Transcript Document

Driving Profits in the New Economy:
Strategies for Increasing Sales in a
Down Economy
Presented by
Robert Plotkin
BarMedia
Sean Ludford
BevX.com
Nightclub & Bar Show
Las Vegas
Monday, March 2nd, 2009
10:00 a.m. – 11:00 a.m.
Backbar Management —
“Setting the Stage for Success”
•
The backbar is highly valuable real estate, yet it’s
often unmanaged
•
Object is to shelve a balanced offering of exciting,
profit-laden spirits
Backbar Management — “Setting the Stage for Success”
Tactic #1 – Drop Dead Stock
•
Any product that takes 6 to 9 months or more to
deplete is dead stock
•
Dead stock detracts from backbar and takes up
valuable shelf space
•
Reassess the viability of slow moving brands
(4 to 6 months to deplete)
•
Reduce to deplete duplicate products on
the backbar
Backbar Management — “Setting the Stage for Success”
Tactic #2 – Call Brands Deliver Bigger Profits
•
Vertically extend each category of spirits with at
least one super-premium brand
•
Super-premiums create up-selling opportunities
and yield higher profits
•
Long-term benefit — premium spirits make for
better drinks and yield higher margins
Backbar Management — “Setting the Stage for Success”
Margarita made with WELL Tequila
1 ¼ oz. Well Tequila
$ .35
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $ .68
$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage
Backbar Management — “Setting the Stage for Success”
Margarita made with WELL Tequila
1 ¼ oz. Well Tequila
$ .35
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $ .68
$4.50 sales price - $.68 drink cost = $3.82 gross profit
Backbar Management — “Setting the Stage for Success”
Margarita made with PREMIUM Tequila
1 ¼ oz. Sauza Hornitos
$ .72
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.05
$1.50 drink cost ÷ $6.00 sales price = 17.5% cost percentage
Backbar Management — “Setting the Stage for Success”
Margarita made with PREMIUM Tequila
1 ¼ oz. Sauza Hornitos
$ .72
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.05
$6.00 sales price - $1.50 drink cost = $4.95 gross profit
Backbar Management — “Setting the Stage for Success”
Margarita made with SUPER-PREMIUM Tequila
1 ¼ oz. Sauza 3 G’s Plata
$1.39
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.72
$1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage
Backbar Management — “Setting the Stage for Success”
Margarita made with SUPER-PREMIUM Tequila
1 ¼ oz. Sauza 3 G’s Plata
$1.39
½ oz. Triple Sec
+ $ .12
3 oz. sweet ‘n’ sour
+ $ .21
Drink Cost
= $1.72
$7.50 sales price - $1.72 drink cost = $5.78 gross profit
Backbar Management — “Setting the Stage for Success”
Margarita made with Well tequila
$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage
$4.50 sales price - $ .68 drink cost = $3.82 gross profit
Margarita made with Premium Sauza Hornitos
$1.05 drink cost ÷ $6.00 sales price = 17.5% cost percentage
$6.00 sales price - $1.05 drink cost = $4.95 gross profit
Margarita made with Super-Premium Sauza Tres Generciones Plata
$1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage
$7.50 sales price - $1.72 drink cost = $5.78 gross profit
Backbar Management — “Setting the Stage for Success”
Tactic #3 – Expand Horizontally
•
Take a marketing position and become a great
tequilaria, bourbon bar, etc.
•
Select a category of spirits and expand its the
breadth horizontally
•
Stock a diversity of styles to attract greater number
of aficionados
•
Introduce clientele to new, up and coming brands
Backbar Management — “Setting the Stage for Success”
Tactic #4 – Marketing Support
•
Devote a large part of the bar’s marketing to
promoting featured spirit, e.g. Tequila
•
Create a tequila menu with descriptions and
tasting notes
•
Promote a set of tequila-based specialty drinks
•
Single out most popular of the specialties as your
house signature cocktail
Backbar Management — “Setting the Stage for Success”
Tactic #4 – Marketing Support
•
Offer tasting flights — opportunity for guests to
determine their favorite brands
•
Schedule in-house tequila dinners or tastings
featuring specific tequila ranges
•
In-house catered gigs are a growing trend for
increasing sales and guest loyalty
Backbar Management — “Setting the Stage for Success”
Tactic #4 – Marketing Support
•
Staff enthusiasm and expertise pivotal to
program’s success
•
Educate staff about the spirit and nuances
between the various name brands
•
Yields high ROI in form of enhanced
credibility and increased sales abilities
Backbar Management — “Setting the Stage for Success”
Tactic #5 – Merchandizing
•
Product placement — adopt retail merchandising
cardinal rule
•
Studies reveal that consumers look first and longest
at center of retail displays
•
Concentric merchandising — bestselling products
positioned in center of backbar
•
Slower selling products should be placed further
toward the outer edges
Backbar Management — “Setting the Stage for Success”
Tactic #6 – Reassess House Brands
•
Well liquors typically have the highest sales
volume behind the bar
•
Selection criteria — don’t serve your guests
products you wouldn’t drink
•
Featuring quality house brands in the well the
savvy choice
Backbar Management — “Setting the Stage for Success”
Tactic #6 – Reassess House Brands
•
Premium spirit sales are steadily increasing, while
value brands are flat
•
Prevailing attitude in U.S. — life’s too short to
drink cheap booze
•
Consumers now have higher expectations about
the quality of their drinks
•
Premium wells — enhanced quality, increased
profits and higher perceived value
Backbar Management — “Setting the Stage for Success”
Example of a Pouring Brands’ Well
Brand Name
Liter
Costs
Rico Bay Rum
$ 7.80
Heaven Hill Bourbon
$ 8.02
Burnett’s Vodka
$ 8.18
Burnett’s Gin
$ 8.94
Tres Reyes Tequila
$10.47
Old Smugglers Scotch
$10.58
Average Liter Cost
$ 9.00
Backbar Management — “Setting the Stage for Success”
Example of a Pouring Brands’ Well
Brand Name
Liter
Costs
Cost Per
Ounce
Rico Bay Rum
$ 7.80
$ .23
Heaven Hill Bourbon
$ 8.02
$ .24
Burnett’s Vodka
$ 8.18
$ .24
Burnett’s Gin
$ 8.94
$ .26
Tres Reyes Tequila
$10.47
$ .31
Old Smugglers Scotch
$10.58
$ .31
Average Liter Cost
$ 9.00
$ .27
Backbar Management — “Setting the Stage for Success”
Profit Potential — Pouring Brands
Well Average Cost = $ .27/ounce
Average Portion Cost (1.25 oz) = $ .34
Drink
Price
Cost
Percentage
Gross
Profit
$3.00
11.3%
$2.66
$3.50
9.7%
$3.16
$4.00
8.5%
$3.66
$4.50
7.6%
$4.16
$5.00
6.8%
$4.66
Backbar Management — “Setting the Stage for Success”
Profit Potential — Pouring Brands
Well Average Cost = $ .27/ounce
Average Portion Cost (1.25 oz) = $ .34
Drink
Price
Cost
Percentage
Gross
Profit
$3.00
11.3%
$2.66
$3.50
9.7%
$3.16
$4.00
8.5%
$3.66
$4.50
7.6%
$4.16
$5.00
6.8%
$4.66
Backbar Management — “Setting the Stage for Success”
Example of a Premium Well
Liter Costs
Brand Name
Seagrams Extra Dry Gin
$12.82
Old Fitzgerald Bourbon
$10.08
SKYY Vodka
$17.18
Cruzan Light Rum
$ 8.48
Lunazul Blanco Tequila
$18.50
Ballantine Scotch
$13.63
Average Liter Cost
$13.45 (+ $4.45/lt)
Backbar Management — “Setting the Stage for Success”
Example of a Premium Well
Brand Name
Liter
Costs
Cost Per
Ounce
Seagrams Extra Dry Gin
$12.82
$ .37
Old Fitzgerald Bourbon
$10.08
$ .29
SKYY Vodka
$17.18
$ .50
Cruzan Light Rum
$ 8.48
$ .25
Lunazul Blanco Tequila
$18.50
$ .54
Ballantine Scotch
$13.63
$ .40
Average Liter Cost
$13.45
$ .39 (+ $ .12/oz)
Backbar Management — “Setting the Stage for Success”
Profit Potential — Premium Well
Well Average Cost = $ .39/ounce
Average Portion Cost (1.25 oz) = $ .49 (+ $ .15)
Drink
Price
Cost
Percentage
Gross
Profit
$4.50
10.8%
$4.01
$5.00
9.8%
$4.51
$5.50
9.0%
$5.01
$6.00
8.2%
$5.51
$6.50
7.5%
$6.01
Backbar Management — “Setting the Stage for Success”
Profit Comparison
Drink
Price
Cost
Gross
Percentage Profit
Pouring Brands
$4.50
7.6%
Premium Well
$4.50
10.8%
$4.16 (+ $ .15)
$4.01
Backbar Management — “Setting the Stage for Success”
Profit Comparison
Drink
Price
Cost
Gross
Percentage Profit
Pouring Brands
$4.50
7.6%
$4.16
Premium Well
$5.00
9.8%
$4.51 (+ $ .35)
Backbar Management — “Setting the Stage for Success”
Advantages of NOT Featuring Well Liquors
•
Ensures that all drinks will be prepared with
quality, name brand products
•
Gross profit potential higher on every sale
•
Necessitates that bartenders engage guests to
determine their brand preferences
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
The Cheers Paradigm
•
Becoming a destination venue necessitates building
repeat business
•
Crucial to success — core clientele contribute on
average 72% of revenue
•
Building repeat business is achieved by exceeding
guest expectations
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Profiting With Mixology
•
Enhanced mixology adds appeal and
perceived value without adding cost
•
Don’t offer your clientele the same
uninspired drinks as the competitors
•
Breaking down the elements of a
marketable specialty
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty —
Sessionability
•
Term used to describe a cocktail that people can
enjoy throughout an evening
•
Sessionability is an elusive quality — difficult to
achieve in a drink
•
Drink must be sufficiently interesting to make
guests want another
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty —
Sessionability
•
Cocktails lacking character are a bore and
guaranteed to send people packing
•
Cocktails with excessive flavor are overbearing and
quickly overpowers the palate
•
Alcohol strength a factor — sessionability
decreases as potency increases
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty — Balance
•
A balanced cocktail is one in which…
•
…all ingredients and flavors can be perceived
•
…no characteristic (tart, sweet, savory and acidic)
overshadows the others
•
…its featured spirits can be tasted, but not felt
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty — Branding
•
1st Immutable law of mixology — “The better the
liquor, the better the drink”
•
Featuring premium spirits in cocktails isn’t
sacrilege; it’s an act of creative genius
•
Specialties made with premium brands sell better
and yield more profit
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty —
High Production Value
•
Enhanced production value adds sizzle, enhances
the guest experience
•
Mixing techniques with high production value —
muddling and handshaking
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
High Production Value — Muddling Cocktails
•
Muddling does for a cocktail what high-def
does for television
•
Injects cocktails with fresh ingredients —
cucumbers, mint leaves, veggies and fruit
•
Drinks muddled in service glass —
Mojitos, Caipirinhas, Old Fashioneds
•
Muddling and double straining fresh
ingredients in signature cocktails
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
High Production Value — Handshaking Cocktails
•
Handshaking drinks — loudly communicates
freshness and proper technique to guest
•
Technique thoroughly mixes ingredients into a
homogenous cocktail
•
Handshaking lowers ingredients to serving
temperature — around 37-38˚F
•
Vigorous shaking also aerates the cocktail —
producing froth on top of the drink
•
Technique also adds water — softens cocktail and
melds spirits and modifiers
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Anatomy of a Marketable Specialty —
Great First Impression
•
Consumers buy with their eyes — decide whether
they’ll like a drink before tasting it
•
Aesthetic attributes of a cocktail with a great first
impression
•
Color — imbues a cocktail with intrigue and
visual appeal
•
Opacity — cocktails should be free of debris,
sediment and cloudiness
•
Aromatics — bouquet appeals to the olfactory
sense; powerful stimulus
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
•
Up-selling — effective sales technique and
service-oriented consideration
•
Suggestive sales techniques help guests make
informed decisions
•
Which is more effective — suggesting no brand, one
or two name brands spirits?
•
Deliver suggestions as if relaying insider information
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
•
Cross-promoting food and beverage increases
sales and defrays high food costs
•
Practical benefits to clientele eating food
while drinking
•
Conventional wisdom — it’s more fun to eat
in the bar than drink in the dining room
•
Cross-train bartenders on proper food service
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Alcohol-Free Program
•
Well-conceived alcohol-free program is a source of
risk-free, sustainable profits
•
Americans increasingly unlikely to consume
alcohol outside of the home
•
The demographics of alcohol-free drinkers include
literally everyone
•
Even when not imbibing, your guests deserve
sexier options than tap water and soda
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
The Non-Alcoholic Disconnect
•
Few non-alcoholic programs are successful from a
revenue perspective
•
Pervasive disconnect among bartenders who
regard drinks without alcohol a snooze
•
Non-alcoholic specialties are rarely special —
drinks contrived with ingredients on-hand
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Succeeding With Alcohol-Free
•
Orientation — converting ones thinking from
“non-alcoholic” to “alcohol-free”
•
Look to develop one alcohol-free signature
drink appropriate for all trade periods
•
Involve staff in the drink development —
program depends largely on staff buy-in
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Succeeding With Alcohol-Free
•
Alcohol-free specialty drink must have…
•
…high production value — muddling, handshaking
or floating the last ingredient(s)
•
…high quality ingredients — feature unusual or
exotic flavors
•
…high perceived value — drink volume of between
14-18 ounces
•
…a reasonable price tag — don’t allow high sales
price to inhibit sales volume
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Bar Savvy — Profiting From Spirit Infusions
•
Infusions involve taking any inexpensive liquor,
changing its flavor and character
•
Infusions feature everything from fresh fruit to
sun-dried tomatoes
•
Infused spirits have scores of applications in every
category of cocktails
•
Infusions are highly profitable, yielding profit
margins between 88-92%
•
Create a winning infusion and there’s only one
place people can get it
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Bar Savvy — Retro Drink Pricing
•
Recession-weary guests could use a break —
why not help?
•
Occasionally roll your drink prices back to what
they were in 1982, 1968 or 1945
•
Turn it into a regular promotion — flexible form
of discounting prices
Increasing Sales Without Raising Prices — “Exceeding Guest Expectations”
Bar Savvy — Random Acts of Kindness
•
In this rough economy, consider doing the
delightfully unexpected
•
Imagine applying the concept of random acts of
kindness to your business
•
What if you occasionally comp’ed guests their
dinner or a round of drinks?
•
“It’s just our way of saying thanks,” you’d say
•
Exceed people’s expectations and build a loyal
client base
Driving Profits in the New Economy:
Strategies for Increasing Sales in a
Down Economy
Presented by
Robert Plotkin
BarMedia
[email protected]
Sean Ludford
BevX.com
[email protected]