How Much is Too Much for a Cocktail?

I always had the attitude that if you can’t afford to tip for great service, then you should get a bottle of booze from your local liquor store, make yourself a martini at home and chat with people on Grindr.  You should not go out and purchase booze at your local watering hole and stiff your bartender.  I think that attitude has changed for me.  I have bartended in a gazillion different concepts over the years from bars that have just opened to bars that have been in operation since Stonewall.  Do you want to know how the bars stay open for 30 plus years?  They don’t screw their guests.  I am not sure what it is about simple profit and loss costing that bar managers have such trouble with when understanding what retail price to set in order to reach a profitable cost of goods percentage.  Maybe I should take my 15+ years in P&L management experience and just keep my mouth shut, which is what I usually do when I am in a bartending role.  The following opinion is not due to one instance or one bar.  This is something I have seen over the years which has been the undoing of many places.

For me, I feel it is reasonable to pay up to $6 for a well or rail drink.  I would pay $7-8 for call or premium booze.  I would pay up to $10 for top shelf.  I think those are reasonable.  I would pay up to $12 for a martini/manhattan/multiple liquor cocktail.  I worked at a gay sports bar in DC during the grand opening months.  The prices were comparable to those I have just mentioned, then midway through my shift one night that all changed.  Apparently, the manager was adjusting all the prices in the POS during the busy friday night rush.  Jack Daniels had been $7.50 all night.  I had a guest returning to the bar for his fourth Jack and Coke, I turned to him and said, “Hey baby, that’s $7.50.”  He handed me $10 and walked away.  I turned to ring in the sale and it rings up $9.  Sure, he gave me enough money to cover that, but is that the right thing to do?  I was always taught that a guest-first-focus leads to increasing sales.  I feel like this approach had nothing to do with that motto.  There was no communication with me as to a pricing change as I could inform the guest of this.  There was no reason to increase the price.  Jack Daniels did not jump in price at the wholesale cost.  Needless to say, the bar business dropped significantly after word got out about the change.  They struggled immensely until they lowered prices and a new nightclub opened across the street.  It became the pre-funk spot.  Lowering prices alone was not enough to court the lost guests.  It was a slap in the face to the consumer and showed signs of gross mismanagement.

There is a concept in basic business marketing called an SPR- Street Pricing Report.  If you want to open a bar that competes for a target market, then you conduct your street pricing research by going to all the bars who are competing for the same market and pricing their product.  You do NOT want to price yourself out of the market.  You combine that data with your cost of goods budget.  It is not rocket science.  There is nothing more embarrassing for me than knowing something is way overpriced then having to tell the guest their total.  We are the front line.  We are your salesmen.  We are your guest relations.  We also hear all the bitching about pricing.  I have told people, “Sorry honey, that is way overpriced.  Don’t worry about tipping me.”  There are better ways to make a profit without raising prices.  Are you ready bars?  HIRE SEASONED MANAGERS!!!

There is an old management philosophy that holds true in practice.  “You can increase sales by $10 to make $1 in profit, or you can cut $1 in costs to make $10 in profit.”  It is easier to control your costs than it is to raise sales.  The killers to a business are spending more in product and labor to make a few sales.  I know I am getting too back of house for most of you, but it frustrates me when I see poor operations.  The community deserves awesome new venues to patronize.  If the business runs at a profit, I can guarantee the money will flow back to the community in the form of sponsorships/donations/fundraiser etc.  We don’t need to gouge our community’s pocketbook to make a profit.  We need to run the businesses as business professionals behind the scenes.

Pride is coming!  Bars/Nightclubs have a lot going on.  There are sure to be cover charges for all the entertainment booked.  They aren’t cheap.  How much are you willing to pay for a night out?  As more bars/nightclubs are on the horizon for Seattle, now is the time to get our shit together with our products/services so we can be around in 20-25 years.