Behind the Bar

6 Money-Saving Tips for Bar Owners

A woman on an ipad in from of a bar.
Bar owners can save money by taking steps to limit waste, cut costs on individual drinks and ingredients and by hiring the necessary financial help. (Photo: Squaredpixels/iStock)

Owning a bar means wearing multiple hats, putting out fires and generally being a superhero. It’s your job to keep tabs on everything from creative marketing to customer service to employee morale. It can be hard to find the time to tweak your business in small, but powerful ways.

We’ve made it a little easier by collecting creative ideas from around the country on how to do just that. A bar manager, restaurant CFO, two restaurant managers and a tax expert share their best advice for keeping bar costs down. Apply these tips to up your profits without overhauling your business.

1. Pay attention to waste.

“There can be a tremendous amount of things wasted that people don't pay attention to. For example, how many lemons are cut before service or garnish that is thrown away at the end of the night. Watching those levels can be really important. Most people are unaware of the cost of what you're putting in the glass versus what you're charging for it. You can save money by paying attention to your margins.” — RJ Melman, Managing Partner of Lettuce Entertain You Enterprises in Chicago

What are you using up thoughtlessly? If you aren’t already, take stock of everything at the beginning and end of each day. Think of waste as a creative challenge: where can you get resourceful with fewer purchases? Consider composting, nixing straws, zesting your lemons and other ways to reduce waste. You can also prevent waste by extending the shelf life of ingredients like syrups and bitters.

2. Consider your employees.

“Reward employees with a percentage if the cost of goods are down. Talk to employees making them part of your team to care about equipment. Labor is the largest expense. Keep a close eye on clock-ins and clock-outs. Outsource using Fivver and Upwork for social media and online promotions. Train employees on safety to reduce work-related accidents. Hire interns.” — Sal Rozenberg, Director of 230 Fifth Rooftop in NYC

Your staff is one of your biggest expenses and one of your biggest assets. It might seem counter-intuitive, but keeping your team happy, accountable, and prepared will affect costs at every level. Make sure to put yourself in their shoes to anticipate problems, build trust and successfully implement changes when necessary. A great bar manager takes care of people and profits at the same time.

3. Move ingredient sourcing in-house.

“Make some of your ingredients in house. Ingredients and labor to make coffee liqueur, grenadine, vanilla syrup, etc. are less expensive than purchasing a final product. Often they will be of much higher quality as well.” — Joshua Batway, Bar Manager at Good Bar in Seattle

You’re probably not ready (or willing) to make all your ingredients in-house tomorrow. But it’s well worth considering the benefits of making your own syrups, purees and shrubs. Grenadine tops the list for many bar owners as an easy gateway to housemade ingredients. But don’t jump into making spirits and liquors without seriously taking stock of your resources, skills and motivations.

4. Refine new libations.

"A great way to save (and make) money is to do your creative work behind the bar, but then put each new libation through a rigorous process to see if it should make the cut:

  • Does this taste delicious?
  • Does it look good?
  • Do I have a creative marketing angle?
  • Does the cost calculate out correctly, including expected waste?
  • Can I produce this quickly when we get busy?

“The costing part of this exercise is the most important. Try substituting more cost-effective liquors, where possible. Blind taste-test drinks on staff — or guests, to make the process interesting — and find out which substitutions matter, and which don't." — Matt Hetrick, President/Founder of Culinary Accountants, Inc. in DC and owner of Preserve and Vintage restaurants in Maryland

Creativity is, of course, key to a memorable and successful bar. There’s power in creating a culture of creativity behind the bar, which will lead to exciting new creations and keep patrons coming back and feeling connected. But a beautiful, unique, delicious cocktail will be a failed experiment if the numbers don’t work out in your favor at the end of the day.

5. Get an accountant.

“When it comes to tax season, you can either really hurt or help your bar. Know what you can deduct and you could see huge tax savings. For instance, you can deduct direct and indirect food costs and there are allowances for wasted food items.” — Jayson Mullin, Owner/Founder of Top Tax Defenders in Houston

One of the most counter-intuitive money-saving tips for any business: spring for a great accountant! An accountant will help you take advantage of the deductions available to you. A great accountant will help you take full advantage and give you insights into increasing profits, cash flow management and cutting costs throughout the year. Visit the IRS Restaurant Tax Center to educate yourself as well.

6. Be smart with your spirits.

“Buy liquor in bulk. Use Jiggers to control pouring. Don’t sell high-end wine by the glass, only by the bottle. Sell more bottled beer. Tap has a lot of waste.” — Sal Rozenberg, Director of 230 Fifth Rooftop in NYC

Spirits — the core of your business. Naturally, you want the highest-quality liquors for your cocktails. But quality and thrift can go hand-in-hand. Just by being wise about where you get your alcohol and being mindful of how you serve it, you can immediately control costs. No bar overhaul required.

Whether you’re just beginning the process of opening a bar or you’re a seasoned owner with multiple years under your belt, keep these six money-saving tips in your back pocket to cut unnecessary costs and boost your bottom line.

This guest post is courtesy of Bond Street, transforming small business lending through technology, data and design. The company offers term loans of up to $1,000,000 with interest rates starting at 6% and terms from one to three years.

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