Table of Contents Introduction2 Why SOPs are Crucial for Running a Successful Venue 4 Increase Productivity 4 Safety4 Consistency and Quality Control 5 3 Cornerstone Processes to Document and Implement ASAP 6 1. Opening Procedures 6 2. Closing Procedures 7 3. End of Day Cashing Out 8 How to Get Inventory Management Right 10 9 Tips to Optimize Your Food and Beverage Costs 12 1. Standardize Food and Drink Recipes 12 2. Set Drink Prices for Optimal Profit Margins 13 3. Implement Pour Policies 14 4. Be Cautious With Drink Specials 14 5. Check Profitability of Recipes 15 6. Supervise and Control Inventory 15 7. Categorize Profits and Loss by Item 15 8. Hire Reliable and Trustworthy Employees 16 9. Use Smart Technology 16 Employee Monitoring and Preventing Theft 17 Conclusion18 About Glimpse 19 2 Chapter One Introduction It’s easy to sell liquor. What’s hard is turning a profit while doing it. With competition driving prices down, and labor costs up, it’s never been more important to have sound, streamlined operations. In fact, your process can be your biggest competitive advantage - allowing you to serve customers better and minimize waste in terms of costs and inventory. But how do you do this? There’s so much to keep in mind - from hiring and training employees to dealing with suppliers and customers... It’s hard enough to find time for the essentials, let alone reviewing and documenting all of your processes in detail. So the answer we’d like to propose is this: start with the cornerstone operations first. Just like in life, there are cornerstone habits and procedures you can implement for managing your bar. 2 In this guide, we’re going to highlight the key operations to start optimizing along with best practices for doing so. We’re going to start with a quick review of why Standard Operating Procedures (SOPs) are important for your success as a bar manager. Next, we’ll cover the 3 procedures that shape the start and end of each day. Namely, your opening, closing and cashing out procedures. The meat of this guide is about inventory management and cost control. We’ll show you key tactics and advice to streamline both areas so you can instil profitability inside your bar’s DNA. Lastly, we’re going to look at how to keep this machine running using data and consistent monitoring. By the time you finish reading this guide, we hope you’ll have a solid blueprint (and some inspiration) to make your bar run like clockwork. Ready? Let’s go. 3 Chapter Two Why SOPs are Crucial for Running a Successful Venue S tandard operating procedures (SOPs) are essential for the efficient and effective running of any business, especially in the bar and restaurant industry. SOPs can make or break the successful operation because every aspect of running a bar or restaurant requires a specific routine to meet various demands. Here are the reasons why implementing clear, specific SOPs can be a savior for your restaurant or bar. Increase Productivity By having SOPs in place, employees have a clear understanding of just what is expected of them. More time can be spent focusing on important aspects of the operation rather than “retraining” employees since they will learn the SOPs during their initial training. Safety Whether it is food storage, handling or even proper cleaning methods, SOPs help minimize or eliminate any potential situations that could be dangerous to employees or customers. Having a thorough system of SOPs in place will give your employees the knowledge and tools on how to handle any potentially dangerous situation. 4 Consistency and Quality Control Loyal customers are hard to obtain and easy to lose. Breaking their trust with bad service is one thing you want to stay away from. And SOPs are an excellent way to ensure that each employee is providing the same level of service such that customers are delighted every time they visit. 5 Chapter Three 3 Cornerstone Processes to Document and Implement ASAP N ow that we reviewed the importance of SOPs, let’s look at the 3 operations that shape “business as usual” every single day. 1. Opening Procedures To create a professional atmosphere and keep you and your employees accountable it’s important to have a standard opening procedure and checklist for your bar. These procedures outline the tasks that need to be completed each day before you open the doors. Here are the top procedures for you and your opening staff: Property check Before entering the establishment, do a property check to ensure everything is okay on the outside and if there’s any damage from the night before. Clear any trash away from doors, windows, and the parking area. Internal check Check inside for anything that’s out of place, such as broken chairs, missing items, or any duties not performed by your closing staff. 6 Cleaning Clean throughout the bar, getting it ready for another evening of business. This includes dusting and cleaning chairs and tables, vacuuming and washing floors, wiping bar counters, and checking to see if the kitchen is clean and ready for a new shift. Inspect the taps Bar taps need to be kept in great working order – inspect taps for broken spouts, faulty lines, and bad kegs. Bar prep Bar staff should run through a list of bar prep duties, including setting out clean bar towels, cutting garnishes, and squeezing juice. Check wine bottle dates Your bar staff should be dating open wine bottles – check to see if any are past their usability date and need to be removed 2. Closing Procedures Bar closing procedures are just as important as opening tasks. At the end of the day, a closing checklist ensures that your bar is clean and ready for the next day. Personalize the list for your own business, using these procedures as a guideline for your checklist: Empty and lock At closing time, make sure all your customers have left the premises and that the doors are locked before your staff begins cleaning and you start cashing out for the day. Turn off lights not in use to save on energy costs. Bar closing Your bartenders should follow a checklist of tasks to be completed at the end of the day not only to prep for the next day but also to maintain a high standard of cleanliness. This includes: • Dating and storing perishable garnishes, cocktail ingredients, and other foods so 7 they remain fresh. • Dating open bottles that have been newly opened. • Cleaning counters, bar equipment and tools, and rinsing drains. • Wiping downspouts and taps. • Loading and running the dishwasher with the last glasses of the night. • Setting clean glass out to air dry. • Cleaning bar mats. Refill disposable items Having your night staff refill for the next day saves time for your opening staff. Refill all disposables such as napkins, straws, and stir sticks. 3. End of Day Cashing Out For you as a bar manager, the most important part of your bar operations is closing and cashing out money at the end of the day. If you’re not the one cashing out, make sure you have a reliable manager you can count on. End of day cashing out means making sure that all sales have been accounted for and checking to see if there’s a discrepancy between your POS system and the registers or inventory. Even with the efficiency of a POS system, the process of reconciling receipts, counting money, and balancing the cash drawer is your checkpoint to ensure the accountability of each day’s transactions. To avoid errors, it’s important to follow these procedures at the end of day when cashing out bartenders and servers: 8 Balance registers Balancing starts with counting all your cash, including cash and credit sales. Make sure the amount of cash on hand matches all your tabs for the night. Distribute tips Your employees count on tips to supplement their income. Whatever method you’ve decided to use for tips, whether it’s by percentage, split by hours worked, or by pools and points, making tip splitting part of your cashing out procedure makes your staff feel valued and keeps them loyal. Secure money and receipts Keeping your money and receipts secure in a safe is your best option when running a business that operates into the late evening hours. Leave your banking to daylight hours for security. 9 Chapter Four How to Get Inventory Management Right Properly managing bar inventory is paramount to success. More than just keeping enough alcohol on hand, efficient tracking of inventory shows financial performance, product variance, provides information to calculate pour costs and shows which items sell and which ones don’t. On a basic level, you will need to know a few pieces of information to calculate inventory usage. For a given inventory period, you need to know how much stock there was in the beginning, the end, and how much you received during said period. Add your starting inventory and received inventory together, subtract ending inventory and you will be left with your usage for that period. This metric allows you to further dive into inventory management. In addition, keep the following tips in mind when taking inventory and documenting the process: • Consistently take count. If you work from the top down, always work from the top down. • Set consistent inventory periods. 10 • Settle on a method. Some prefer to do this alone while others have help. • Only take inventory while the bar is closed so nothing is added or removed. • Employees should be trained in inventory counting. Something as little as recording a broken bottle can be costly in the long run. • Whether you use a handwritten list, spreadsheet, or specific software, arrange the spreadsheet based on how your bar is arranged. Alphabetical inventory sheets may not be the most efficient. • Include the type, brand, name, and bottle size. Also, label where the alcohol is kept: bar back, storeroom, walk-in or any other location where you keep inventory. • When estimating the amount in a bottle, use tenths. • Repeat the estimation process for each bottle you have in inventory. • Total the amounts according to category and repeat this process at the end of your desired inventory period. These two will give you your starting and ending inventory. • During your inventory period, be diligent about noting all products taken in via invoices and sold via your POS system. With accurate usage metrics, you will be one step closer to higher profits and more efficient operations. Pricing of drinks will become more accurate and profitable and you will decrease waste while ordering. It all starts with doing proper liquor inventory. 11 Chapter Five 9 Tips to Optimize Your Food and Beverage Costs A successful bar starts with great atmosphere, excellent customer service, and a quality drink and food menu. But it doesn’t stop there. You also need to cover all your expenses and generate a profit. One of the biggest challenges you face is controlling your beverage and food costs. Managing these expenses is crucial to your business success and profitability. Here’s how to optimize your drink and food costs to stay on top of your expenses. 1. Standardize Food and Drink Recipes Establishing a standard for each of your recipes ensures that both quality and consistency are maintained. Each of your bartenders needs to follow the same recipe when mixing drinks and cocktails, otherwise you have no control of your liquor and mix costs. Using the same format for each, list every drink in a cocktail bible by drink name, listing ingredients, measurements, and the directions for mixing. Make sure all your bartenders can easily access these recipes. As well as a printed copy behind the bar, download recipe templates and load them onto iPads for use behind the bar. Standard recipes also need to be set for food items on your menu. Your kitchen staff 12 has to know the exact amount of ingredients for each item, including the number of servings and precise portions. If you have more than one bar or restaurant, standardizing recipes helps you control and maintain consistency across all locations. 2. Set Drink Prices for Optimal Profit Margins The majority of your profit comes from your drink sales. Keep this in mind when pricing each drink and cocktail. If you price too high, you’ll drive away your customers. If you price too low, you’ll lose revenue and soon be in the red. You want to come up with a price in the middle that pulls people into your bar and that generates profit. Use these calculations to help you determine your drink price for each cocktail: First, calculate your liquor cost per ounce: Bottle price / Ounces per bottle = Liquor cost per ounce For example, a standard bottle contains 750ml or 25.4 oz. If the bottle costs $40, the liquor cost per ounce would be $40/25.4 oz = $1.57 per ounce. Next, calculate the total beverage cost: (Liquor cost per ounce*Amount used) + Cost of other ingredients = Total beverage cost So if a drink requires 1.5 oz and garnishes cost roughly $0.60, the total beverage cost would be ($1.57*1.5) + $0.60 = $2.96. Lastly, estimate the price you should charge: Total beverage cost / Target pour cost (usually 20%) = Estimated price per drink So if the beverage cost is $2.96, then a price that gives you sufficient profit would be $2.96 / 0.2 = $14.80. This should give you a good indication of the price you should charge for a given drink or cocktail. However, use these calculations to start your research rather than end it. If you rely solely on cost, you may end up charging less than you should given your target market and competition. 13 So while you should factor in your costs, try to estimate the maximum you can charge based on your area, competitors and customer persona. Then, experiment with prices that fall within the range of what your customers are willing to pay and the minimum price at which you’re willing to sell. 3. Implement Pour Policies Over pouring can quickly add up and cost you thousands of dollars against your profits. To avoid this loss, you need to train your bartenders, so they understand and follow the correct pouring practices and policies. Jiggers and ball pourers Have your bartenders use bar tools such as jiggers and ball pourers to prevent over pouring and to keep cocktails consistent in taste and quality. Track spillage and free drinks It’s not just over pouring that will increase your drink costs – spilled drinks and complimentary drinks to your loyal customers also add up. Keep track of these costs by recording them and regularly reviewing the number of free drinks your employees are serving. When the cost becomes noticeable and starts eating into your profits, it’s time to take action by limiting the number of free drinks each employee can serve. 4. Be Cautious With Drink Specials Just like complimentary drinks can increase your bar costs, so can drink specials and promotions. Whether it’s Happy Hour or drink specials on certain days of the week to bring in more business, these promotions can increase your drink costs if you’re not seeing a higher volume of customers through your door. With any campaign you launch to attract more clientele to your bar, take the time first to evaluate your profit and loss margins. Are the lower prices of the drink specials you’re offering enough to raise your sales volume and see a profit? Sometimes the payoff isn’t worth the cost – when this happens it’s time to re-evaluate Happy Hour. 14 5. Check Profitability of Recipes You’ll need to control the cost of food items on your menu in the same way you control beverage costs. Maintain a database for your food dishes and recipes. Regularly calculate the cost of each item, including the cost of delivery, food, and spoilage. This lets you formulate a menu price that allows for a good profit margin. Once you know the cost and profitability of each individual thing that comes out of your kitchen you can review your menu at least once a month. Menus are always changing due to cost – remove those items that aren’t selling well or that don’t make a profit. Then replace these items with ones that sell better and are more cost-effective to prepare. 6. Supervise and Control Inventory One of your best tools for controlling cost is inventory management. You need to know exactly what products you have in stock and how much of each. Every dollar you have tied up in inventory is a dollar against your profits. Do a weekly inventory to determine if there are any discrepancies and irregularities in the count that can point to product loss, including employee theft. With Glimpse, you can make this process less painful by utilizing video recognition technology. You’ll get an automatic report that highlights areas of risk and non-compliance so every drink in your bar is accounted for. Learn how it works. For the inventory process, assign the task to one or two reliable employees at most. When weekly inventory is complete, carefully compare sales invoices for each product against the actual count on hand. You need to avoid both overstocking and understocking to keep your costs manageable, taking into consideration product cost and shelf life. 7. Categorize Profits and Loss by Item It’s much easier to manage your profit and loss records if you’re able to break down menu items into categories. Divide your menu costs into two different sections – drinks and food. This way you’re not calculating profit and sales margins from drinks and food 15 combined. This breakdown not only lets you manage cost by each section, you’ll also be able to see trends in pricing and cost across all your locations. For even more insight into the financial gains and losses of items on your menu, break down categories even further than just beverages and food. Have more categories within each, such as alcoholic drinks and non-alcoholic drinks, wine and beer, and appetizers and main meals. 8. Hire Reliable and Trustworthy Employees You count on your staff to efficiently help you with the daily operations of running a bar. This means they have access to liquor and food at all times, including before and after work. This access can be tempting to some of your staff, which is why up to 25% of your profit loss can be the result of theft and employees giving away free product to their family and friends. Other causes of loss include errors, negligence, and a disregard for the policies and processes you’ve established. When interviewing candidates for hire, don’t just find out if they have the experience and skills to work behind the bar, in the kitchen, or in front of house. Just as important is determining if they have the characteristics and personality your bar needs such as reliability, trust, and being a team player. 9. Use Smart Technology You can improve your cost management and increase efficiency by using smart technology and bar software tools. The advantages of smart technology includes fewer errors and access to data and reports that can help you control costs. Software to consider include apps for mixing drinks correctly, accounting software to accurately maintain your business and employee costs and payroll, and Glimpse to help you manage your operational costs. The most common technology used in bars and restaurants is a point of sale system (POS). With multiple features, you can use your POS system for sales tracking, inventory management, employee management, and to increase employee productivity. 16 Chapter Six Employee Monitoring and Preventing Theft In order to keep these key processes running, it’s important to monitor your staff to make sure guidelines and procedures are being followed. And of the biggest areas you should pay attention to here is preventing theft. According to a study by the United States Chamber of Commerce, employee theft in bars and restaurants amounts to almost $400 billion in lost profits. To prevent employee theft you need to have systems in place to monitor your staff and make them accountable: Install security cameras to monitor employees behind the bar. With Glimpse, you can match the video footage with your POS system to instantly spot gaps between recorded sales and drinks passed over the counter. Learn more about Glimpse’s video auditing technology. Hire employees based more on attitude and trust rather on their skills and experience. Have a pour policy in place for quality control and to ensure that your bartenders maintain accurate drink measurements according to recipe standards. Use your POS system to spot check employee tabs. Be clear about the consequences if losses and theft occur. 17 Chapter Seven Conclusion In closing, think of your bar operations manual as the rules and guidelines to a successful business. It’s these procedures that give both you and your employees the information needed to provide great customer service, improve productivity, and improve your bottom line. Once you and your team are on board with SOPs, it’s time to implement the 3 cornerstone procedures: opening, closing and cashout. Next, make sure to document your inventory management practices to minimize waste and reduce training time. This will further be augmented when you get full control over your costs using tactics like standardization and measuring profitability on a recipe level. Lastly, make sure to include an efficient monitoring system to keep this whole system running without you being there. 18 Chapter Eight About Glimpse Glimpse provides an innovative loss prevention technology that will help increase the financial profitability of your restaurant or bar. Our unique software captures drink movement across the bar counters through video cameras and matches all sales to the POS data. Based on this, we generate reports that show how many drinks were properly recorded at the POS versus those ‘at risk’ (rung up late) or lost altogether (never rung up). Learn more at: https://www.glimpsecorp.com/ 19
