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Copyright Bar Prophets 2011
Successful Beverage Management —
Proven Strategies for the On-Premise Operator
LAS VEGAS - MARCH 2011
Presented By:
JACK ROBERTIELLOContributing Editor of Nightclub & Bar Magazine, Drinks
Ink
ROBERT PLOTKINContributing Editor of Nightclub & Bar Magazine, BarMedia
MODULE THREE:SIX WAYS TO INCREASE SALES IN A
DOWN ECONOMY
Copyright Bar Prophets 2011
Taking The High Road — Premium Spirits Yield Larger Margins
• Despite the Recession, on-premise sales of premium spirits continue to increase
• Prevailing attitude in U.S. — life’s too short to drink cheap booze
Copyright Bar Prophets 2011
Taking The High Road — Premium Spirits Yield Larger Margins
• Consumers now have higher expectations about the quality of their drinks
• Consumer Research: 84% said cocktails made with premium spirits taste better
• Consumers said they expect to pay an additional $2.80 for a branded cocktail
Copyright Bar Prophets 2011
$ .67 drink cost ÷ $4.50 sales price = 14.9% cost percentage
Taking The High Road — Premium Spirits Yield Larger Margins
Margarita made with WELL Tequila
1 ¼ oz. Pepe Lopez Tequila $ .34
½ oz. Triple Sec + $ .12
3 oz. sweet ‘n’ sour + $ .21
Drink Cost = $ .67
Call Brands Deliver Bigger Profits
$4.50 sales price - $.67 drink cost = $3.83 gross profit
Copyright Bar Prophets 2011
Taking The High Road — Premium Spirits Yield Larger Margins
Margarita made with PREMIUM Tequila
1 ¼ oz. El Jimador Reposado $ .65
½ oz. Triple Sec + $ .12
3 oz. sweet ‘n’ sour + $ .21
Drink Cost = $ .98
Call Brands Deliver Bigger Profits
$ .98 drink cost ÷ $6.00 sales price = 16.3% cost percentage$6.00 sales price - $ .98 drink cost = $5.02 gross
profit
Copyright Bar Prophets 2011
Taking The High Road — Premium Spirits Yield Larger Margins
Margarita made with SUPER-PREMIUM Tequila
1 ¼ oz. Herradurra Reposado $1.50
½ oz. Triple Sec + $ .12
3 oz. sweet ‘n’ sour + $ .21
Drink Cost = $1.83
Call Brands Deliver Bigger Profits
$ 1.83 drink cost ÷ $7.50 sales price = 24.4% cost percentage$7.50 sales price - $1.83 drink cost = $5.67 gross
profit
Copyright Bar Prophets 2011
Getting More Bang From The Most Important Bottles In The House
• Well liquor is used in more drinks than any other type of spirits
• Brands featured in the well significantly impact profitability
Copyright Bar Prophets 2011
Getting More Bang From The Most Important Bottles In The House
• Selection criteria — featured brands need to conform to concept and clientele
• The bar’s price structure is based on the well
Copyright Bar Prophets 2011
Getting More Bang From The Most Important Bottles In The House
• Often featured at operations with a predominantly price-conscious clientele
• Advantages — low cost per ounce and relatively low carrying cost
• Disadvantages — low quality, no brand recognition, heightened liability
Pouring Brands
Copyright Bar Prophets 2011
Brand NameLiter Cost
Cost Per Ounce
Castillo Rum $ 6.15
$ .18
Gilbeys Vodka $ 6.24
$ .18
Early Times Bourbon $ 6.77
$ .20
Gilbeys Gin $ 8.00
$ .24
Old Smuggler Scotch $ 8.39
$ .25
Pepe Lopez Gold Tequila
$10.47 $ .27
Average Liter Cost $ 7.42
$ .22
Example of a Pouring Brands Well
Getting More Bang From The Most Important Bottles In The House
Copyright Bar Prophets 2011
Average Well Cost = $ .22/ounce
Average Portion Cost (1.25 oz) = $ .28
Drink Price
Cost Percentage
Gross Profit
$3.00 9.3% $2.72
$3.50 8.0% $3.22
$4.00 7.0% $3.72
$4.50 6.2% $4.22
$5.00 5.6% $4.72
Getting More Bang From The Most Important Bottles In The House
Profit Potential — Pouring Brands
Copyright Bar Prophets 2011
• Best suited for a value-conscious clientele or brand-conscious clientele
• Advantages — moderate cost per oz, high quality, enhanced brand recognition
• Disadvantages — elevated cost per ounce, slightly higher carrying costs
Getting More Bang From The Most Important Bottles In The House
Premium Brands
Copyright Bar Prophets 2011
Well Liquors — The Most Important Bottles in the House
Example of a Premium Brands Well
Brand NameLiter Costs
Cost Per Ounce
Ballantines Scotch $11.60 $ .34
Old Forester 86º Bourbon $11.93 $ .35
Finlandia Vodka $12.10 $ .36
Appleton Dark Rum $12.75 $ .38
Cuervo Especial Tequila $14.77 $ .44
Beefeater London Dry Gin $19.02 $ .56
Average Liter Cost $13.70 $ .40 (+ $ .18/oz)
Copyright Bar Prophets 2011
Average Well Cost = $ .40/ounce
Average Portion Cost (1.25 oz) = $ .50
Drink Price
Cost Percentage
Gross Profit
$3.50 14.3% $3.00
$4.00 12.5% $3.50
$4.50 11.1% $4.00
$5.00 10.0% $4.50
$5.50 9.1% $5.00
Getting More Bang From The Most Important Bottles In The House
Profit Potential Premium Brands Well
Copyright Bar Prophets 2011
Getting More Bang From The Most Important Bottles In The House
Profit Comparison
Drink
Price
Cost Percentage
Gross Profit
Pouring Brands $4.00 7.0% $3.72
Premium Brands $4.00 12.5% $3.50
Copyright Bar Prophets 2011
Getting More Bang From The Most Important Bottles In The House
Profit Comparison
Drink Price
Cost Percentage
Gross Profit
Pouring Brands $4.00 7.0% $3.72
Premium Brands $4.25 11.7% $3.75
Copyright Bar Prophets 2011
Merchandising For Success — Increasing The Impact of Your Backbar
• The backbar is your most effective marketing device
• It’s essential the backbar is stocked with the right product mix
Copyright Bar Prophets 2011
• Reassess status of underperforming products — those that take 4+ months to deplete
• Drop dead stock — products that take longer than 9 months to deplete
• Drop duplicate flavors or repetitive styles
Merchandising For Success — Increasing The Impact of Your Backbar
Copyright Bar Prophets 2011
• Reducing inventory levels frees working capital & lessens exposure to loss
• Concentric merchandising — bestselling products positioned in center of backbar
Merchandising For Success — Increasing The Impact of Your Backbar
Copyright Bar Prophets 2011
• Vertically extend each category of spirits with at least one above-premium brand
• Adopt a marketing position — horizontally expand a select category of spirits
• Dedicate a portion of the bar’s marketing to that spirit
Merchandising For Success — Increasing The Impact of Your Backbar
Copyright Bar Prophets 2011
• Guests typically spend 2 minutes with food menus; 20 seconds with bar menu
• Essential your bar menu is well-conceived and easy to read in dim lighting
Bar Menus — Increasing Their Capacity To Drive Sales
Copyright Bar Prophets 2011
• Roll-out three separate menus; each with different specialty drinks
• Rotate the menus every two months and track the sales results
• Bestselling drinks should then be combined in one menu
Bar Menus — Increasing Their Capacity To Drive Sales
Conduct Your Own Market Research
Copyright Bar Prophets 2011
• 88% of consumers read the drink menus at full-service bars and restaurants
• 68% surveyed said the bar menu is the most significant choice influencer
• 58% of the consumers want the bar menu on the table at all times
Bar Menus — Increasing Their Capacity To Drive Sales
What Consumer Research Reveals
Copyright Bar Prophets 2011
• 81% of the consumers want drink prices listed on the menu
• 68% said they wanted to be able to read descriptions of the drinks
• 41% responded that they prefer seeing pictures of the drinks
Bar Menus — Increasing Their Capacity To Drive Sales
What Consumer Research Reveals
Copyright Bar Prophets 2011
• Functional descriptions only include mention of the ingredients in a drink
• Consumers were presented a Margarita menu with only functional descriptions
• 47% of consumers ordered the house, 31% top-shelf, 22% the ultra-premium
Bar Menus — Increasing Their Capacity To Drive Sales
Menu Test #1 — Functional Descriptions Only
Copyright Bar Prophets 2011
Bar Menus — Increasing Their Capacity To Drive Sales
Source: NextLevel Marketing 2009
22%
31%
47%
0% 10% 20% 30% 40% 50% 60%
Ultra-premium
Top Shelf
House
Margarita Menu
House MargaritaCuervo Gold Tequila, triple sec and sweet and sour mix.
Top Shelf MargaritaSauza Hornitos Tequila, Cointreau and margarita mix.
Ultra-Premium, MargaritaPatron Silver Tequila, Cointreau, and margarita mix.
Copyright Bar Prophets 2011
Bar Menus — Increasing Their Capacity To Drive Sales
• Adding romance drink copy to menus drives significant drink trade-up
• 14% of consumers switched from ordering the house Margarita to a branded Margarita
Menu Test #2 — Added Romance Copy
Copyright Bar Prophets 2011
Bar Menus — Increasing Their Capacity To Drive Sales
Source: NextLevel Marketing 2009
36%
31%
33%
28% 30% 32% 34% 36% 38%
Ultra-premium
Top Shelf
House
Margarita Menu
House MargaritaCuervo Gold Tequila, triple sec and sweet and sour mix.
Top Shelf MargaritaSauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks.
Ultra-Premium, MargaritaOur distinctive, hand-shaken ultimate Margarita made with Patron Silver 100 Agave Tequila, Cointreau, and fresh squeezed lime juice served straight up or on the rocks.
Copyright Bar Prophets 2011
Bar Menus — Increasing Their Capacity To Drive Sales
• Only 5% of consumers were affected by the higher price of ultra-premium Margarita
• They switched from the ultra-premium to the premium Margarita
Menu Test #3 — With Added Romance Copy and Drink Prices
Copyright Bar Prophets 2011
Bar Menus — Increasing Their Capacity To Drive Sales
Source: NextLevel Marketing 2009
31%
36%
33%
28% 30% 32% 34% 36% 38%
Ultra-premium
Top Shelf
House
Margarita Menu
House Margarita $6.00Cuervo Gold Tequila, triple sec and sweet and sour mix.
Top Shelf Margarita $7.00Sauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks.
Ultra-Premium, Margarita $8.00Our distinctive, hand-shaken ultimate Margarita made with Patron Silver 100 Agave Tequila, Cointreau, and fresh squeezed lime juice served straight up or on the rocks.
Copyright Bar Prophets 2011
• Consumers prefer stand-along bar menus
• They want descriptions of the drinks they’re ordering
• They want to know how the drinks will look and how much it will cost
Bar Menus — Increasing Their Capacity To Drive Sales
Summary of Menu Testing
Copyright Bar Prophets 2011
• Staff Training and Education — What Your Staff Doesn’t Know Can Cost You
• Training/education yields high ROI in form of increased staff competency
Investing In Your Sales Force — Helping Your Staff Help You
Copyright Bar Prophets 2011
• Education — product knowledge/credibility pivotal to selling premium spirits
• Training — ensuring core competency - pouring, prices, mixology
• Challenge your bartenders to expand their professional skills/cross-training
Investing In Your Sales Force — Helping Your Staff Help You
Copyright Bar Prophets 2011
• Suggestive selling techniques — helping the clientele make informed decisions
• Three sales tactics — how many brands to suggest?
Investing In Your Sales Force — Helping Your Staff Help You
Copyright Bar Prophets 2011
Technique Matters — Production Value Sells
• Handshaking a cocktail communicates freshness and quality to your guests
• Thoroughly mixes ingredients and chills drink to serving temperature
• Vigorously handshaking cocktails is an underappreciated mixing technique
• Adds water; softens the cocktail and melds spirits and modifiers
Leveraging Beverage Trends — Taking Advantage of Latest Intel
Copyright Bar Prophets 2011
Technique Matters — Production Value Sells
• Muddling is a high production value technique
• It does for a cocktail what high-def does for television
• Muddling injects cocktails with vibrant flavors
• Muddling fresh ingredients into cocktails requires double-straining
Leveraging Beverage Trends — Taking Advantage of Latest Intel
MODULE FOUR:PRIORITIZED PROFIT ASSESSMENT
Copyright Bar Prophets 2011
Answer #1 — 0 points
Answer #2 — 5 points
Answer #3 — 10 points
Assessing Your Operation’s Areas of Strength and Weakness
Scoring:
Copyright Bar Prophets 2011
Section score of 45-50 = Excellent
Section score of 35-40 = Very Good
Section score of 25-30 = Average
Section score of 0-20 = Below Average
Assessing Your Operation’s Areas of Strength and Weakness
Section Scoring:
Copyright Bar Prophets 2011
180 - 200 points = Excellent
You’re a seasoned pro with a finger firmly on the pulse
140 - 175 points = Very Good
When it come to the bar, not much gets past you
100 - 135 points = Average
Indicates significant room for improvement
0 - 95 points = Below Average
You’re leaving too much money on the table
Assessing Your Operation’s Areas of Strength and Weakness
Total Score Four Sections:
Copyright Bar Prophets 2011
• Step One: Sequence sections from lowest score (1st) to highest (4th)
• Step Two: Within each section, sequence responses from lowest score to highest
• Step Three: Your areas of weakness now top the lists within each of the four sections
Assessing Your Operation’s Areas of Strength and Weakness
Creating a Business Action Plan
Copyright Bar Prophets 2011
#1 — Identify in what order you will address the areas
of weakness
#2 — Identify who in the business will be responsible for initiating changes
#3 — Assign a date as to when the initiatives are to be implemented
#4 — Track each set of initiatives to ensure progress is being made
Assessing Your Operation’s Areas of Strength and Weakness
Creating a Business Action Plan
Copyright Bar Prophets 2011
Successful Beverage Management —
Proven Strategies for the On-Premise Operator
JACK ROBERTIELLOBeverage writer/former editor of Cheers Magazine
Drinks InkBrooklyn NY917.439.8467
ROBERT PLOTKIN
Author/beverage management consultantBarMediaTucson AZ
barmedia.com/barprofits.comAMERICANcocktails.com