Compared to restaurants, bars and breweries often have a much larger profit margin. That doesn’t mean that it’s easy to stay afloat as a bar or brewery owner. Even with an average markup of 300% to 500% on alcoholic beverages, it can be difficult to remain profitable in such a volatile industry (especially as the COVID-19 pandemic continues).
If you want to run a successful bar, it’ll take more than just attracting customers or having great drink specials. You’ll also need to keep a close eye on your costs. If you’re not tracking what comes into and goes out of your bar or brewery, it can quickly tank your profits.
Budget Branders understands the challenges of running an independently owned and operated business. That is why we have put together a list of 11 ways that you can cut costs for your brewery or bar.
Get Your Employees on Board
One of the best ways to keep your expenses under control is to make it a team effort. After all, if your staff doesn’t know that something is a priority for you, they won’t be able to act on it. If your goal is to cut costs, then hold a meeting where you discuss what your plan is and how they can help.
To motivate employees, you could offer incentives for taking cost-cutting measures, like noticing a mistake in an order of liquor or other inventory. In this way, you can increase the odds that your staff will be working to cut costs, regardless of whether or not you are physically present.
Consider Alternate Forms of Marketing
One of the keys to success for any business is coming up with a solid plan for marketing and/or advertising. When you look at your budget, marketing might be a pretty big expense. Fortunately, there are ways to reduce these costs without negatively impacting your profitability.
One great option is to up your social media game. A recent Pew Research survey found that 72% of Americans use social media in some way, whether it’s to connect with others, engage with news content, or share information. They also use it to interact with brands.
Increasing your social media presence can be a great way to boost your marketing efforts for little or no cost. You can try posting special events on social media, going live, or running contests on social media. You may even add some social media-friendly elements to your bar or brewery so that your patrons are motivated to snap pictures or take videos in your space – and share them with their followers.
You can also try to market yourself in a different way. For example, if you already buy disposable cups for your bar or brewery, consider getting branded cups. A plastic stadium cup is something that customers might take home with them, and use again and again – giving you more bang for buck with a product that you might already be buying.
It’s pretty common to set up bar snacks, or give out free samples of beer. There are solid reasons for doing these things – eating salty snacks can encourage patrons to drink more (and thus spend more money), and allowing customers to try before they buy can boost overall sales. But these tactics can also cut into your bottom line.
Take a hard look at what you may be giving away for free. Some of these items – like nonalcoholic beverages for designated drivers – may be worth the expense. But you may want to think about whether some freebies should stay, or whether they could be swapped for a less expensive alternative (like popcorn instead of mixed nuts at the bar).
Do a Daily Inventory
Taking inventory can be painful, but it is one of the best ways to keep your business running smoothly. Doing a daily inventory may seem like overkill, but it can give you a more accurate understanding of what is going on at your restaurant or brewery. It is also relatively easy to do once you get started.
Daily inventories are particularly important in an industry where employees might be more tempted to help themselves to the stock. When you have a good idea of how much alcohol you have on hand each day, you’ll be quicker to notice any missing supply. You can also get a better sense of waste and losses from overly generous pours so that you can address these problems immediately.
Get Smart about Staffing
With any bar or brewery, there are going to be peaks and valleys. If you want to reduce your expenses, plan your staffing so that you aren’t overstaffed during slow times – or understaffed (and missing out on sales) during busy periods.
It may be easy to predict staffing levels in some ways. If you run a sports bar, you can probably count on having a full house when there is a big game. Other things may be harder to predict, like fewer patrons on cold or rainy days when you have a big outdoor space. Using a software program can give you a better understanding of when you are slow versus busy so that you can staff accordingly.
Focus on Consistency in Serving Sizes
Yes, there is a big markup on alcohol sales in bars and at breweries. But if your staff is regularly over pouring, then your profits will suffer.
Menu prices are calculated based on a number of factors, including how much of each ingredient is put into a drink. If your staff isn’t using a jigger to properly measure drink components, it’ll affect your bottom line. Remind staff to be consistent – and keep an eye on your liquor levels to confirm that they’re following their training.
Use the Correct Glassware
One reason why some bars and breweries lose money is that they aren’t using the right glassware. If your drinks are priced based on an 8 ounce serving, but your bartender is serving them in a 12 ounce glass, you’ll lose money.
Using the right glassware for the drink will keep costs in line. It can also ensure that customers are happy, as they will want their drink served correctly (i.e., a Belgian beer should be served in a tulip-shaped glass – not a pilsner glass).
Organize Your Supplies
One of the easiest ways to cut costs is to keep your bar or brewery well-organized. After all, it’s easy to order too much if you don’t know what you have. Being organized can also make a daily inventory much easier.
Start by grouping inventory based on item type or how it is used. Then implement the FIFO (first in, first out) method for your products and supplies. This ensures that products are regularly rotated – and are used before they go bad.
Do a Refresher Training
When you bring on new employees, you probably spent a fair amount of time training them. Over time, they may forget some of what you taught them – or gotten a bit sloppy about things like cocktail recipes and draft pours.
Make sure that you are providing ongoing training to your staff. This will help you cut costs from waste and mistakes, and make sure that you are getting your money’s worth from your products.
Know Your Numbers
It is pretty hard to cut costs if you don’t have a firm grip on things like sales, invoicing, labor expenses, and other expenditures. A good software program makes it easy to run reports, from a daily snapshot to more in-depth analysis. Make sure that you are running these reports regularly, and examining them to know what you’re bringing in and what you are spending.
There will always be times when you just have to eat an expense – like when a glass breaks, a customer sends a drink back, or a bartender makes a mistake. Knowing that waste happens isn’t enough. Keeping track of it can help you find ways to reduce waste – and improve your profits.
Grow Your Business with Budget Branders
Owning a bar or brewery isn’t easy. Simple mistakes can make it hard to turn a profit. By employing these cost-cutting measures, you can make sure that you remain in the black.
At Budget Branders, we know that running a small business often means doing things that aren’t very glamorous, like taking inventory. Our goal is to help fellow entrepreneurs succeed with a line of disposable products including cups, bowls, and bags that can be customized with your brewery or bar’s logo. We sell all of our products in qualities that make sense for smaller businesses, and offer them at fair prices.
To learn more or to request a quote, contact us by pressing the chat button or submitting a contact form.