EXPERT TIPS FOR COST CONTROL IN BARS

In order to control costs and boost profitability in your bar, there are a range of different aspects you need to focus on beyond your bottom line. From stock management to keeping a monthly track of costs, Charlene Dawes shares effective strategies and analysis tools to improve cost control at all times.

STAYING ALIVE: HOW TO ENSURE YOUR BAR LASTS AFTER OPENING

People often ask me if it’s hard to open a bar, and my answer is always the same: opening one is easy but keeping it open is much harder.

After the initial months of being the new bar in town and attracting all new customers, things do slow down a bit and it’s crucial to keep the momentum of the business going.

After all, a bar is a business and not just a hobby. In hospitality, it is important to be creative and keep generating new ideas. But it’s equally important to control cost and boost profitability while doing so.

DISCOVER THE IMPORTANCE OF COST ANALYSIS

Some bar owners have never operated a business on their own before, so keeping track of how well they are doing is often done by judging the amount of money that’s coming in but neglecting cost control and not carrying out an analysis.

It's important to look at every aspect of the business when it comes to cost. We often forget to include wastage, maintenance and irregular costs that add up and eat into our profit. Carrying out a cost analysis should be a monthly task, not an annual one. It could be too late by then and impossible to recover the business. A simple way to carry an analysis at your bar could be separating the food and drink costs and making a transfer record of items that are shared amongst the two. Doing this will enable you to create a much more accurate cost of sales for both departments.

WHY YOU SHOULD PRIORITISE MANAGING YOUR STOCK

Managing your stock is one of the most important things you can do for your business. Managing what we buy is crucial but looking at what we cannot sell is also important - doing this is essential for controlling costs. We often sit on a lot of dead or slow-moving stock. Finding ways to use this can reduce your stock level and also lower purchases.

It’s very popular to have guest bartender events now who often use ingredients or spirits that we do not carry in our bar, so additional purchases will have to be made but often never used again. You can identify these ingredients and use them in special of the month promotions, instead of offering these serves for one night only. Customers will find them interesting, and it will lower your stock level.

ORDER! ORDER! PLAN YOUR PURCHASES

Purchasing what we need at the right moment has always been a good idea. But it’s often harder to manage in real life.

Purchase planning and usage analysis can enable us to work on an average of how much we use monthly and discuss with suppliers which items could be purchased in bulk or discover which products you are simply overordering. Find a suitable purchase and stock management software which can track purchases, establish a pattern and help with data analysis. We use one called Lime Inventory to help us control our costs.

WAYS TO RECYCLE YOUR GLASSWARE

We tend to like choosing new glassware for new seasonal cocktails but after one season or a year, they are left in storage.

If you are fortunate enough to have several bars, then it’s a great way to create a second life by rotating glassware amongst your bars. But if you are a single bar owner, you are often stuck with them in storage, and they are soon forgotten. So, before they gather dust, try to offer the glassware up to other bars in your community. A simple social media post could find the next owner and save the both of you some money, space and benefit the environment.

TOP TIPS TO CUT DOWN ON RENT AND LABOUR COSTS

Two of the most discussed topics amongst bar owners will definitely be rent and labour costs. Finding the right property and signing a lease you can afford is part of the initial success of your business. The rent is a fixed cost that we know we have to pay, but labour cost can vary slightly month by month based on your needs.

Reducing staff turnover will help to control this cost. You don’t keep staff purely by offering them more money, but by also keeping them interested in being part of your business. Enhancing their knowledge by giving them the right amount of training will give them more confidence and improve their wellbeing.

Less staff turnover means less time spent on:

• Interviews
• Placing ads
• Redoing the initial training

Being good to your employees will always pay off in the long run. Try to schedule off-venue group meetings, so managers can concentrate on employees and talk more openly, and in return, employees can feel more comfortable expressing themselves. It does everyone good to take a breather from the day-to-day work environment.

On top of this, organise efficient and effective management meetings which will make sure senior management are working together to keep track of costs and keeping the team spirit high. We can spend every day working very hard on our business but taking the time to step out and look in will also be very beneficial.

Key Takeaways

• Investigate every financial aspect of the business when it comes to cost analysis, don’t neglect wastage, maintenance and irregular costs
• Carry out cost analysis monthly
• Plan ahead with your purchases and examine usage and stock to make sure you are ordering the right things, in the right quantity
• Consider recycling glassware between venues, or amongst your local bar community
• Reduce staff turnover by investing your staff to cut down on labour costs