Cutting Costs in Your Bar Without Cutting Corners

By Donald Burns


Donald Burns

July 26, 2016

Posted in Restaurant Management, Industry & Culture

When business is good, everything is great in your world.

When the numbers turn bad, however, most bar owners turn to making budget cuts to make up the loss in sales. But, let’s put something out on the table right away: You cannot save your way to a profitable bar or restaurant.

As a bar or restaurant owner, do you need to be aware of your costs? Of course. Do you need to overreact and make drastic cuts when the numbers are declining? Probably not.

Just like in any business venture, irrational changes are usually not the course of action you want to take. Let’s take a look at some common economical areas and ways you can cut costs in your bar without cutting corners.

Market Your Bar

Unfortunately, marketing is one of the first areas that many restaurant and bar owners tend to put on the chopping block first. But, when business is slow, the last thing you want to do is cut back on your marketing efforts. In fact, you need to amp them up!

If radio, TV and print advertising is outside your budget, have no fear. In today’s market, all you really need is a smart phone and some Internet access to drive traffic to your business. Yes, we’re talking about social media.

There are three main platforms you need to be consistently active on (and the keyword here is consistently): Twitter, Facebook and Instagram. These three are the trinity of social media marketing. Combined, they provide a three-way of social media power that most older forms of marketing can’t even touch. If you’re proficient in the three already, make sure to expand into new social media platforms like Periscope and Snapchat.

With as little as a one-hour commitment each week, you can start driving traffic to your restaurant with a very limited budget. You can post on each platform separately, or you can use a social media management tool like Hootsuite, Buffer, Everypost or Sprout Social to help you schedule your posts for around $10 a month. These tools are all fairly easy to use and learn. Once you get the hang of it, all you need to do is spend a little time on one of your slower days and schedule all your social posts for the upcoming week.

If you really want to jump on a hot (but probably short-lived) trend, look into catching the Pokémon wave of business. If you haven’t heard of this mega trend, get your head out of the sand and study. Many bars have been lucky enough to be named a Pokémon Go Gym, which is like hitting the Powerball numbers. This basically makes your bar or restaurant a Pokémon hot spot. Where there are Pokémon, there are fans—or rather, potential customers—who want to catch them.

Get creative and think about some off-the-wall ideas like a Pokémon brewers crawl with other local businesses—a beer crawl set up to help your guests enjoy some drinks and go on the hunt for those little digital characters. Oh, and don’t sweat it if you’re not a Pokémon Gym or stop. You can buy credits that attract Pokémon to your bar or restaurant for 30 minutes (it’s called a lure module). The cost to buy a 30 minute “lure module” is only about $1. Just make sure to tie it into your social media channels and get the word out that at a certain time your place is going to lure Pokémon, and watch the fans come looking for them.

It’s being up to date with the latest digital trends, such as this one, that will help you attract more customers.

Train Your Team

Here is another area that usually suffers from the axe of cutbacks. Just like marketing, it’s really not an area you want to cut back on. Restaurants and bars get better when the people working in them become better at what they do.

How does your staff improve? Training.

When times are tough and business is slow, bringing in a consultant to do some training can be a good idea. What you can do is talk to your vendors—food and beverage distribution companies are not suffering for sales. In fact, a lot of these vendors hire outside consultants to come in and conduct seminars for customers. Shamrock Foods, Sysco, Ben E. Keith and many others hold educational workshops on topics such as food cost, hiring, marketing and suggestive selling techniques for your service team—all free of charge if you buy product from them.

Education and training doesn’t have to be in a formal class setting. Blog post like this and articles from other websites like Foodable TV Network, Modern Restaurant Management, Toast Management Blog, and Bar Biz Magazine all publish free content on how to improve your bar operations. Browse the Internet for a while, find a couple of blog posts or articles that could be useful for your team and print them out for distribution.

Also, take advantage of the many industry magazines available (you may even qualify for a free subscription for some) on the market like Restaurant Business, Restaurant Hospitality, Market Watch and Nightclub & Bar Magazine. These are just a few of the many available resources for training and education.

Know Your Numbers

It doesn’t make a difference how much you cut from this budget or that budget if you don’t know your costs in the first place. You must do your homework and set up your business for success, or you might be making bad decisions based on bad information.

Maybe that bone-in dry-aged pork chop on the menu is not really a money maker and it’s time to cut that from your kitchen’s inventory. How about that eight-ingredient craft cocktail that takes the team two hours just to prep for and has a beverage cost of 40%? Sure, it’s impressive. But, being on-trend without being profitable is a losing proposition. If you don’t know the cost of every item on your menu, through correct drink pricing, pour costing and understanding your sales information, your business will suffer.

Whether busy or slow, profitable or not, there are some things you must always do to be successful in this business. Always be marketing. Always be training. And always be the person who knows their costs and sales data. Follow these processes and you might not need to make any cuts at all.

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