For Bar Owners – Being Profitable

Bar owners are a different lot. You meet many personalities that enter this industry. But one thing most bar owners have in common, is they are “know it all’s”. Yes, each will tell you what the other guy is doing wrong, or what they would do.

Did I offend any of you reading that statement? Probably so, but it was not intended that way. It just describes the ego that many have. Each has learned their own way to do, and to look at things. Many times, no one is wrong, it’s just another way.

Why this group of people think this way is quite unusual in business? Many owners in the restaurant business, even corporate, welcome idea’s and thoughts from their competition, and usually they steal each others idea’s. So why don’t they?

Let’s face it, who in the hell knows everything?

Being a bar owner is the desire for many people. How many times have you heard someone say “I would like to own my own bar” or
“one day, I am going to own my own bar”. But the reason many say this I have found is that this profession looks fun, exciting, and glamorous. And it is, to a point, but they never say “I want to be a bar owner to make money”. If you are not saying those words, don’t get into the bar business.

After all, why else would you enter in the business of being a bar owner? Why does anyone go to work? But it is work, and that’s where many fail.

It is amazing the people that are bar owners really have no idea what they are doing. Yes, even big corporations. Many don’t know how to price their product, how to figure their profitability, or really understand the business or the area they are in. They build places that cost way more then they should, and have fixed costs expenses that would choke a horse.

If you are busy, and your expenses are too high, and you make very little or no money, what was the point? Did ego get in the way when you were building? Did you choose a site that was way too expensive? Did you over do the remodeling costs? Did ego get in the way of common sense?

They lack the business knowledge, but because they were a bartender in their life, a corporate executive who never worked in the bar business, or a DJ, they think they know how to operate a bar. Or, who they were taught by, really didn’t know all that much. Either way, many times it doesn’t work.

What people in these jobs fail to realize is bar owners have to be profitable, and they have to have longevity. And since they have no knowledge generally of all the operating costs of such an establishment, along with what just plain works, they too are just “know it all’s”.

So let’s talk about how to be profitable for the bar owners. Some of this you may already know, but I’ll get you to make money and not close your doors. Please be open minded here.

First, let’s talk about the money you are going to invest. How does anyone figure that they can invest a boat load of money in a bar, or nightclub for that matter, and get a speedy return on their investment along with on going weekly profits? How do you pay this off in a reasonable amount of time?

Sure, some of these places are beautiful, especially if you like architecture. But honestly, do you really think that the average person cares, or can appreciate, the red oak trim, or the wallpaper so expensive it would choke a horse?

Of course not. These are ego decisions, not business decisions. And unless you are living in Las Vegas, or New York City, you shouldn’t even be considering such things, let alone doing them. And some times, not even then.

You can build yourself one hell of a nice place that people will still ooooh and awwwwe about without being silly with your money. Anyone can build a beautiful bar or nightclub with an unlimited bank account. But for what reason? You are here to make money, right?

Paying off such an extreme debt will choke you. And you and your partners are not going to see a dime if you over do it. And then, no one is happy.

Did you ever see a dive type of place that was busy all the time? Of course you have. See what I mean?

Build yourself a nice place, for sure. But be wise. You have to understand a couple of things in this business. Most people don’t have these outgoing personalities and have fun. But “fun” is the recipe for success. People don’t know how to have fun, but sure want to be a part of it. It’s up to you to provide what they don’t know how to provide for themselves. Everyone sells basically the same product, let’s face it. So why go to your place? What’s the draw? Do you even know?

This may sound stupid if you are an outgoing extrovert who has fun no matter what they do, or where they go, but it’s true. People are drawn to people and fun. If you can provide this, consistently, you will be the talk of the town, and you didn’t have to put in a million dollars to do it!

And when I mean fun, I don’t mean the cheezy wet t-shirt contests or stuff like that to draw people in. Use your imagination. Please! If you provide a clean, safe, and fun environment, you will be the hit of the town you are in. And please take the t-shirts that say “bouncer” off of your security.
And simply put, the bar business, to this day, is still about “boy meets girl”. So you have the premise, so go for it. This has absolutely nothing to do with investing a huge amount of money in your place. Remember, you are here to make money.

As bar owners, when building your place, you need to concentrate on what matters in a bar or nightclub. Think about it. What are they things that everyone complains about? Location, parking, safety, service, FUN.

I’m sure bathrooms are the first thing that comes to mind. No one ever builds them big enough do they? And why would anyone put florescent lights in a bathroom? They are the absolute worse type of lighting in the world for human skin. They DO NOT compliment! They are many things you can do with bathrooms that are fun and unique too.

What else? Sound systems and lighting I am sure come to mind. I can’t tell you how many people in the bar business do this wrong. I have always designed and installed my own, but it was something I could do well. Not everyone can. Placement of your speakers so they don’t blare in one’s face, and the quality of the components used is questionable many times too. If you are providing music, make it sound great.

Overpriced DJ’s will kill your profits if they have have no emcee skills. But the worse thing you can do is let the DJ control the night. You own the place, so YOU control the night. Do you want a DJ to control your future??

Lighting, whether it is general house lighting, or specialty lighting, has to be done correctly. You don’t use white light in bars, and every bar owner should know that! And specialty lighting doesn’t work in all venue’s. It make work in one place just fine, but another with lower ceiling height may not work as well, and so on.

Depending on the size of your place, a coat room is a necessity. I mean a manned coat room. Don’t laugh. How many customers do you know that get their coat stolen or damaged while hanging off the bar stool? Great reputation for a bar owner to have, isn’t it. And it’s a money maker!

Another problem for bar owners is that when they are in the process of leasing the space to build their new place is they never lease the correct size of a place! It’s inexperience plain and simple. And when they are done, they start saying things like, “I should have made it larger”, or “I forgot to allow space for this or that”.

Bar owners hate to hire consultants. Of course, they are KNOW IT ALL’S. But what gives them the knowledge to approach this with any sense of understanding? When people have asked me about if it was worth it to hire a consultant, I have put it this way. “Let’s say you design your own place. And let’s say you do a pretty good job and you only make ten mistakes while doing this. Which is pretty good.

But, if each of those mistakes cost you two thousand dollars, you just lost twenty thousand dollars! And you could have retained a consultant for less then that with no mistakes”. So is it worth it? I’ll let you answer that.

The problem with this is who to hire. There are a few out there, but who do you trust? The problem with this profession is that many “so-called” bar or nightclub consultants have never owned their own places. And if they have, it was generally a partner in “one” place in which they weren’t there very long. Wanna be’s are everywhere is the bar business.
Sometimes bar owners need consulting.

So where is the experience that they can offer you? I live in the D.C. area and I came across “another” consulting company recently that has made their home here. I won’t mention any names, but they have all the BS of many I find here on the internet. The associates are very young, so where is the experience level? And they push mainly software for bar owners. If you are taught correctly, you don’t need to buy it, need it, spend the time on it, or pay them. Period. But they will hood wink someone I am sure.

Another problem with so-called consultants, is they have no construction experience. Without it, how do they know where to locate plumbing, and electrical needs? They don’t! Anyone can say, relocate this over there, and move this here, or there, and they just get a bid from the contractor on what it is they want to have you do.

And in this business, no bar owner wants there name on a consultant’s web site as a customer! Don’t let them make money at your expense.

But it is very very easy for these people to spend the BAR OWNERS money. Anyone can build anything perfectly with an unlimited bank account. Especially yours! But does it make sense financially? After all, you are the one that has to pay this money off!

Back to where I was. Another thing that most people in the bar business fail to plan for is storage area’s. There is never enough and the place is always a mess.

Cooler space, especially walk in coolers that are WAY to small, especially for draft beer kegs.

Bar stations, and the bar design are usually hard to work at, and of course this goes to providing customer service, or the lack thereof. If customers can’t get served, why did you open a bar? Do you ever return to a bar that you can’t get served in? That’s what I thought.

Managing is a huge part of being profitable. But many people in the bar business don’t know how to manage correctly. Along with many duties a manager is responsible for, are they truly taking care of your money. Is waste at a minimum? Are bartenders that steal being let go? Do they know how to detect theft? Are purchases and inventory being managed correctly? You need to take a look at these things and not just say, everything is good here.

POS systems are another investment you need to make. They are very expensive but not all work that well and are cumbersome. There are many companies out there that provide these, as there is a ton of money in selling software and maintenance packages. Buyer beware. I have seen many but all in all, Micros is probably the best, and probably the most expensive too. And no, I don’t get any money from Micros for saying so. If you live in a small town, you can still get buy without a POS system. Thank your lucky stars!

And then there is heat and air conditioning. Usually these units are too small to provide adequate temperature. How is yours?

Consequences? If your staff can’t provide excellent service, and you haven’t provided the right training, it’s your fault. Yes, can be expensive to train and to train new hires, but it is mandatory. Are you doing your part? If you have, and your staff is not performing, there has to be consequences! Get rid of them. Every bad attitude, every messing looking, every person not smiling, every everything makes a difference. You are the bar owner, so operate like one.

As you can see, I have only touched on a few things here, but I think you get the drift of what I am trying to get at. Everything makes a difference for people to come back and for you to be successful and profitable. Are you doing everything?Did you, or are you spending way too much money building your place?

I had a premise long ago that my clubs had to pay themselves off in less then a year and a half, and they did. Did you do that? Did you spend money where you shouldn’t have?

I could go on and on here. But last and definitely not least, your place has to be comfortable to be in. The atmosphere has to be comfortable, even homey. A place where your customers actually like to go to. And they want to have fun. No, they could give a shit about your draft special! C’mon, your not serious are you? You are not Walmart or are you? Customers will be more then happy to pay full price if they are having a good time. Are you able to provide that? Are you?

Would you go to your own place if you didn’t own it. Hiring the right personalities is paramount. And when you find them, treat them good as well as pay them good. They will bring you ten fold the business then an average person would.

Most DJ’s have terrible personality. Some are gifted and work a crowd well. So hire an emcee. People who are gifted in their profession make a difference. Make it fun and YOU will be the successful bar owner in town.

Also, what are your fixed costs? Before you decided to build your bar, did you figure your fixed costs? Are they attainable? Are you dreaming? Anyone can build a bar, given the money. Anyone. Especially one that doesn’t make any money! Did you put together a business plan for yourself so you could see reality? Again, are you dreaming?

The purpose of going into business is to make money. Period. If you are in a pickle, get help. Don’t let ego get in your way and get confidential help to insure your longevity.

I can go on and on here. We could talk about scheduling, food costs, insurance, CPA’s, service contracts, vendors, shortages, leases, etc. But this page gives just a few things to think about. Sometimes you may be too close to a problem to see the light at the end of the tunnel. If you are having problems, seek out a consultant for a conversation. Just a conversation. Feel them out and see if you feel good. Don’t buy a package that you can’t afford to begin with. Talk a little, maybe pay them for an overview, and take a look at your numbers, and what you do. It shouldn’t be that expensive for an overview.

Don’t work harder, work smarter!

Filed Under: Bar / Nightclub BusinessBar Business

Tags:

About the Author:

RSSComments (9)

Leave a Reply | Trackback URL

  1. Felix says:

    I thoroughly enjoyed this article – very informative useful and to-the-point. Owning a profitable bar is definitely not easy. I appreciate the excellent words of caution.

  2. Cas says:

    Definitely useful information. Thanks for that. I might actually buy the whole book and read on. I have a friend of mine who fell into the trap of buying into a nightclub that noone in town bothered going to and now he is out of business, I am sure he will find the book useful.

  3. Gennady says:

    Hello

    I am interesting in investing into a new bar venture in NYC. Currently I am looking for an operating partner who would like to be the one running the business. If you are interested please email me at tradingtime212@gmail.com

    Thank you

  4. nolly says:

    hi,
    This article helps me a lot to see the big picture of managing a bar..thanks a lot.

  5. Noel says:

    Thanks for all the great tips, I am opening a club in Houston. Wish me Luck!

  6. says:

    Good luck!!!

  7. John says:

    Thanks for the insight but you should really run this through a proof reader. There are an amazing number of grammatical and spelling errors.

  8. says:

    Thank you for the comment john. I know my spelling and grammar are not top class, but i never intended it to stop me when i decided to take on the task of building this site and delivering my knowledge end experience to other people. Nor should any of you give up your wishes because of irrelevant drawbacks you might have. Only look at hard relevant facts that i detail in this site when you try to decide if you are to do something you wish.

  9. Clinton Gallagher @virtualCableTV says:

    Over the years more and more technology has been used on the premises of bars from pinball machines to HDTV sets. These days and for decades to come customers carry and use mobile phones and tablets they use to connected with one another, entertainment, news and such.

    Since day one bars have been the Facebook of the brick and mortar world, a place where people could congregate in large numbers dwelling on the premises to socialize while consuming a product: eyeballs that marketers and advertisers pay big bucks to attract.

    But most bar owners I have tried to work with are arrogant and down right f*cking stupid claiming with their loud voice “I don’t want no stinking advertising in this place and its not what my customers come for.”

    But when I point to Mr. Dumb Ass’s 60″ TV playing nothing but sports and a Quiznos commercial comes on I explain to him that Quiznos pays a much as $15,000 for 15 second spots on the sports networks.

    Then I ask Mr. Dumb Ass the big shot bar owner “how much of that advertising revenue you (hypocritically) say that you refuse to allow on your premises was shared with you?” Of course then Mr. Dumb Ass stares like a deer caught in the headlights.

    Bar owners do not understand their customers are looking for places that have become media centers. They think customers only come to drink beer and such which these days is not the whole story.

    The bar owners foolishly waste the use of their HDTV sets with nothing but sports 24+7, they have poor Wi-Fi if they even have it at all and they have the worst websites on the WWW some of which are so FUBAR they do not even tell the customer the hours of operation or their location and other such amenities customers are looking for.

    In other words most bar owners do not know sh!t from shinola as it pertains to operating a bar or a gastro pub during these contemporary times.

    Yup, they sure are a bunch of dummies

Leave a Reply




If you want a picture to show with your comment, go get a Gravatar.