In Part 1 of this post, we discussed three liquor cost management tips to help you achieve the right balance between maintaining a low liquor cost and maximizing your profits. Here are three more factors to consider.
Purchase Price
While the price you pay for the products you carry is typically fixed, there are some ways you can save money on your purchase price. The two factors to consider when ordering products for your bar are:
• Case deals
• Product selection
There are many occasions where liquor companies will offer case deals. Often, these deals can result in 1 or 2 free bottles when you buy a case. It’s important to stay on top of these specials and deals in order to minimize your costs.
However, you also need to know which products you use most often to determine which ones are worth buying by the case and which are not. If you buy a case of a product that doesn’t sell very well, you will be left with lots of surplus that will clog up your storeroom and prevent you from keeping the right quantity of more popular items on hand.
Product selection should also be a factor when seeking the right balance between liquor cost and profitability. This is most relevant with your well drinks. Traditionally, bars will stock their well with extremely cheap liquors such as Popov vodka or Evan Williams whiskey. However, a new trend among nicer bars is to have a premium well with slightly higher-end liquors such as Svedka vodka or Jim Beam.
There are benefits to both choices. A premium well gives your bar the impression of being more high end. If you are seeking this type of clientele, then a premium well may be the right option, even though it will increase your liquor cost. However, most customers ordering well drinks are typically price sensitive. Therefore, having a traditional well with a low-cost alternative might more effectively address their needs.
You can run a successful bar using either option. The important thing is to make a conscious, strategic decision about which one works best for your bar.
Portioning
Most of the bars that work with Bar-i use a 1.5 oz. pour for their drinks. However, some of the more corporate establishments typically choose a 1.25 oz. pour size.
The argument for choosing a 1.25 oz. pour size is that most customers will probably not notice the difference if their drink has a quarter ounce less liquor in the glass. However, since your drinks have 1/6 less alcohol, you can reduce the price by 1/6. For example, a $6 1.5 oz. drink can become a $5 1.25 oz. drink. This would appeal to price-sensitive customers who may choose to come to your bar because drinks are priced slightly lower than other bars in the area.
However, many higher end bars prefer to provide stronger, better tasting drinks since their clientele is typically less concerned with the price of the drink than they are with the quality and taste. In this situation, choosing a 1.5 oz. pour size is preferable.
You should also think carefully about the size you choose for your shot glasses. In general, shot glasses range anywhere in size from 1 oz. to 1.5 oz. Bar-i recommends using a smaller 1 oz. shot glass since it will take customers who drink many shots throughout the night longer to get wasted.
But there is another benefit to using a small shot glass. If you pour 1 oz. shots and 1.5 oz. cocktails, you can price your shots lower. This may entice more people to order shots. Since the shot contains 1/3 less liquor, you can charge 1/3 less than you do for the cocktail. For example, you can offer a $4 shot of whiskey compared to a $6 whiskey cocktail. Many customers will perceive this as providing them with greater value on the shot, even though you are just passing along your savings from pouring a smaller drink.
Shrinkage
Shrinkage is a problem affecting just about every bar. Every time a product gets wasted, over-poured, or given away for free, it is costing you money. The best way to monitor and decrease your shrinkage is to use a sophisticated liquor inventory system which can accurately track which products have the most shrinkage.
The Bar-I liquor inventory system will compare what is being rung into your POS system with what is actually being poured. The detailed data you receive will create greater accountability among your staff and help you significantly reduce shrinkage.
For additional tips on how to streamline your processes or to schedule a free consultation, please contact Bar-i today or call 303-219-0916. We provide services to bars nationwide from our offices in Denver, Colorado.