How Should You Know if Your Bar Is Making a Profit

You thought adding a bar to your restaurant would exist piece of cake and fun.

It'd bring in extra coin hand over fist, y'all said.

It'd allow you to hire a unique mixologist who would apace create some buzz – y'all were sure of information technology.

And y'all could've sworn it'd give you lot and your staff a great place to unwind, conversation, and bond after a busy shift.

But, reality hit fast.Running a bar isn't like running a restaurant at all. It's a completely different beast.

There are new tasks to monitor, new costs to consider, and a whole list of unexpected ways money could be flying out of your bank account.

Yous'd finally taken control of your eatery'southward costs, and now yous take to deal with this, too?

Well, just like for your eatery, it's easier than you'd retrieve to chief your bar costs. You don't have to go on drowning in the kegs beneath your counter.

The Complete Guide to Bar Profitability is congenital to plough your bar from your eating place'south drunk uncle into its secret weapon.

Nosotros've compiled everything you need to know about making your bar as successful every bit possible. You'll learn how to manage costs, keep your bartenders in check, and count for usage in a new style.

Plus, we'll tell y'all all virtually how technology like Orderly can make it fifty-fifty easier to go on your bar's costs low – with a fraction of the piece of work.

Don't await around. Allow's raise a glass to your future success.

Where to Kickoff

So, yous're set to brand your bar profitable once and for all.

The beginning thing you need to do to manage your bar costs is to, well… Know your bar'southward costs.

That ways our favorite term is back:

You lot need to know your bar's Toll of Appurtenances Sold.

For the uninitiated, your Cost of Goods Sold, or COGS, is the total toll you can attribute to the product of goods sold over a flow of time.

In the case of your bar, it'south the total toll it took you to create and serve all the drinks you served over that fourth dimension menstruation.

It looks at everything you brought into your bar, from the kegs to the bitters, also as your weekly sales.

It'southward a specific number. You tin apply it to determine how well your restaurant's bar is doing – and where yous could exist saving more cash.

Now, nosotros'll exist honest: technically, you could keep running your bar without ever calculating your COGS. And it'll run, maybe for a long fourth dimension. Merely will it run well?

You'll be missing opportunities to pay less for ingredients and liquors. You'll whiff on ordering, and will probably proceed re-stocking your bar with unnecessary booze that doesn't sell. Or liquor you're paying way too much for. And you'll be drowning in debt instead of swimming in greenbacks.

So, sure. You could run a restaurant blindly without accurate numbers.

But when you know your COGS, you tin can be more profitable.

Plus, it tin help you run a ameliorate business:

• Yous'll be able to run across where your sales vary from your inventory, so you lot tin can combat theft or finish your managers from giving out as well many comped drinks
• You can monitor how your orders compare to your sales, and curb spending where possible
• You'll be able to decrease waste – no one likes spoiled beer, anyways

How to Find Your Bar's COGS

Calculating your COGS the former-fashioned way is a time consuming, yet rewarding process.

And if done right, it tin help you and your eating house save thousands.

First, you need to select a catamenia of time to calculate your COGS over. We suggest one week.

Note: Calculating your COGS once is great. Merely to truly run into long-term benefits, you'll desire to calculate it calendar week over week.

You'll need 3 things:

• Your starting inventory
• Your purchases
• Your ending inventory

Yes, if you're calculating your COGS the traditional fashion (we're talking long counts and spreadsheets), yous'll need to take a full inventory. Twice.

Then, if you were to await at this over the course of a week, you'd demand to take an inventory on the first Sunday, an inventory on the following Sunday, and calculate all your purchases from in between.

And no fudging your numbers. Information technology may seem similar guesstimating how many eggs you lot have is no large bargain, but it actually hurts you in the long run.

You wouldn't only halfway practice your bar prep for the day, would you?

Sure, you technically could…

Simply, y'all'd be running a much less efficient shift.

You'd be chopping limes on the spot, adding fourth dimension to every order. Y'all'd never have make clean glasses when y'all demand them. Ingredients would get lost or forgotten.

Sure, drinks would still get across the bar, but it'd take double the time – which ways half the profits.

It's ridiculous to not do everything equally finer and efficiently as possible.

Same thing goes for fudging your numbers when counting.

You'll get a number in the end. But information technology won't be accurate, and that volition throw everything else off.

A piffling actress time, care, and preparation can salve you a whole lot of stress in the long run.

With authentic numbers in hand, you'll plug them into this formula:

Starting Inventory Costs + Purchases – Final Inventory Costs = COGS

From in that location, yous tin can determine if your COGS is likewise high and if you demand to make some changes, or if you're on the right track.

Ways to Exist Proactive

When you determine to really start taking charge of your bar's profitability, there are a few ways yous can starting time getting alee of the game to make your life a little easier.

ORGANIZATION

When you're doing a count – be it for inventory or for usage – information technology'south already fourth dimension-consuming to begin with.

The concluding affair you want to do is go search for where your bartender decided to put the scotch this time.

Having articulate, ready organization outlines can make those long counts movement a fleck faster (so can the correct engineering, only we'll get to that). Plus, a well-organized liquor brandish may inspire a customer who wasn't going to drink to think well-nigh purchasing a libation or 2.

VARIANCE

Your variance is the divergence between what yous actually have in stock and what you lot think you have. It'due south related to portioning and loss in your bar.

Sizing up your variance starts past monitoring your usage, which nosotros'll go to in a later chapter.

Simply keep in listen, information technology'southward going to exist different for beer and liquor:

• For liquor, pay attention to the portioning, or how much your bartenders are pouring into each drink
• For beer, information technology'southward all virtually the loss. Sloppy pours and free drinks aren't smashing for business concern

Price TRENDS

Blindly purchasing booze is, to be frank, a dumb idea. When you lot're not paying attending to local and national prices, you're giving abroad coin that could exist going into your pocket.

Sure, discrepancies may non exist as farthermost as they are with produce, but taking the fourth dimension to find out what you should be paying versus what your vendor is charging can make a huge difference.

Other Places Your Bar Profitability Can Endure

Profitability isn't all just numbers and counting. Though, you lot know, it's a pretty big role of information technology.

At that place are many other areas you could be shedding money too. But if yous simply pay attention, your taps could turn to gold.

…Or maybe yous'll simply run across some actress cash in your banking company business relationship.

Focus on these areas of your business concern to stop the cash from pouring out.

STAFF

Larry may have been your outset ever employee. Emily might be 1 of your top bartenders.

And maybe James brings an energy to your team that's unmatched by anyone else on staff.

All iii could be valuable members of your bar, simply if you're not paying attention, they could be draining your profits, also.

Maybe some members of your staff tend to brand their pours extra heavy. After all, they similar the nice tips that come with those boozy drinks.

But if a double shot gets marked as a single in your POS (and it keeps happening over and over), it's going to throw your numbers off.

Your orders will be wrong. And you lot'll be spending more money than y'all're bringing in.

If they're not even putting the drink in the arrangement at all, that's a whole extra level of issues.

While a comped drink is a neat way to appease a client every now and and so, too many can mess with your lesser line.

With proper policies and guidelines in place, you can terminate these issues from happening.

Build a training programme for new hires, and concord re-preparation sessions for your vets.

Just, make sure information technology doesn't seem like a punishment. Keep it fun and lite, creating games and offering incentives.

This can as well aid curb another result – your staff could simply be stealing from you, also.

Y'all don't need to set upward a security perimeter to make certain Jackie didn't stick a bottle of Merlot in her bag. Simply paying attention – and stressing your dedication to lowering your bar costs – can make a globe of divergence.

And then can only keeping employee morale high. After all…

Happy employees are less probable to cause y'all problems.

MARKETING

Practise you lot have a happy 60 minutes? Some unique specials? Good for y'all. And so does the guy next door.

While a happy hour tin bring some people through the doors, updating your marketing tactics can bring fifty-fifty more customers into your restaurant's bar – and they won't be drinking at a discount.

Nowadays, people like to telescopic out your bar before they prove upwards.

So, check your website and social media pages. Do yous have your signature cocktails posted? What about a beer list?

Do the photos expect similar they were taken by a professional or by your ninety-year-old Aunt Gertrude?

Don't impale your chances of winning over a customer before they even set foot through your doors.

Get creative. Brand a hashtag. Run a competition. Post unique photos.

Online, the inventiveness doesn't take to cease.

Create special menus (that you can of course share online) or plan celebrations for holidays and big events. Partner with local companies and sports leagues, getting yourself involved with the community.

Get your proper name out there and you lot'll see your profits grow. Ignore your Marketing, and you may see business deadening to a trickle.

Bar Profitability Tips and Tricks

Running a more profitable bar is more than just accurate counts. Here are a few tips and tricks to aid you out.

MONITOR USAGE

When yous've monitored usage, yous've likely been counting every unmarried canteen, keg, and crate each calendar week.

Seems similar a lot of time. Peculiarly when you sell a drinking glass of that aged scotch maybe twice a month.

Here'southward the thing. Your bar has 3 types of booze:

• Your ten-12 "highest-volume" liquors
  • These are your well vodkas, your lite beers and other similar drinks. They're going to account for 60-80% of your weekly spend.
• Your sixty or so "mid-volume" liquors
  • Yous gild these every few weeks.
• Your 40ish "low-book" liquors
  • Similar that aged scotch, you lot're not selling these often – and are simply ordering them twice a year, if that.

If y'all're but selling some booze once in a blue moon, why are y'all counting its usage weekly?

Definitely monitor your high-volume booze every week. Since you're using a lot, there's enough of room to lose money on it.

For the residual, set upwards a rotation. Perhaps monitor half of the mid-volume liquors each week, or just a third of them. Those low-book ones? Count them fifty-fifty less frequently.

Don't completely ignore them, though. If your staff knows you're not paying attention, they know which booze is ripe to snag a potable or four from.

GET STAFF INVOLVED

A lot of the staff issues discussed in the last chapter can exist eliminated only by getting your employees involved with the mean solar day-to-day management of your bar's profitability.

Maybe it's getting them to aid with counts. Maybe information technology'due south simply keeping them aware of how seriously you're taking your numbers.

Whatever you choose, an engaged staff is a happy staff. And a happy staff not only works harder, but they tend to stick around, also.

LOCK IT UP

If you start to discover your pricey booze disappearing, information technology might exist time to lock it upward. Have policies in identify where merely managers accept the key. That way, if issues continue to arise, you know exactly where to start your questioning.

The Orderly Fashion

And so you've made it through the Guide. And you lot may be excited to dive in on your bar's profitability, but it seems similar it'southward going to eat up a lot of your time.

Well, what if yous could get an accurate COGS without spending Lord's day nights behind the bar?

What if yous could increase your profitability in a fraction of the time?

Fudged numbers no more. And no need to become your staff bogged down in long counts and confusing spreadsheets.

Orderly is bar price management washed for you. It'due south easy to apply, and hassle-free.

Orderly can give you a true weekly COGS without you always having to take an inventory at all. We analyze your invoices and sales numbers. Nosotros then use machine learning and analytics to determine your patterns and depletion model.

Sound confusing? Don't worry, you're not involved in that part.

All yous accept to do is snap photos of your invoices and update your sales.

Managing your profitability tin be that simple.

And so do yourself a favor. Ditch the spreadsheets, relieve yourself hours, and lookout man the greenbacks menstruum in.

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Source: https://getorderly.com/blog/bar-profitability-guide