Yes, I know that when it comes to running a bar that you have 647 things on your to-do list and you’re not sure which one to do first.
So, whenever in doubt, always do those things first that move you toward the most important part of running a business:
The purpose of running a business is to make profits, which means you need to look at all areas of your bar where profit can be increased, and that includes cost control on waste, bar and liquor inventory, marketing, labor and of course creating menus that are not only tasty, but extremely profitable, because people like to be guided so the majority of the orders you get will be directly from the menu.
So why would you create a guide/menu that produces shitty profits?
Now, I understand that creating a unique and profitable menu can be a thorn in your balls (because it’s worse than a thorn in your side, in case you were wondering about the crudity of that metaphor). Mostly because it takes creativity, and creativity takes thought energy which is one of the most draining energies in existence.
But it’s important, so get some sleep, eat some good brain food and sit down with your managers, bartenders and chef and create your next menu to align perfectly with your theme while achieving the highest profit possible.
You have four responsibilities when creating a cocktail menu:
1) Create a menu that aligns with your concept and that inspires you and the staff.
2) Create a menu that also inspires your guests while finding the best value for them.
3) Create a menu that results in the lowest pour cost % and highest profit with the best ingredients possible so everyone is happy.
4) Create a menu that is reasonably time-efficient for your bartenders. An amazing drink isn’t so amazing if you have to wait 7 minutes for it.
Let me remind all of you pour cost percentage freaks out there who think cost percentage is the Holy Grail analyzer and that profit is secondary. I’ve said it before and I’ll say it again, you put profits in the bank, not percentages. So don’t just look to have low cost % items. Make sure the profit is high as well.
In order to find out which items those are, you can start by downloading our free Item Costing Tool here on the Bar Patrol Resource Page. This will help you find the sweet spot for each of your menu items, whether it be food or bar products.
We also have an awesome item costing tool built right into the Bar Patrol Inventory System that does it automatically for you. Let’s take a look at a couple of cocktails you might think about putting on the menu and how to analyze them.
This is the recipe portion and item costing details inside the Bar Patrol Inventory Software from a Long Island Iced Tea using well liquors.
You’ll notice at $8.00 that this only costs the bar $0.63 with a cost percentage of 7.88% and a profit of $7.37. This tells me that putting some sort of Long Island drink on the menu would be a smart, profitable decision your mom would be proud of.
Now this is another snap shot of a Mojito. Both Long Islands and Mojitos in this example get 2 oz. of liquor, and both are priced at $8.
Here the cost is $1.70, with a cost percentage of 21.25% and a profit of only $6.30. More than $1 less per cocktail.
This small analysis might not seem like much, but the average mid-sized bar serves at least 1,000 cocktails per week. If you saved $1 on every cocktail by using this analysis, you’ve suddenly increased your profits $52,000 per year.
JUST LIKE THAT!
*IMPORTANT: You want to make sure to include ALL ingredients that go into each cocktail. Many places will only include the liquor when they item cost and it’s not accurate.
In the Mojito example above, if we leave out the mint and limes, that’s about $0.25 not accounted for. Multiply that times 1,000 drinks per week x 52 weeks per year, that’s $13,000 not accounted for on the average drink missing $0.25 of ingredients.
Knowledge is power. Ignorance is only bliss when it comes to knowing how many calories are in a Big Mac or the idiot boyfriend your daughter is dating, but NOT when it comes to business.
When it comes to business, knowing the numbers is everything to making more money. Why would you ignore that when it means you could have a $50,000 – $60,000 per year raise simply by paying attention?
Thanks for stopping by. See you next time.
Tags: creating a bar menu item costing liquor inventorybar inventory increasing bar profits increasing restaurant profits bar cost control