Profitability – It’s what you spend, not what you take!
When thinking of the quickest ways to increase profit the most obvious answers for on trade operators is to simply take more money. However, whilst there is quite clearly a benefit to increasing takings this can be a difficult process. Best practice for any business is to look inwards at the money they are spending and how to both reduce their costs and use the costs they are incurring as efficiently as possible.
Here are 4 key tips to increase profitability and reduce outgoings.
Being able to accurately plot out what your venue is expecting to take over a certain period will allow you to concentrate your efforts and orders to specific days or events to maximise takings whilst saving money on other days. By looking at takings from the same date on previous years and cross referencing that with any special events that my drive extra traffic in the area you can make accurate forecasts that will allow you to better plan your orders, plan more efficient rota’s and maximise the profits from any takings. Special events to account for would be local or national sporting events. Organised events such as marathons or other distance runs. Large scale concerts and outdoor events. Special occasions and seasonal events such as bank holidays or Mother’s/Father’s Day.
As sustainability grows ever more in the consciousness of many a bartender and operator it’s important to remember that there are also monetary benefits to reducing waste. Reducing waste comes in many forms, with accurate forecasting you can make much better judgements on par levels for things such as fresh fruit for garnishes, perishable goods such as soft drinks and kegs of beer. In order to create a par level for a spirit used in a certain cocktail for example, look at the weekly sale for that cocktail for the last 3-4 months. You can then work out what your average weekly sales are but also the highest number of sales. This will let you work out how much of that spirit you need on hand every week and can stop you from over ordering and subsequently wasting money.
Our wastage calculator is a fantastic way to work out if you're overspending!
Manage your wage bills
Once there’s a good idea of how much business you are expecting on any given day it’s important to plan your rotas accordingly. It’s highly unlikely you’re going to need every station on the bar fully staffed on a Monday lunch time. It’s a great practice to look at your weekly takings and set a wage budget that at a percentage of that. This will allow you to accurately plan how many staff you need in each area of the venue to provide a complete and fantastic customer experience without over staffing or overspending. By reducing staff numbers on quiet days, it will allow you to ramp up the numbers on busy days such as the weekends to make sure you maximise the money you can make in those times without over working the staff on shift.
Be Mindful Of The Cocktail Costs
Cocktails can be a great way of driving and increasing sales, drawing customers in through unique and innovative creations whilst setting you apart from your competition. They can also be a great way to make solid profits if you are wise to the cost of your cocktails and how long it takes to make them. Whilst the focus on cocktails should always be quality ingredients and flavour, there will be limitations on what ingredients you can use within them. If the total cost of the ingredients of the drink surpasses the price at which you are selling them then clearly there are some problems. However, if you can aim to get a gross profit at around 70-80% then your cocktails can be a great way to increase profit. Alongside that it’s important to make sure your cocktails are simple and easy to make quickly and efficiently. How long it takes bartenders to make drinks will impact how much money can be taken and subsequently how much profit can be made. Pre-batching most popular cocktails can be a great way to save time and money to make sure cocktails are served as quickly as possible.
Use our profitability calculator to work out how much your cocktails can make for your bar!
If you look after your guests with excellent service, profits are sure to follow
Measure the profitability of your mixed drinks to discover which serves are driving the most profit in your bar.
Bar Chat Episode #6: How To Increase Profits & Impress Customers
On this episode Director of Bars at The Savoy, Declan Mc Gurk and Founder of Barmetrix, Sean Finter chat to host Tristan Stephenson about the link between venue profitability and customer satisfaction.
Take a look at our wastage calculator to see the potential costs of wasting stock.