Your final customer’s martini is down to its olive and all that’s left of the last margarita is the salt rim. It’s time to bring up the lights, count the cash in the register and hope tonight’s sales don’t leave you with an early morning hangover.
In today’s beverage industry, a unique drink menu, talented staff and popular location can’t guarantee a bar, nightclub or cocktail lounge will create a buzz. Competition is stiff – in 2019, Investopedia estimated more than 65,000 bars were operating around the United States. That doesn’t include restaurants trying to attract thirsty customers with drinks and cocktails of their own.
Once they’re bringing in crowds, bars still gulp down an average of $20,000 in monthly expenses between labor, rent, utilities and other miscellaneous costs, Investopedia reports. Buying inventory can tack on thousands of dollars more.
Turning cocktails into cash
To make a profit, it’s up to business owners to control expenses and make sure they’re selling drinks at the right price. Most bars aim for profit margins between 75% and 80% on each drink, according to Bartenders Business. So, for every $10 a customer spends, an owner tries to earn $7.50 to $8.
Mixing up those margins requires calculating pour cost, which can vary based on the type of drink and cost of ingredients. Pour cost combines expenses for the spirit, mixer and garnish used for each cocktail. Using that base number, owners can tweak the cost of their drinks to earn their desired profits.
Even with the right prices, running a profitable bar requires owners to keep an eye on their numbers, writes Bartenders Business. Running product mix and daily sales reports can shed light on what customers are buying and give bars an opportunity to highlight those drinks. On the other hand, the reports can show which cocktails customers would rather leave on the bottom shelf.
Use tech to raise the bar
Hospitality management software Craftable can also help bars monitor costs and bring in cheers-worthy margins. The tool is fully mobile on iPhone and Android devices and can be integrated into more than 60 of the industry’s most popular point-of-sale and accounting platforms. It can also be utilized by an unlimited number of users.
With placing orders, reconciling invoices, and counting inventory, and managing other back-of-office tasks, labor expenses usually leave business owners wanting a stiff drink. Craftable cuts down on those costs by tracking inventory and offering one-stop shopping across all vendors. It also creates reports in real time, allowing staff to spend more time on the floor and less time on administrative tasks.
The result? Users can reduce inventory time by 50%, accounting hours by 80% and send customers their checks in seconds.
Craftable also shows your true cost of goods by calculating how much inventory has been ordered versus how much has actually been used. The software can keep track of overpours, theft and waste with variance reports.
As for pour costs, Craftable can trim them down by 3% to 5% by providing up-to-date pricing and cost calculators.
Come closing time, Craftable can help you raise a glass to a profitable business.
Whether you’re new to the beverage industry or a seasoned drink-slinger, Craftable’s tools can help improve your bottom line. Sign up for a free trial and pour more profit into your business.