering by ‘feel’. It’s too easy to start accumulating weird bottles of booze over time, or get suckered into deals on stock you don’t actually want. By implementing these strategies, you can effectively manage and reduce excess stock in your bar, leading to a more efficient and profitable operation. Booze isn’t just there to look pretty. from Sam Robertson, an experienced bar operator and now a coach with Foodie Coaches
Business owners often consider bar sales ‘easier and less complicated’ than food and kitchens. It can be, but that’s not a reason to take your eye off the numbers or assume that security and stock control will run itself.
Work through all these figures and see where the surprises are – that’s where to take action first.
Want to get some 1 on 1 help? Talk to one of our coaches
Want the Action Sheet ? Click Here
Beverages should be a fantastic profit driver in your business – but too often, the high margins are reduced by wastage, poor service and stock security problems. Whether it’s wine, beer, spirits, coffee or soft-drinks, there are plenty of ways to improve bar profits and profit-margins of your beverage sales. When you analyse the profit figures, stock levels and stocktake shortfalls, staff sales performance and service workflow, the problems will quickly become apparent, and improvements can follow.
First you need facts: if there are problems, you’ll need to examine your KPI’s to locate the cause. Can you produce the following Key Performance Indicators?
KPIs to Improve Sales & Productivity
Average Sales per Customer. Check separately for alcohol beverages and non-alcohol. It’s the perfect indicator of two things – how much your beverages appeal to your customers and how well your staff are selling. This KPI can be a good basis for a sales bonus system.
Staff Training Activities – how often does this happen? Is it regular each week or month, or random and usually forgotten? Who is responsible? As we often say at Foodie Coaches, many cost problems are actually SALES problems – a boost in Average Sales per Customer can make a dramatic improvement in profit margins, even without fixing other issues.
Total Sales and Overall Gross Profit % on Sales – the main KPI to show – are results holding steady, improving or declining? Ultimately, the actual Gross Profit (real money) will matter the most.
Sales per Point of Sale Terminal – in a fast-moving bar, efficient bar layout and nimble staff will make a huge difference to sales per hour. It may be worth keeping staff on their own till and comparing the results. Make sure till screens refresh quickly and products can be found quickly – bad keyboard design can be a big drag on sales!
Staff Costs per Hour and per Customer. You measure total labour cost, now divide it by the number of hours and customers to have a useful comparison with last week or last year. Do you have customer numbers? It can be tricky to work out exactly in a fast moving bar – an electronic door counter can help with this. When you get (fairly) accurate figures, a whole new way to measure productivity opens up.
Top 3 Ways to Improve Bar Sales in the next 7 days:
Have good booze. Sounds simple, right? You’ve already stocked it full of your favorite suds, and now you’re wondering why the people aren’t flocking.
Make sure you’re covering the bases. A big IPA drinker won’t touch a generic lager, like a VB drinker isn’t likely to touch an Imperial Fruitcake Gose. Some people only drink Rose. Make sure you’re listening to your customers when they’re struggling to find what they want. This doesn’t mean you have to get exotic indie bottlings of Islay Whiskey, but you will hear trends. Don’t poo-poo them.
Invest in the right glassware. Don’t have pints? Get them. Assess what you can do to cater to your customers. The easiest upsell I hear is for when someone asks for a beer is, “Pint?” It’s an automatic upsell. McDonalds do the same when you try to order a single item. “Is that a meal?” Learn from the best, right? Just as a side note: The right glassware can also help your team to not accidentally (or be pressured into) overpouring. They’ll pay for themselves.
Upselling through passion. We have an almost unique business where we can sell things we are truly passionate about. Just listen to your staff talk about products – Some staff will be naturally enthusiastic about selling certain things. See if you can lean into their passion, or even get them to do some light cross training with the other staff. If a customer is after a banging whiskey, they WANT to be sold one. They know there’s a price involved, and to be honest, few patrons will have the pallet to understand an amazing whiskey, what they’re after is a story. Reps will 100% also do this training with your staff, and your staff will get to get some free grog. How good!
from Sam Robertson, experienced bar operator and now a coach with Foodie Coaches
KPIs for Controlling Bar Costs
Gross Profit on Individual Items. If you’re selling two bottles for the same price, but one costs $5 to buy and one costs $7, obviously you try to maximise the sales of the one with the highest margin. How do the margins on cans of Coke compare with post-mix Coke? How much post-mix gas do you use for every 1000 serves? What are the margins on mineral water poured by the glass compared to served by the bottle? How much do you really make on fresh-squeezed juice? How do you compare faster-serving bottled beer and tap beer?
Stock Value – how much cash is locked up in your cellar? Are there more items you could order ‘just in time’? As freight costs rise and minimum orders are more common, compare the benefits of more stock or smaller deliveries. The romance of long wine lists and ‘special deals’ can lead to bulging shelves – be strong, and stay lean!
Stock Turnover – how fast is the stock selling? If you are carrying wine stock worth $50,000 and the value (not sales) of what you sell each week is only $10,000, it’s taking 5 weeks to turn over your stock. Too long?
Carrying Cost of Stock – what is the cost of financing $50,000 of stock? Take the current interest rate for borrowing money, apply it to your stock value, and divide by 52 to get a weekly figure. If stock is valued at $50,000 and the business borrowing rate is 12%, annual cost of financing the stock is $6000 or $115 per week.
Sales and Stocktake Discrepancies. Alcohol means security problems. As an essential KPI, measure the difference between what you used (from the stocktakes) and what your POS system says you sold. What’s the difference? Best practice will bring the variation down to below 1% – how does yours rate? There is often value in employing external stocktakers.
Improve Bar Profits by Cutting Excess Stock
We’ve all been there – accumulated a ton of booze, or our Manager ordered a ton of a product for whatever reason, and now we’re stuck. What are our options? Sell it. Seems simple, right?
Here are a few ways that work every time:
> Got some beer you need to move in a hurry? Put it in a big ice bucket on the counter with a Special Sign for $5 Tinnies. This would be ideal if the beer is nearing its Best Before. Don’t try to sell it warm. Don’t be gross.
> How about spirits? Depending on the product, you could put it into cocktail prebatches. .Got a rum you don’t want to stock anymore? Pre-batch it into your favourite spin on a Mai Tai. Got a function coming up?
> Once again: Cocktail pre-batches. If it’s too premium for bulk recipes, you could always make it your Whiskey / Spirit of the month, and get some interest in it. Who knows, you could be ordering more of it instead of getting rid of it!
Talk to your Reps. Their job is to move product. You’re having trouble moving that product. Let’s start that conversation. If you’re struggling to move excess bar stock, AND you’re keeping that product, have a talk to your supplier and see if they’ll jump on board. They may be able to help you through sponsored events or promotional material. If your relationship is good, you can ask to return undamaged stock to suppliers. Obviously, this will be easier if you’re still buying stock from them and the items are non-perishable. Have a chat.
Ordering. How you order, or more precisely, not order, will be key to maintaining stock levels. Make sure whomever is doing your ordering has a budget based on previous sales to go off, and isn’t ordering by ‘feel’. It’s too easy to start accumulating weird bottles of booze over time, or get suckered into deals on stock you don’t actually want. By implementing these strategies, you can effectively manage and reduce excess stock in your bar, leading to a more efficient and profitable operation. Booze isn’t just there to look pretty.
from Sam Robertson, an experienced bar operator and now a coach with Foodie Coaches
Business owners often consider bar sales ‘easier and less complicated’ than food and kitchens. It can be, but that’s not a reason to take your eye off the numbers or assume that security and stock control will run itself.
Work through all these figures and see where the surprises are – that’s where to take action first.
Want to get some 1 on 1 help? Talk to one of our coaches
Check the other useful blog posts on the Foodie Coaches website…