Post on 23-Dec-2015
Copyright BarProfits 2010
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 ROBERTIELLOBeverage 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
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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 $2.80 for a branded cocktail
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$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage
Premium Sales Trending Up — Americans Are Drinking Less But Better
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
Call Brands Deliver Bigger Profits
$4.50 sales price - $.68 drink cost = $3.82 gross profit
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Premium Sales Trending Up — Americans Are Drinking Less But Better
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
Call Brands Deliver Bigger Profits
$ 1.05 drink cost ÷ $6.00 sales price = 17.5% cost percentage$6.00 sales price - $1.05 drink cost = $4.95 gross profit
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Premium Sales Trending Up — Americans Are Drinking Less But Better
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
Call Brands Deliver Bigger Profits
$ 1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage$7.50 sales price - $1.72 drink cost = $5.78 gross profit
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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
Premium Sales Trending Up — Americans Are Drinking Less But Better
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
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Well Liquors — 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 in the Well
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Brand NameLiter 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
Example of a Pouring Brands Well
Well Liquors — The Most Important Bottles in the House
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Well Liquors — The Most Important Bottles in the House
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
Profit Potential — Pouring Brands
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• 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
Well Liquors — The Most Important Bottles in the House
Premium Brands in the Well
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Well Liquors — The Most Important Bottles in the House
Example of a Premium Brands Well
Brand NameLiter 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)
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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
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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
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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
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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
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• 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
Backbar Management — Adopting a Marketing Position
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• 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
Backbar Management — Adopting a Marketing Position
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• 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
Suggestive Selling — A Small Skill Set that Yields Big Results
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• 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
Suggestive Selling — A Small Skill Set that Yields Big Results
Copyright BarProfits 2010
• 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
Bar Menus — Proven Sales Drivers
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• 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
Bar Menus — Proven Sales Drivers
Conduct Your Own Market Research
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• 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
Bar Menu Effectiveness — Consumer Research
Consumers Prefer Stand-Alone Drink Menus
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• 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
Bar Menu Effectiveness — Consumer Research
Most Consumers Want Drink Prices and Drink Descriptions on Menus
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• 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
Bar Menu Effectiveness — Consumer Research
Menu Test #1 — Functional Descriptions Only
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Bar Menu Effectiveness — Consumer Research
22%
31%
47%
0% 10% 20% 30% 40% 50% 60%
Ultra-premium
Top Shelf
House
Source: NextLevel Marketing 2009
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.
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Bar Menu Effectiveness — Consumer Research
• 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%
Menu Test #2 — With Added Romance Copy
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Bar Menu Effectiveness — Consumer Research
36%
31%
33%
28% 30% 32% 34% 36% 38%
Ultra-premium
Top Shelf
House
Source: NextLevel Marketing 2009
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.
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Bar Menu Effectiveness — Consumer Research
• 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 ultra-premium Margarita 5% of the consumers changed their minds and opted for the premium Margarita
Menu Test #3 — With Added Romance Copy and Drink Prices
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Bar Menu Effectiveness — Consumer Research
31%
36%
33%
28% 30% 32% 34% 36% 38%
Ultra-premium
Top Shelf
House
Source: NextLevel Marketing 2009
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.
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• 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
Bar Menu Effectiveness — Consumer Research
Summary of Menu Testing
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• Don’t offer your clientele the same uninspired drinks as the competitors
• Enhanced mixology adds panache and perceived value without adding cost
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Profit Through Enhanced Mixology
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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
Increasing Revenue Through Mixology — Exceeding Guest Expectations
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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
Increasing Revenue Through Mixology — Exceeding Guest Expectations
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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
Increasing Revenue Through Mixology — Exceeding Guest Expectations
Copyright BarProfits 2010
Successful Beverage Management —
Proven Strategies for the On-Premise Operator
Part Two:Increasing Sales In A Down Economy
JACK ROBERTIELLOBeverage writer/former editor of Cheers Magazine
Drinks InkBrooklyn NY
917.439.8467applejak@earthlink.net
drinksink.blogspot.com/
ROBERT PLOTKINAuthor/beverage management consultant
BarMediaTucson AZ
520.747.8131robert@barmedia.com
barmedia.com/barprofits.com