AVOIDING THE 10 CIRITICAL ERRORS BEVERAGE OPERATORS MAKE
by Robert Plotkin

“When a man with money meets a man with experience, the man with the experience ends up with the money, and the man with the money ends up with the experience.”

Is any teacher will tell you, making mistakes is an essential part of gaining experience. Some things you just have to learn at the school of hard knocks. Perhaps the key to success, however, is keeping your mistakes to a minimum, and striving to keep the learning curve short and shallow. 

In the beverage business, there are a number of critical errors that should be avoided like the plague. Every industry has them, ours is no different. Here is the list of ten critical errors beverage operators make:

1. Loss of Control
Running a bar requires making a significant investment in liquid assets, liquid that can disappear at an alarming rate without a corresponding sale. Failing to implement an effective inventory control system places the capital you’ve invested at risk. To be profitable, you should have the capability of knowing exactly what inventory you have, what you paid for it, what rate you use it at, and exactly where it is at any point in time. Tracking inventory throughout your operation doesn’t require software. Rather, it’s a matter of simple bookkeeping. 

2. Monitoring Pour Costs
One of the many truisms in this business is, “If you can’t measure it, you can’t manage it.” Nowhere is that truer than behind the bar. Determining your bar’s ongoing cost percentages - pour costs - reveals your level of profitability. As your cost of goods sold increases, gross profits diminish. Success behind the bar greatly depends on maintaining and safeguarding your profit margins. Tracking your cost percentages is a fundamental form of control - the more frequently you conduct an audit and determine your pour costs, the more insight you’ll have into your operation. 

3. Weak Links
Your business is only as strong and vital as your weakest employee. Cash passes through your employees’ hands, so it is critical to assemble the most professional staff you can. One of the most important steps in the process is establishing an ongoing training program. What your people don’t know can most certainly hurt you. Their lack of expertise reflects poorly on your business, and prevents them from attaining their potential. Ongoing training is an investment, not a hardship. 

4. Fiscal Responsibility
One plague of the beverage business is the scourge of shrinkage. Bartenders control both ends of every transaction at the bar. For some, the temptation of handling a steady stream of cash can be irresistible. Take pains to implement solid cash controls and look to reduce your vulnerability to theft. The savings often spell the difference between financial viability and the unpleasant alternative.

5. Productivity
Every industry tracks employee productivity except ours. Calculating sales per hour is easily done and is an enormously effective means of assessing employee effectiveness. Productivity measures employee sales per hour, and is computed by dividing the shift’s gross sales by the number of hours the bartender worked. An employee with chronically low sales per hour may have a serious problem. On the positive side, a bartender with consistently high sales per hour deserves acknowledgement. Either way you look at it, tracking productivity is highly beneficial.

6. Suds Watch
Industry wide, we lose roughly 20% of the draft beer we purchase due to waste, spillage, and theft. That translates to one out of every five kegs of beer. Clamping down on draft costs is essential. Proper maintenance of the draft beer delivery system and staff training are fundamentally important. Operations that depend on draft beer sales to remain financially viable should consider investing in a draft beer control system, which is capable of tracking every ounce of product dispensed and providing a report detailing exact shift cost percentages per brand. 

7. Shoddy Product
A restaurant that doesn’t routinely change its menu always has plenty of open tables. The same is true about bars. Add some pizzazz to your beverage line-up. Shake up your specialty drinks. Change spices things up and helps keep your guests interested. Likewise, bartending staffs typically operate without a clearly defined set of recipes. The result is a loss of product consistency, fluctuating costs, and shoddy, hit-or-miss drinks. Determine what they’re pouring, or they’ll do it for you.

8. Slash Marketing
The only marketing some operators do is to recommend the cheapest brand. Strive instead to promote your business from the inside out. People are open and receptive to timely suggestions on what to drink. Develop bar menus, table tents, and wipe off boards on which to market your house specialties. If you’ve created interesting, delicious signature drinks, make sure you announce your success. You’ll likely notice that sales for whatever you actively promote will skyrocket.

9. Ill-Devised Playbook
Get drafted into the NBA and they’ll give you a playbook. Get hired as a bartender or server, and all you’ll likely get are three training shifts and a page of house policies. Being an employer is fraught with legal ramifications. Make a mistake and you could find yourself on the wrong end of a civil lawsuit. The first line of legal defense is a comprehensive, well-structured employee handbook, one that clearly defines the employees’ job descriptions, areas of responsibilities, and all the operation’s policies and procedures. Without it, legally holding employees accountable for their actions is practically impossible.

10. Lack of Leadership
Things are managed, people are led. Make every effort to become a dynamic leader, one who leads by example. Your staff is the lifeblood of your operation, without whom all enterprise ceases. Acknowledge and encourage their efforts, and nearly all other management issues will abate.

Robert Plotkin is a judge at the San Francisco World Spirits Competition and has recently authored his 16th book, Secrets Revealed of America’s Greatest Cocktails - The Hottest Spirits, Freshest Places and Coolest Drinks. He can be reached at www.BarMedia.com or by e-mail at robert@barmedia.com.