April 12, 2018 How to Increase Beverage Sales at Your Bar in 7 Days
It’s the million dollar question every bar owner asks: How can I increase beverage sales? The answer doesn’t take luck – or magic – just a few calculations, upselling strategies, and smart promotions. Use these 7 steps to increase beverage sales within just one week.
Step 1: Run the Beverage Cost Formula on Monday
When setting out to increase beverage sales, the first step is to run the beverage cost formula – also known as pour cost. This formula reveals the percentage of your total beverage sales that are being spent on the actual drink ingredients each week (cost of goods sold or COGs).
Think of it like this: pour cost is what you pay your distributors for the products you serve. Once you find your pour cost, you can also determine your gross profit.
Your ultimate goal is to lower your pour cost, so you can increase your profitability on beverage sales.
The Basic Pour Cost Calculation
Cost of Goods Sold (COGS) / Total Sales = Pour Cost
A lower pour cost is always better. For example, if your bar’s annual total beverage sales were $700,000 – and you purchased and used $200,000 of inventory – your pour cost percentage would be 28%. Your gross profits were $500,000.
If you use strategies in Step 2 to lower your pour cost to 20%, that means an extra $60,000 in gross profits for you. See why running this calculation is the key to increase beverage sales…and your profitability?
What is a “Good” Pour Cost Percentage to Aim For?
A bar management software company, BevSpot, analyzed the average pour cost across thousands of bars. BevSpot determined the industry average pour cost for bars is 18-24%. Broken down further, BevSpot found:
- 28% media pour cost for wine
- 24% median pour cost for beer
- 15% median pour cost for spirits
As you tackle ways to increase beverage sales, pay equal attention to keeping your pour cost in line with these averages.
Step 2: Reduce Your Beverage Costs on Tuesday
Remember, this is your mantra: To increase beverage sales, I must decrease beverage costs!
Unfortunately, most bar owners simply focus on boosting beverage sales through marketing. But if you’re losing thousands each week because your beverage costs are too high…what’s the point? Get control of your beverage costs first. Here’s how:
1) Go Local
Not only is this a priority for customers, 41% of whom seek out bars and restaurants with locally sourced products according to Mintel Research, it can save on pour cost. Team up with a local brewery. Or, source in-season fruit for your drinks from a local farmer. Distributors bury shipping costs into their food and beverage sales – passing them on to you.
2) Talk to Your Distributor
To reduce beverage costs, and increase beverage sales, your distributor can also be your best friend. Ask about new brands. Many emerging wine, beer, and liquor brands offer lower “promotional pricing” to get their product in more bars. Plus, customers will enjoy tasting new beverages.
3) Stick to the Recipe
Each drink should have a recipe and guidelines for bartenders. Every month, review those recipes with your staff. Of course, bartenders can whip up a gin and tonic – but are they adding an extra half ounce of gin? That could be costing you.
Step 3: Increase Your Margin on Wednesday
As you work to increase beverage sales, pour cost comes into play again. Now, you’ll use it to strategically price your drink menu for a healthier profit margin. That way, you’ll get a higher percentage of profit from your beverage sales. Here’s the formula in action as applied to a gin and tonic:
COGs per Drink / Pour Cost = Menu Price
1) Determine the COGs for Each Drink
Outline the costs for every individual ingredient involved in beverage sales of your gin and tonic – including the straw and the lemon (or lime!) wedge. To find out the cost of goods sold (COGs) for the gin, divide the cost you pay for each bottle by the ounces you use in each gin and tonic. Do the same for the tonic water.
COGs for the gin and tonic = $1.45
2) Use an Aggressive Pour Cost
Get aggressive here. Don’t apply your bar’s pour cost – go a few percentage points lower. For example, if your pour cost for spirits is 22%, go lower by a few percentages to add in profits to your beverage sales.
Pour Cost = 20% or .2
3) Run the Formula
Gin and Tonic COGs $1.45 / Pour Cost .2 = $7.25
You should price your gin and tonic at $7.25.
Your profit margin on beverage sales of gin and tonics would be 80% or $5.80. If you had used your own pour cost to price the gin and tonic, it would only be 78% or $5.65. Those cents add up! If you sell 8,000 gin and tonics a year for an extra 15 cents each, that’s $1,200 more in profit from your beverage sales.
The Golden Book ofUpselling Secrets
The ultimate guide for owners & managers.
Step 4: Upsell on Your Menu on Thursday
The next step in your quest to increase beverage sales is to put your “silent seller” to work. That’s your menu. Use these research-backed strategies to boost beverage sales:
1) Remove Zeroes and Dollar Signs
If you have a $8.00 Manhattan on your menu, you’re doing it wrong. No, the price is just fine – it’s how you show it. A study by Cornell University Center for Hospitality found that guests ordered more of an item when the zeroes and the dollar signs were removed. Why? Because double zeroes suggest expense (an $800 Manhattan? Nope). And dollar signs or the word “dollar” reminds guests they’re spending money. To lift beverage sales, use one of these formats on your menu:
- Manhattan 8-
- Manhattan 8.
- Manhattan 8
2) Use the Magic Number 9
Actually, you might want to make that Manhattan $9. In a study by MIT and University of Chicago, customers bought more of an item when it was priced at $39 – compared to $34. Their conclusion? Customer have a “thing” for the number 9.
3) Create Descriptive Drink Names to Increase Beverage Sales by 27%
The devil may be in the details, but so are hidden profits. Add detail to your drink names to see sales increase by 27%, according to research by the University of Illinois Food Lab. It’s not a Manhattan anymore, it’s a Special Hickory Smoked Manhattan (with a splash of liquid smoke).
Step 5: Train Your Team to Upsell on Friday
After optimizing your menu to increase beverage sales, now look to your team of bartenders. Train them in the art – or rather, science – of upselling.
1) Say “Because”
“Would you like a Special Hickory Smoked Manhattan, because everyone is ordering it like crazy today?”
A Harvard Psychologist found that when the word “because” is used in upselling, 93% say yes – even with a crazy reason. Give guests a good reason, and 94% will say yes. Without “because”? Just 60% say yes.
2) Give a Taste…For Free
To increase beverage sales, free sampling is a smart move. In the retail world, a study found that sales of an item increased by 2,000 percent after shoppers were given a sample. Just look to Costco for proof.
Want more upselling strategies to increase beverage sales? Download this free whitepaper: The Golden Book of Upselling Secrets for Bars and Restaurants.
Step 6: Promote on Social Media on Saturday
Now your team and menu are ready to upsell, your drinks are priced right. The next step to increase beverage sales is to bring in the crowds.
With 68% of American adults on Facebook according to the 2018 Pew Internet Research report, start there for the biggest reach. To put Facebook’s reach in perspective, Instagram is the next most-used social media platform – used by 35% of adults.
Marketing on Facebook to increase beverage sales could be an entire article – but the smartest move you can make today is to use Facebook’s “Go Live” feature. In early 2018, Facebook changed its algorithm to show users less content from businesses. However, Adam Mosseri, the head of Facebook Newsfeed said that live videos have a 6x greater chance of being seen than regular videos.
To go live, open Facebook on your smartphone – hit “go live” and start recording to increase beverage sales. Need ideas? Here’s what to record:
- Your bartender showing how to make her signature drink
- The atmosphere during your busiest night
- Describe new craft beers as you move down the tap handles
Step 7: Slow Down the Tempo on Sunday
The final step might surprise you. The secret to increase beverage sales just might be in your background music. During slower dayparts – like a Sunday afternoon – play slow, relaxing music. One study revealed that those mellow tunes caused guests to spend up to 40% more on drinks (and desserts).
If you’ve put these strategies to increase beverage sales into play, by the following Monday you should be looking at a healthier bottom line. You know what to do. Repeat the process again! After a few weeks, you’ll be calculating your pour cost formula on autopilot. Your team will be upselling like it’s second nature. And you’ll be running a profitable bar business. Cheers to you!