Successful Beverage
Management —
Proven Strategies for the
On-Premise Operator
Part Two:
Increasing Sales In A Down Economy
LAS VEGAS NIGHTCLUB & BAR SHOW
MARCH 2010
Presented By:
JACK ROBERTIELLO
Beverage Writer/Former Editor of Cheers Magazine, Drinks Ink
ROBERT PLOTKIN
Author/Beverage Management Consultant, BarMedia
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
•
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
•
As evidence, on-premise sales of inexpensive
value brands are flat or dropping
•
Consumers now have higher expectations about
the quality of their drinks
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
A recent consumer research study:
•
Conducted August 2009 by NextLevel Marketing
and Nightclub & Bar
•
Involved 1250 on-premise consumers — LDA, split
50% male / 50% female
•
Over 80% strongly agreed that cocktails made with
premium spirits taste better than those prepared
with house brands
•
Consumers said they expect to pay an additional
$2.80 for a branded cocktail
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
Call Brands Deliver Bigger Profits
Margarita made with WELL Tequila
1 ¼ oz. Well Tequila
$ .35
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $ .68
$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage
$4.50 sales price - $.68 drink cost = $3.82 gross profit
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
Call Brands Deliver Bigger Profits
Margarita made with PREMIUM Tequila
1 ¼ oz. Premium Tequila
$ .72
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.05
$ 1.05 drink cost ÷ $6.00 sales price = 17.5% cost percentage
$6.00 sales price - $1.05 drink cost = $4.95 gross profit
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
Call Brands Deliver Bigger Profits
Margarita made with SUPER-PREMIUM Tequila
1 ¼ oz. Super-Premium Tequila
$1.39
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.72
$ 1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage
$7.50 sales price - $1.72 drink cost = $5.78 gross profit
Copyright BarProfits 2010
Premium Sales Trending Up — Americans Are Drinking Less But Better
Margarita made with Well tequila
$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage
$4.50 sales price - $ .68 drink cost = $3.82 gross profit
Margarita made with Premium Tequila
$1.05 drink cost ÷ $6.00 sales price = 17.5% cost percentage
$6.00 sales price - $1.05 drink cost = $4.95 gross profit
Margarita made with Super-Premium Tequila
$1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage
$7.50 sales price - $1.72 drink cost = $5.78 gross profit
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
•
Well liquor is used in more drinks than any other type
of spirits and typically has the highest sales volume
•
As a result, featured brands will significantly impact
profitability
•
Bar’s price structure based on the well (e.g. well price
plus $1 = call price, etc.)
•
Selection criteria — featured brands need to conform
to concept and clientele
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Pouring Brands in the Well
•
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
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Example of a Pouring Brands Well
Brand Name
Liter
Cost
Cost Per
Ounce
Rico Bay Rum
$ 7.80
$ .23
Heaven Hill Bourbon
$ 8.02
$ .24
Burnett’s Vodka
$ 8.18
$ .24
Burnett’s Gin
$ 8.94
$ .26
Tres Reyes Tequila
$10.47
$ .31
Old Smugglers Scotch
$10.58
$ .31
Average Liter Cost
$ 9.00
$ .27
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Profit Potential — Pouring Brands
Average Well Cost = $ .27/ounce
Average Portion Cost (1.25 oz) = $ .34
Drink
Price
Cost
Percentage
Gross
Profit
$3.00
11.3%
$2.66
$3.50
9.7%
$3.16
$4.00
8.5%
$3.66
$4.50
7.6%
$4.16
$5.00
6.8%
$4.66
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Premium Brands in the Well
•
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
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Example of a Premium Brands Well
Brand Name
Liter
Costs
Cost Per
Ounce
Seagrams Extra Dry Gin
$12.82
$ .37
Old Fitzgerald Bourbon
$10.08
$ .29
SKYY Vodka
$17.18
$ .50
Cruzan Light Rum
$ 8.48
$ .25
Lunazul Blanco Tequila
$18.50
$ .54
Ballantine Scotch
$13.63
$ .40
Average Liter Cost
$13.45
$ .39 (+ $ .12/oz)
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Profit Potential Premium Brands Well
Average Well Cost = $ .39/ounce
Average Portion Cost (1.25 oz) = $ .49
Drink
Price
Cost
Percentage
Gross
Profit
$3.00
11.3%
$2.66
$3.50
9.7%
$3.16
$4.00
8.5%
$3.66
$4.50
7.6%
$4.16
$5.00
6.8%
$4.66
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Profit Comparison
Drink
Price
Cost
Percentage
Gross
Profit
Pouring Brands
$4.50
7.6%
$4.16
Premium Well
$4.50
10.8%
$4.01
Copyright BarProfits 2010
Well Liquors — The Most Important Bottles in the House
Profit Comparison
Drink
Price
Cost
Percentage
Gross
Profit
Pouring Brands
$4.50
7.6%
$4.16
Premium Well
$4.75
10.3%
$4.26
Copyright BarProfits 2010
Backbar Management — Setting the Stage For Success
•
Beverage sales in casual and tablecloth
restaurants average nationally around
25% of gross revenue and account for over
50% of average net profits
•
The backbar is an operation’s principal and
most effective marketing device
•
It’s essential to assess whether the backbar is
stocked with the right product mix
Copyright BarProfits 2010
Backbar Management — Adopting a Marketing Position
•
Look to reduce inventory levels — frees
working capital & lessens exposure to loss
•
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
•
Concentric merchandising — bestselling
products positioned in center of backbar
Copyright BarProfits 2010
Backbar Management — Adopting a Marketing Position
•
Vertically extend each category of spirits
with at least one above-premium brand
•
Adopt a marketing position — horizontally
expand a select category of spirits
•
Staff education crucial to success of the
strategy, facilitates server credibility
•
Focus a portion of the bar’s marketing to
that spirit:
•
Create a line of specialty cocktails
featuring the adopted spirit
•
Devote space in the bar menu to list the
name brand spirits stocked
•
Promote tasting flights to showcase
nuances between various brands
Copyright BarProfits 2010
Suggestive Selling — A Small Skill Set that Yields Big Results
•
Suggestive selling helps clientele make
informed decisions
•
A look at consumer perceptions about
suggestive selling:
•
Nearly 70% of the consumers said they walk
into a restaurant without knowing beforehand
what they were going to drink
•
About two-thirds said they listen to server
suggestions and trade-up to a premium brand
•
Only 3% responded of the consumers said
they stick with their original order
Copyright BarProfits 2010
Suggestive Selling — A Small Skill Set that Yields Big Results
•
Three sales tactics — suggesting one, two
or no name brands spirits
•
Bar staff should deliver suggestions as if
relaying insider information
•
Guest hesitation before ordering is
opportunity to present bar menu
•
Of those consumers who typically stop
after one drink, almost 25% said they
would order another drink if only the
server asked or didn’t take the cocktail
menu away
Copyright BarProfits 2010
Bar Menus — Proven Sales Drivers
•
Every bar regardless of size should
promote using a bar menu
•
While guests will typically spend 2
minutes perusing a food menu — people
on average spend 20 seconds looking
through a bar menu
•
That makes it essential your bar menu is
well-conceived, easy to read in dim
lighting and loaded with sensational
cocktails
•
On average, consumers want to see 14
beers, 14 wines and 16 cocktails
promoted on a bar menu
Copyright BarProfits 2010
Bar Menus — Proven Sales Drivers
Conduct Your Own Market Research
•
Test the appeal of specialty drinks before
dubbing them your house signatures
•
Create three separate menus each with
different specialty drinks
•
Rotate the menus every two months and
track the sales results
•
The bestselling drinks should then be
combined in one menu
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Consumers Prefer Stand-Alone Drink Menus
•
Nearly 90% of consumers read the drink
menus at full-service bars and restaurants
•
The majority of consumers 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
•
17% responded that the prefer table top
cards to menus
•
Only 11% said they prefer specialty drinks
listed in the main food menu
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Most Consumers Want Drink Prices and
Drink Descriptions on Menus
•
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
•
35% of the consumers want brand names
listed in descriptions
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Menu Test #1 — Functional Descriptions Only
•
Functional descriptions only include
mention of the ingredients in a drink
•
Consumers presented a Margarita menu
with only functional descriptions
•
47% of consumers would order house,
31% top-shelf, 22% the ultra-premium
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Margarita Menu
47%
House
House Margarita
Cuervo Gold Tequila, triple sec and sweet
and sour mix.
Top Shelf
31%
Top Shelf Margarita
Sauza Hornitos Tequila, Cointreau and
margarita mix.
Ultra-premium
Ultra-Premium, Margarita
Patron Silver Tequila, Cointreau, and
margarita mix.
Source: NextLevel Marketing 2009
22%
0%
10%
Copyright BarProfits 2010
20%
30%
40%
50%
60%
Bar Menu Effectiveness — Consumer Research
Menu Test #2 — With Added Romance Copy
•
Adding romance drink copy to menus drives
significant drink trade-up
•
Consumer interest in ordering the house
Margarita dropped from 47% to 33%
•
Those interested in trading-up to a branded
Margarita rose from 53% to 67%
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Margarita Menu
House Margarita
House
Cuervo Gold Tequila, triple sec and sweet
and sour mix.
33%
Top Shelf Margarita
Top Shelf
Sauza Hornitos Reposado Tequila,
Cointreau Orange Liqueur and premium
margarita mix served frozen or on the rocks.
31%
Ultra-premium
Ultra-Premium, Margarita
Our distinctive, hand-shaken ultimate
Margarita made with Patron Silver 100 28%
Agave Tequila, Cointreau, and fresh
squeezed lime juice served straight up or on
the rocks.
Source: NextLevel Marketing 2009
36%
30%
Copyright BarProfits 2010
32%
34%
36%
38%
Bar Menu Effectiveness — Consumer Research
Menu Test #3 — With Added Romance Copy and Drink Prices
•
When romance copy and drink prices were
included on the menu…
•
… 67% still wanted to order a branded
Margarita
•
… However, after seeing the price of the ultrapremium Margarita 5% of the consumers
changed their minds and opted for the
premium Margarita
Copyright BarProfits 2010
Bar Menu Effectiveness — Consumer Research
Margarita Menu
House Margarita
$6.00
House
Cuervo Gold Tequila, triple sec
and sweet
and sour mix.
33%
Top Shelf Margarita
$7.00
Sauza Hornitos ReposadoTop
Tequila,
Shelf
Cointreau Orange Liqueur and premium
margarita mix served frozen or on the rocks.
Ultra-Premium, Margarita
Ultra-premium $8.00
Our distinctive, hand-shaken ultimate
Margarita made with Patron Silver 100
Agave Tequila, Cointreau, and fresh28%
squeezed lime juice served straight up or on
the rocks.
Source: NextLevel Marketing 2009
36%
31%
30%
32%
Copyright BarProfits 2010
34%
36%
38%
Bar Menu Effectiveness — Consumer Research
Summary of Menu Testing
•
People want to know details about the drinks
they’re ordering, just as they want to know
about items on a food menu
•
Consumers also want to know in advance
how the drinks will look, what the ingredients
are and how much they will cost
Copyright BarProfits 2010
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Profit Through Enhanced Mixology
•
Don’t offer your clientele the same uninspired
drinks as the competitors
•
Enhanced mixology adds panache and
perceived value without adding cost
Copyright BarProfits 2010
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Achieving Sessionability in Your Drinks:
•
Sessionability is the most elusive of all qualities in
a drink to achieve
•
Term used to describe a cocktail that people can
enjoy throughout an evening
•
Cocktails must taste sufficiently interesting to
make guests want another
•
Drinks lacking character are a bore and guaranteed
to send people packing
•
Excessively flavorful cocktails quickly overwhelm
the palate
•
Alcohol strength a factor — sessionability decreases
as potency increases
Copyright BarProfits 2010
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Technique Matters — Handshaking
•
Vigorously handshaking cocktails is an
underappreciated mixing technique
•
Shaking a cocktail communicates
freshness and quality to your guests
•
Handshaking accomplishes a number of
objectives:
•
It thoroughly mixes ingredients into a
homogenous cocktail
•
Handshaking chills ingredients to serving
temperature, around 37-38˚F
•
Vigorous shaking also aerates the cocktail
and produces froth on top
•
Technique adds water; softens the cocktail
and melds spirits and modifiers
Copyright BarProfits 2010
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Technique Matters — Muddling
•
Enhanced production sells the sizzle, adds to the
guest experience
•
Muddling is a high production value technique
•
It does for a cocktail what high-def does for
television
•
Muddling injects cocktails with fresh, vibrant flavors
•
Drinks muddled in service glass — Mojitos,
Caipirinhas, Old Fashioneds
Copyright BarProfits 2010
Successful Beverage
Management —
Proven Strategies for the
On-Premise Operator
Part Two:
Increasing Sales In A Down Economy
JACK ROBERTIELLO
Beverage writer/former editor of Cheers Magazine
Drinks Ink
Brooklyn NY
917.439.8467
applejak@earthlink.net
drinksink.blogspot.com/
ROBERT PLOTKIN
Author/beverage management consultant
BarMedia
Tucson AZ
520.747.8131
robert@barmedia.com
barmedia.com/barprofits.com
Copyright BarProfits 2010