Copyright Bar Prophets 2010 Successful Beverage Management — Proven Strategies for the On-Premise...

Copyright Bar Prophets 2010

Successful Beverage Management —

Proven Strategies for the On-Premise Operator

NOVEMBER 2010

Presented By:

JACK ROBERTIELLOBeverage Writer/Former Editor of Cheers Magazine, Drinks

Ink

ROBERT PLOTKINAuthor/Beverage Management Consultant, BarMedia

MODULE THREE:SIX WAYS TO INCREASE SALES IN A

DOWN ECONOMY


Taking The High Road — Premium Spirits Yield Larger Margins

• 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



• Consumers now have higher expectations about the quality of their drinks

• Consumer Research: 84% said cocktails made with premium spirits taste better

• Consumers said they expect to pay an additional $2.80 for a branded cocktail


$ .67 drink cost ÷ $4.50 sales price = 14.9% cost percentage


Margarita made with WELL Tequila

1 ¼ oz. Pepe Lopez Tequila $ .34

½ oz. Triple Sec + $ .12

3 oz. sweet ‘n’ sour + $ .21

Drink Cost = $ .67

Call Brands Deliver Bigger Profits

$4.50 sales price - $.67 drink cost = $3.83 gross profit



Margarita made with PREMIUM Tequila

1 ¼ oz. El Jimador Reposado $ .65



Drink Cost = $ .98


$ .98 drink cost ÷ $6.00 sales price = 16.3% cost percentage$6.00 sales price - $ .98 drink cost = $5.02 gross

profit



Margarita made with SUPER-PREMIUM Tequila

1 ¼ oz. Herradurra Reposado $1.50



Drink Cost = $1.83


$ 1.83 drink cost ÷ $7.50 sales price = 24.4% cost percentage$7.50 sales price - $1.83 drink cost = $5.67 gross

profit


Getting More Bang From The Most Important Bottles In The House

• Well liquor is used in more drinks than any other type of spirits

• Brands featured in the well significantly impact profitability



• Selection criteria — featured brands need to conform to concept and clientele

• The bar’s price structure is based on 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

Pouring Brands


Brand NameLiter Cost

Cost Per Ounce

Castillo Rum $ 6.15

$ .18

Gilbeys Vodka $ 6.24

$ .18

Early Times Bourbon $ 6.77

$ .20

Gilbeys Gin $ 8.00

$ .24

Old Smuggler Scotch $ 8.39

$ .25

Pepe Lopez Gold Tequila

$10.47 $ .27

Average Liter Cost $ 7.42

$ .22

Example of a Pouring Brands Well



Average Well Cost = $ .22/ounce

Average Portion Cost (1.25 oz) = $ .28

Drink Price

Cost Percentage

Gross Profit

$3.00 9.3% $2.72

$3.50 8.0% $3.22

$4.00 7.0% $3.72

$4.50 6.2% $4.22

$5.00 5.6% $4.72


Profit Potential — Pouring Brands


• 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


Premium Brands


Well Liquors — The Most Important Bottles in the House

Example of a Premium Brands Well

Brand NameLiter Costs

Cost Per Ounce

Ballantines Scotch $11.60 $ .34

Old Forester 86º Bourbon $11.93 $ .35

Finlandia Vodka $12.10 $ .36

Appleton Dark Rum $12.75 $ .38

Cuervo Especial Tequila $14.77 $ .44

Beefeater London Dry Gin $19.02 $ .56

Average Liter Cost $13.70 $ .40 (+ $ .18/oz)


Average Well Cost = $ .40/ounce

Average Portion Cost (1.25 oz) = $ .50

Drink Price

Cost Percentage

Gross Profit

$3.50 14.3% $3.00

$4.00 12.5% $3.50

$4.50 11.1% $4.00

$5.00 10.0% $4.50

$5.50 9.1% $5.00


Profit Potential Premium Brands Well



Profit Comparison

Drink

Price

Cost Percentage

Gross Profit

Pouring Brands $4.00 7.0% $3.72

Premium Brands $4.00 12.5% $3.50



Profit Comparison

Drink Price

Cost Percentage

Gross Profit

Pouring Brands $4.00 7.0% $3.72

Premium Brands $4.25 11.7% $3.75


Merchandising For Success — Increasing The Impact of Your Backbar

• The backbar is your most effective marketing device

• It’s essential the backbar is stocked with the right product mix


• 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



• Reducing inventory levels frees working capital & lessens exposure to loss

• Concentric merchandising — bestselling products positioned in center of backbar



• Vertically extend each category of spirits with at least one above-premium brand

• Adopt a marketing position — horizontally expand a select category of spirits

• Dedicate a portion of the bar’s marketing to that spirit



• Guests typically spend 2 minutes with food menus; 20 seconds with bar menu

• Essential your bar menu is well-conceived and easy to read in dim lighting

Bar Menus — Increasing Their Capacity To Drive Sales


• Roll-out three separate menus; each with different specialty drinks

• Rotate the menus every two months and track the sales results

• Bestselling drinks should then be combined in one menu


Conduct Your Own Market Research


• 88% of consumers read the drink menus at full-service bars and restaurants

• 68% 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


What Consumer Research Reveals


• 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


What Consumer Research Reveals


• Functional descriptions only include mention of the ingredients in a drink

• Consumers were presented a Margarita menu with only functional descriptions

• 47% of consumers ordered the house, 31% top-shelf, 22% the ultra-premium


Menu Test #1 — Functional Descriptions Only



Source: NextLevel Marketing 2009

22%

31%

47%

0% 10% 20% 30% 40% 50% 60%

Ultra-premium

Top Shelf

House

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.



• Adding romance drink copy to menus drives significant drink trade-up

• 14% of consumers switched from ordering the house Margarita to a branded Margarita

Menu Test #2 — Added Romance Copy




36%

31%

33%

28% 30% 32% 34% 36% 38%

Ultra-premium

Top Shelf

House

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.



• Only 5% of consumers were affected by the higher price of ultra-premium Margarita

• They switched from the ultra-premium to the premium Margarita

Menu Test #3 — With Added Romance Copy and Drink Prices




31%

36%

33%

28% 30% 32% 34% 36% 38%

Ultra-premium

Top Shelf

House

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.


• Consumers prefer stand-along bar menus

• They want descriptions of the drinks they’re ordering

• They want to know how the drinks will look and how much it will cost


Summary of Menu Testing


• Staff Training and Education — What Your Staff Doesn’t Know Can Cost You

• Training/education yields high ROI in form of increased staff competency

Investing In Your Sales Force — Helping Your Staff Help You


• Education — product knowledge/credibility pivotal to selling premium spirits

• Training — ensuring core competency - pouring, prices, mixology

• Challenge your bartenders to expand their professional skills/cross-training



• Suggestive selling techniques — helping the clientele make informed decisions

• Three sales tactics — how many brands to suggest?



• Americans are increasingly likely to not consume alcohol when entertaining

• However, few non-alcoholic programs are successful or noteworthy

• Most have little staff buy-in and don’t capture interest of clientele

Leveraging Beverage Trends — Taking Advantage of Latest Intel

Alcohol-Free Marketing — Risk-Free Profits in a .08 Universe


• High production value — muddling, handshaking and floats

• High perceived value — specialty glassware (16-18 oz. volume)

• Feature intriguing ingredients and unusual taste combinations

• Value Priced — avoid any appearance of price gouging


Success Formula — Alcohol-Free Specialties


• Locally produced, micro-distilled spirits surging in sales

• Organic spirits gaining traction with consumers

• New Latin spirits on the rise — cachaça, pisco and mezcal

• Return to prominence — rye, gin and absinthe

• Unqiue cordials and amaros — St-Germain, Canton and Hum


Hot Spirit Trends



• As they say — “It’s more fun to eat in the bar than drink in the dining room”

• Cross-promoting food and beverages increase sales and defrays high food costs

• Practical benefits to clientele eating food while drinking

• Ensure bartenders familiar with food menu and trained on proper food service

Cross-Promoting Food and Beverages


• Don’t offer your clientele the same uninspired drinks as the competitors

• Enhanced mixology adds panache and perceived value without adding cost


Exceeding Guests’ Drink Expectations


Technique Matters — Production Value Sells

• Handshaking a cocktail communicates freshness and quality to your guests

• Thoroughly mixes ingredients and chills drink to serving temperature

• Vigorously handshaking cocktails is an underappreciated mixing technique

• Adds water; softens the cocktail and melds spirits and modifiers



Technique Matters — Production Value Sells

• Muddling is a high production value technique

• It does for a cocktail what high-def does for television

• Muddling injects cocktails with vibrant flavors

• Muddling fresh ingredients into cocktails requires double-straining


MODULE FOUR:PRIORITIZED PROFIT ASSESSMENT


Answer #1 — 0 points



Assessing Your Operation’s Areas of Strength and Weakness

Scoring:


Section score of 45-50 = Excellent

Section score of 35-40 = Very Good

Section score of 25-30 = Average

Section score of 0-20 = Below Average


Section Scoring:


180 - 200 points = Excellent

You’re a seasoned pro with a finger firmly on the pulse

140 - 175 points = Very Good

When it come to the bar, not much gets past you

100 - 135 points = Average

Indicates significant room for improvement

0 - 95 points = Below Average

You’re leaving too much money on the table


Total Score Four Sections:


• Step One: Sequence sections from lowest score (1st) to highest (4th)

• Step Two: Within each section, sequence responses from lowest score to highest

• Step Three: Your areas of weakness now top the lists within each of the four sections


Creating a Business Action Plan


#1 — Identify in what order you will address the areas

of weakness

#2 — Identify who in the business will be responsible for initiating changes

#3 — Assign a date as to when the initiatives are to be implemented

#4 — Track each set of initiatives to ensure progress is being made


Creating a Business Action Plan

MODULE FIVE:PRE-CERTIFICATION EXAM


1. _________ is a semisweet anise liqueur made in Greece and Cyprus which is drier and more potent than anisette.

Successful Beverage Management — Pre-Certification Exam

Section One — Product Knowledge

Ouzo


2. Which fortified wine is most closely associated with solera aging?

a. Vermouth

b. Port

c. Madeira

d. Sherry



d. Sherry


3. _________ is a distilled spirit made from grain or potatoes and flavored principally with caraway.



Aquavit


4. _________ is the most widely produced type of beer in America brewed with bottom-fermenting yeasts.



Lager


5. While both are distilled from grapes, _______________ is typically aged in wood and has a dark, rich color; _______________ is either left unaged or aged in glass vessels to retain its clarity.



brandy

eau de vie


6. _________ is a clear spirit, compounded by redistilling neutral grain spirits with berries and aromatics.



Gin


7. _________ is made in Normandy from cider apples.



Calvados


8. Bourbon is distilled predominantly from which grain?

a. Wheat

b. Rye

c. Corn

d. Barley



c. Corn


9. Made with top-fermenting yeasts, this type of brew is typically heavy-bodied, copper-colored (or darker), high in alcohol and most closely identified with English-style beers.

a. Hefeweizen

b. Guinness Stout

c. Ale

d. Root



c. Ale


10. Most closely associated with Italy, what sweet, fortified aperitif is infused with herbs, quinine and various other botanicals?

a. Sherry

b. Dry Vermouth

c. Sweet Vermouth

d. Port



c. Sweet Vermouth


11. What is the name for a straight, unblended malt whisky from one distillery in Scotland?

a. Cask Strength Scotch Malt Whisky

b. Unblended Malt Whisky

c. Single Malt Scotch Whisky

d. Vatted Malt Whisky



c. Single Malt Scotch Whisky


12. ___________ is a brandy made in the French province of Gascony.



Armagnac


13. Which of the following names is that of an American straight rye whiskey?

a. Old Forester

b. Old Potrero

c. Old Fitzgerald

d. Old Crow



b. Old Potrero


14. A split bottle of wine contains ______ml or _______ ounces, which is one-quarter of a wine bottle; a half-bottle of wine contains ______ml or _______ ounces.



187 6.35

375 12.7


15. This clear, spicy mint liqueur is lighter and drier than Créme de Menthe.



Peppermint Schnapps


16. What color is bourbon when it comes out of the still?

a. Mahogany

b. Amber

c. Clear

d. Pale gold



c. Clear


17. Choose the Dutch juniper-infused spirit that is the predecessor of London Dry Gin.

a. Holland Gin

b. Genever or Schiedam Gin

c. Amsterdam Gin

d. Met Pleezier Gin



b. Genever or Schiedam Gin


18. Marc and ___________ both are pomace brandies made from the remnants of the winemaking process.



grappa


19. This popular French framboise is made from small black raspberries, herbs and honey.



Chambord Liqueur


20. Rhum ___________ is distilled from fresh sugar cane juice, primarily on the French islands in the Caribbean.



Agricole


21. How many ounces in a magnum?

a. 33.8 oz.

b. 50.4 oz.

c. 32 oz.

d. 64 oz.


Section Two — Mixology

b. 50.4 oz.


22. List in order of most dense to lightest the following liqueurs.

____ Grand Marnier

____ Baileys Irish Cream

____ Maraschino

____ Kahlúa




22. List in order of most dense to lightest the following liqueurs.

1 — Kahlúa (Densest)

2 — Baileys Irish Cream

3 — Maraschino

4 — Grand Marnier (Lightest)




23. What does the term “straight up” mean?

a. To serve a cocktail in a tall iced glass

b. To handshake a cocktail in a mixing set and serve it on the rocks

c. To hand shake a drink in a mixing set and serve it in a cocktail glass

d. To prepare a cocktail directly into the service glass



c. To hand shake a drink in a mixing set and serve it in a cocktail glass


24. Unless instructed otherwise, a “splash” always refers to what product?

a. club soda

b. lemon-lime soda

c. water

d. seltzer



c. water


25. How many ounces are in a liter?

a. 22.8 oz.

b. 33.8 oz.

c. 14.6 oz.

d. 32 oz.



b. 33.8 oz.


26. What will pouring club soda into an empty glass reveal?

a. Bubble streams on the inside of the glass means it is clean

b. Bubble streams on the inside of the glass means it is dirty

c. Bubble will clean the glass so it can be used even if it was dirty

d. Bubble streams on the inside of the glass mean the soda is properly charged




27. Which of the following ingredient pairs will not make a suitable replacement for basic simple syrup.

a. Water and agave syrup

b. Water and Demerara syrup

c. Water and honey

d. Water and corn starch



d. Water and corn starch


28. What cocktail is made with gin, Maraschino liqueur and lemon juice?



Aviation Cocktail


29. In what order you would pour the ingredients for a Margarita in your mixing cup?

a. 1-ice 2-sweet and sour 3-tequila 4-triple sec

b. 1-sweet and sour 2-tequila 3-triple sec 4-ice

c. 1-tequila 2-triple sec 3-sweet and sour 4-ice

d. 1-sweet and sour 2-triple sec 3-tequila 4-ice



d. 1-sweet and sour 2-triple sec 3-tequila 4-ice


30. What will a perpetual inventory system reveal about product depletion?

a. Perpetual inventory system is used to track liquor used in comp drinks.

b. The frequency at which products are depleted from the liquor room indicates theft.

c. The rate products are requisitioned from the liquor room to the bar(s) closely corresponds to their actual depletion rate.

d. The perpetual inventory system reveals nothing about product depletion.


Section Three — Beverage Operations

c. The rate products are requisitioned from the liquor room to the bar(s) closely corresponds to their actual depletion rate.


31. How will the perpetual inventory system deter theft?

a. The first entry in the perpetual inventory will indicate how many bottles of each product has been used.

b. The last entry on ledger indicates how many bottles have been stolen.

c. The last entry in the perpetual inventory will indicate how many bottles of each product should be on the liquor room shelves.

d. The last entry in the perpetual inventory will indicate how many bottles have been used.



c. The last entry in the perpetual inventory will indicate how many bottles of each product should be on the liquor room shelves.


32. How will bar par deter internal theft?

a. Bar par utilizes surveillance cameras behind the bar.

b. Bar par will not deter internal theft

c. The bar par will indicate how many bottles were used during a shift.

d. The bar par indicates how many of each product are supposed to be behind the bar.



d. The bar par indicates how many of each product are supposed to be behind the bar.


33. What is the importance of tracking the cost of a bar’s spillage, complimentary drinks and transfers?

a. These costs are considered negligible and therefore not factored into pour cost.

b. These costs are factored into deriving an accurate cost of goods sold figure for the bar.

c. These costs are factored into deriving the number of drinks sold per inventory period.

d. These costs are factored into deriving gross beverage sales.




34. What is the purpose behind taking a physical audit of the inventory?

a. A physical audit of the inventory is used to determine bartender sales productivity.

b. A physical audit is used to determine cash till overages or shortages.

c. A physical audit is used to verify the accuracy of liquor deliveries.

d. A physical audit of the inventory is used to determine cost of goods sold.




35. What does bar productivity measure?

a. Bar productivity measures a bartender’s speed of service.

b. Bar productivity measures the operation’s sales mix percentages

c. Bar productivity measures pour cost on a per shift basis.

d. Bar productivity tracks and analyzes a bartender’s sales per hour.




36. What does an excessive labor cost signify?

a. High labor costs means you’re getting optimum benefit from your labor dollars.

b. High labor cost indicates the operation is spending more on payroll than sales warrant.

c. A high labor cost indicates your pour cost is too low for the sales collected.

d. A high labor cost indicates your pour cost is too high for the sales collected.




37. What are the operational problems associated with a prohibitively low labor cost?

a. A prohibitively low labor cost indicates under-staffing and possible lost sales.

b. A prohibitively low labor cost indicates that payroll and beverage sales are in line.

c. A prohibitively low labor cost indicates over-staffing.

d. A prohibitively low labor cost indicates that beverage sales are too low.




38. Why is the pour cost for liquor calculated separately from beer and wine?

a. The pour cost for liquor, beer and wine should be calculated jointly to have relevance.

b. The cost percentages for liquor, beer and wine are not subject to analysis.

c. The pour cost for liquor, beer and wine can only be calculated separately.

d. The various products sell at different cost percentages and must be calculated separately.



d. The various products sell at different cost percentages and must be calculated separately.


39. What does liquor pour cost reveal?

a. Liquor pour cost indicates the relationship between liters sold and liters purchased.

b. Liquor pour cost indicates the relationship between cost of sales and gross profit margin.

c. Liquor pour cost indicates the relationship between cost of goods sold and liquor sales.

d. Liquor pour cost indicates the relationship between gross sales and payroll costs.




40. How does portion cost impact drink pricing?

a. Portion cost is the cost of goods sold per serving, so it doesn’t impact drink pricing.

b. The higher the portion cost, the lower the sales price must be to yield a viable margin.

c. The higher the portion cost, the higher the sales price must be to yield a viable margin.

d. Portion cost only impacts the amount of sales tax charged on a drink, not its sales price.




Successful Beverage Management —

Proven Strategies for the On-Premise Operator

JACK ROBERTIELLOBeverage writer/former editor of Cheers Magazine

Drinks InkBrooklyn NY917.439.8467

[email protected]

ROBERT PLOTKIN

Author/beverage management consultantBarMediaTucson AZ

[email protected]

barmedia.com/barprofits.comAMERICANcocktails.com

Copyright Bar Prophets 2010 Successful Beverage Management — Proven Strategies for the On-Premise...

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