How To Increase Drink Sales In Your Bar
Before exploring different ways to increase drink sales, bar owners need to prioritise their pour cost to make sure their profit is maximised. Too many bar owners and marketers focus on boosting drink sales by spending on marketing. If the drink costs are too high then profits will suffer and the effort of increasing drink sales will be wasted. By getting control of the drink cost it means a bar can prosper.
Bar owners and marketers should use the basic pour cost calculation to work out their figures:
Drink Sales Calculations & Pricing For Profit
The Basic Pour Cost Calculation = Cost of Goods Sold (COGS) / Total Sales = Pour Cost
If a bar’s annual total drink sales were £1,000,000 and £300,000 was purchased in inventory, the pour cost percentage would be 30%. Gross profit is £700,000.
A bar wants to lower their pour cost as much as they can. A good target is roughly 20% as it’s only gross, which means there are other costs i.e staff and rent that aren’t accounted for. In this example by lowering the pour cost to 20%, that means an extra £100,000 in gross profits.
Before committing to increasing drink sales, a bar should first look to reduce their average drink cost. To increase drink sales and profit, a bar must decrease their drink costs. There are numerous ways to decrease drink costs:
Invest in proper measurement apparatus so each drink is poured perfectly. If you allow bartenders to free pour it’s likely you’ll be wasting a lot in the form of potential costs. If your bar offers cocktails each one should have a recipe and guideline that should be reviewed often. Training staff to pour to the exact measurements is good practice and will save your bar thousands in the long run.
The aim here is to reduce your average drink cost without losing quality. Your distributor needs your business as much as you need your customers, so talk to them. You could even let them in on your goal of say a 20% pour cost and work with them to make that possible. New brands are also a good way to go as they are usually cheaper than the more established brands as they want to get their brand out there. It also keeps your bar shelf new and exciting and could mean your head of the curve with the next best drink.
Sourcing locally can be rewarding as the shipping cost is removed and getting drinks from the source is always cheaper. Customers also love locally sourced products and it can come into their decision when choosing a bar. Win, win.
Now you have a better understanding of the pour cost. It’s time to apply it to each drink on the menu so you can price each one correctly for a rewarding profit margin. This is how you increase your drink profit.
Menu Price = COGs per Drink / Pour Cost
Get the COGs for Each Drink (singles and doubles, small and large)
Using a vodka lime and soda as an example you now need to get the costs for every ingredient that is used. And work your way through your proposed menu and do it for each drink (and food item). In our example, that includes the vodka, lime (wedge or cordial), soda and even the straw. The vodka and soda will need to be calculated by the cost of the bottle divided by the measurement you used.
Let’s assume that = £2 in this example.
Now Use Your Pour Cost But Add A Margin
If your pour cost for spirits is 30%, go lower by a few percentages to add in good profits to your beverage sales. Let’s say it’s 25% or 0.25.
Apply The Formula
Vodka Soda Lime COGs £2 / Pour Cost .25 = £8. You should price your vodka lime and soda at £8.
Your profit margin on a vodka soda and lime is £6 or 75%. If you had applied your general pour cost it would only be £6.66 or 30%. That difference in price adds up when you sell thousands of them a year. Look after the pennies and the pounds will look after themselves.
It’s important that you never increase the price of menu items disproportionately. Switched on customers will realise and you’ll find that the best value items will be bought above anything else so your margins will suffer. If your bar is already established and you want to increase your price you should never do so with sudden price hikes, this won’t sit well with your regular customers. Instead gradually increase the prices over a couple of months.
You also need to be aware of the type of establishment you are and whether the prices are fair based on what your customers would be willing to spend. A high end bar on a rooftop will obviously have more customers willing to spend more than customers in a sports bar for example.
Now you know how to price your menu to maximise profits. Here are a few tips and tricks for increasing drink sales.
Different Ways To Increase Drink Sales
Get Creative With Your Drink Names
According to research by the University of Illinois Food Lab, if you are creative with the names of your drinks, sales can increase by 27%. For example, a Negroni might be re-named on the menu to a Mezcal Safecracker Negroni Cherry Bomb. Don’t use that one as it’s taken, believe it or not.
Remove The Pound Signs
This one comes down to psychology. It’s tempting to price your Mezcal Safecracker at £8.00, but that wouldn’t help with increasing your drink sales. Studies suggest that customers spend more when the zeroes and currency signs are removed. Even with punctuation the zeroes can make it look expensive, i.e. £800. The currency sign £ reminds customers that they’re spending money and will make them subconsciously double think how much they’re spending.
On your menu, try:
Mezcal Safecracker Negroni 8
Mezcal Safecracker Negroni 8.
Mezcal Safecracker 8-
You could even do a split test, so one month try it with the zeroes and currency symbols and the next without. You should see a difference.
Happy hours are a great way to lure in customers when you predict business will be slow. It can also give you a competitive edge over your competition. The most successful happy hours are straight after work and if you offer a great experience customers should stay after when the price goes back to normal.
Happy hours are also a useful tool to have to shift slow selling alcohol. Remember your pour cost? You can reduce this by getting rid of unsuccessful or costly alcohol and replacing it with drinks that give you a better return. Selective wines or cocktails work everytime, and at half price your customers won’t complain.
You also shouldn’t forget food. Your customers could also be in need of food and pairing food with drink is an excellent way to up-sell and increase revenue in general. A happy hour pairing menu could come in the form of:
– Beer and wing happy hour. The beer could be the local brew that you’ve just sourced that has an excellent pour cost.
– Wine and dine happy hour. This could involve pairing wines with certain foods that all have excellent profit margins.
Upselling Techniques & Trained Bar Staff
Your staff are one of the best assets you have for increasing bar spend. Train them properly and they are an excellent investment in terms of profit in the long run. Here are a few tips:
Waiting staff: have a couple of ‘spare’ staff who go around your bar asking if people are okay for drinks. Portable card readers and table service is a sure fire way of increasing drink sales. Not only does it force those who are freeloading for WiFi and tables to order but it also means those who are spending will be asked to spend more. And as the service is so good and with a smile, a lot of people will say yes.
The power of “Because”: “Would you like to try our special Mezcal Safecracker Negroni, because it’s our best selling drink this year?”. A Harvard pyschologist recorded that when the word “because” was said, 93% of people said yes. Without a good reason and without “because” only 60% said yes. You obviously need to make sure the reason is good.
Use Flair and Theatrics: Mixologists and trained bar staff means people will keep coming back to the bar to see a show. Anything theatrical or innovative can mean an increase in sales for high ticket items like cocktails.
Food and Drink Upselling: if you’re selling food in your venue you can train your staff to suggest a drink before they sit down and even a post drink when they are finished. A lot of establishments go down the route of suggesting that the table is still being prepared, almost not giving them a choice. This also adds to the experience and your customers will certainly appreciate it.
Customers love anything free and it leads to an increase in sales. When has having a free taste of a sausage roll never led to buying a whole one, or 3. The oldest trick in the scroll is to offer a taste of top shelf booze as studies suggest the chance of the customer wanting a full pour increases by 2000%. This works well when the customers asks the bartender for their recommendation.
Another freebie tip that has been used in many bars around the world is to give customers free salty nuts or bar snacks to accompany their first drink. The keyword here is ‘salty’ as the salt is dehydrating causing the customer to want to drink more.
Trivia Nights and Themed Nights
Sunday’s, Monday’s and Tuesday’s are notoriously quiet in the bar industry. Having a trivia night on one of these days is an effective way to draw in customers. Make sure the prize is good and it’s marketed soundly and you could have a full bar on the quietest night of the week.
Think beyond Christmas and Halloween here. There are thousands of different holidays and it’s a chance to get creative. Every country has a different unique holiday so if you’re in an area with a certain population then you can draw this crowd in by putting on themed days. St Paddy’s day for example.
Every food seems to have a holiday too so it’s a chance to get creative in the kitchen. National burger day, wack a happy hour pairing on that for example.
Your slowest days and times are likely going to be because the majority of people are working. As you can’t bring the bar to them at work, there’s an opportunity for you to get them to bring their work to your bar. By offering free Wi-Fi, ample seating and don’t forget charging ports, it means people can now work from your bar and hold business meetings there.
Sports fans are known to be big drinkers and by showing the sport you can increase drink sales. Even if you’re not a sports bar there are numerous solutions to having hidden screens now. Even high-end bars in New York are projecting big sporting events on rooftops.
If appropriate you can organise a bar crawl and prominently place your bar within it. This works well if there are numerous bars within short walking distance, especially if they are near a university or college. Eventually the bar crawl can become ‘known’, like the beer mile in London. This guarantees business for years to come.
Slightly off topic from drink sales but to help towards profit for your bar you can branch out into untapped revenue by offering your customers something else to buy other than alcohol. If your bar is starting to pick up momentum in terms of a ‘brand name’, you could start selling t-shirts, beer mats, glasses and hats. This is actually a really good way to test whether you have loyal repeat customers, as let’s face it, they are the one’s who are likely to buy these things. You can trial it with a few items before buying in bulk (to improve profit margins), just to see if you have a ‘brand’ yet or not.
It sometimes makes sense not to open your bar to the public on quiet days i.e during the week. You can still profit from these days by offering your bar as event space to rent out. Offering a ‘minimum spend’ works well as it’s the most attractive way of doing it to event planners. Product launches, receptions, community parties etc are just a few different types of events your bar might be perfect for. There are also websites that can host your space so there’s no pressure on the marketing side for you.
Psychology 0f Music
Studies suggest that by playing mellow music, drink sales can increase by 40%. This is perfect for those slow days like Sunday afternoons. Also unproven theories suggest that by turning up the music, people spend less time talking and more time drinking.
Seating and Space
Have you ever been in a busy crowded bar with no space or seating and thought better of it than to order another drink? By having more space you don’t run the problem of people leaving your bar to go somewhere else. Make sure there is enough space and seating in the bar area that no one is put off ordering.
Smokers are sometimes big drinkers too, so by having outdoor seating it means these customers are accommodated for. This should hopefully mean the drinks will keep on flowing all afternoon whilst the sun shines.
When comparing two groups of people, with one standing and the other sitting, the ones sitting ordered 29% more drink than the ones standing. Seating is critical
So there you have it. By implementing and playing with these ideas you should be able to increase your drink sales in a matter of months. Trial and error is key with a lot of split testing. Don’t give up on the details and you’ll find you’ll have a profitable and successful bar to boast about.