Bar Owner Profits: Profit Growth
When it comes to bars, there are a lot of profit factors and benefactors. Profits come, at least directly, from food and beverage sales. Bar profits also come from great marketing, design ideas that suit the bar, deals that bring in customers, and an overall quality bar plan. As for benefactors, the list includes the customers, as they get great returns on their investment of frequenting a bar. It also includes the wait staff and bartenders, managers and supervisors, and, of course, the bar owner. All of these parties have an interest in increasing bar profits, with the owner being at the top of the list. For the owner, the bar is more than a job, it’s their whole livelihood. Bar owners should always be looking for ways to improve their bar. One specific way they can do this is by looking at how to increase their own specific profits. How bar owners can grow their profits is a lot of ground to cover. However, with the key steps, it's as easy as budgeting and marketing just right.
Are Bars Profitable
We know by now that bars are undeniably quite a profitable business idea. Overall, the profits come from the:
- Flow of drinks
- Great menus with tasty treats
- A fun, inviting environment
That said, as those profits come in, where do they go? Of course, the top priorities of bar revenue go towards paying employees, keeping the bar stocked, and any and all maintenance the bar needs. But what about bar owner profits? So much of the profit growth of a bar goes back into the bar. However, as a business owner, one of the main goals is to increase your own personal profits. So, for owners, the question becomes: are bars profitable for owners? The answer is, yes, and you can increase your profits as you go along.
At What Stage of Growth is a Business Profitable
A lot has to happen for a bar to become profitable, and therefore, for bar owner profits to grow. Once a bar opens up, it can take a while to reach the point of profit growth. This is because it takes a while to get on top of the startup cost to open a bar. It takes work to make money that becomes profit as opposed to money that goes directly back into the bar. On a general basis, it takes about two years from opening for a bar to begin turning a significant profit. As a bar owner, you’ll be pouring everything you can into your bar for those first few years. You'll be prioritizing the health of your bar business and the salaries of your employees. After that approximate two-year mark, you’ll be able to really start turning a profit.
Before we dive into how bar owners can grow their profits, let’s take a look at some of the finer points of profit growth. One important factor to understand is the difference between revenue growth vs profit growth. According to Investopedia, “Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations. Profit, which is typically called net profit or the bottom line, is the amount of income that remains after accounting for all expenses, debts, additional income streams, and operating costs”. Basically, while revenue is the way you raise profits, actual profits come from widening the gap between revenue and profits. For greater bar owner profit growth, learning and mastering that in-between area is key.
Top Seven Ideas For How Bar Owners Can Grow Their Profits
The best ways bar owners can grow their personal profits are all about finding ways to spend less on the bar. Of course, there are things you can’t skimp on, like:
- Employee pay
- General maintenance and safety prices
- Basic bar inventory
- Marketing for your bar
But there are ways to increase profits in small ways across the board. A bar needs a budget like any other business. When you organize your budget, you can find bits and pieces where you can increase your profits over the cost of doing business. Ultimately, the ways you can raise your profits will be very dependent on your bar. That said, these top seven tips for how bar owners can grow their profits will be a good place to start.
Seven: Promote Top Shelf Bottles
A good idea to start off with is increasing the sales you make on top-shelf bottles. Of course, if this was as easy as selling a PBR everyone would be boosting their sales with the top bottles. Not everyone who walks into your bar is going to be looking for a $50 shot or a $3000 bottle. There are two ways, however, that you can increase your profits on these bottles. One is, you can market to a higher end of the market, to bring in customers who will be spending more. The second option is to make these top-shelf items a special part of cocktail offers. This will be accessible for more people and will give you a way to increase profits across the cocktail board. You'll also be able to use less of these top-shelf brands per drink. That's a win for profits on both sides of the board.
Six: Upsell on Group Deals
Another way to boost profit margins is to offer deals on groups of drinks and snacks. A group rate will always bring in customers, and you can strategically choose the best items to include. This is another way to boost sales on top-shelf bottles and pricier dishes. You can pair them with less pricey options, and make a higher profit overall while your customers enjoy a great deal. You’ll have to be careful with what you offer in these deals. They can become a way to lose money if you’re not on top of it. However, if done correctly, a group deal will boost profits in the long run.
Five: Invest in the Best
This tip for growing profits is for anyone who is just starting out their journey of owning a bar. It's also helpful for anyone looking to upgrade their equipment. Investing in the best equipment will mean a higher price point right off the bat, but over time this will save you money. Effectively, while you won’t make money off this directly, you’ll spend less over a period of time. This will give you more to put back in your pocket. Investing in the best bar equipment means your equipment will last longer and help you and your staff operate more efficiently. Not to mention, some of the best equipment out there can even help you provide more for your customers.
Four: Boost Bar Activities
Another great way to raise profits is to find ways to bring in customers that don’t cost money. One option for this is to make your bar a space where people can play games. Things like:
- Board games
- Trivia nights
- Card games
- Video games
These options and more are ways to bring in customers. They'll get them to buy a few rounds and some snacks while they enjoy a few hours playing games. Besides the starting cost of buying a few games, this is essentially free for you. And, in addition to making you money on a nightly basis, this will also bring in more repeat customers.
Three: Max Out Mocktails
Another way to bring in higher profits is by boosting your mocktail market. Mocktails are great for profits because you can make great drinks without costing yourself liquor. Whether you make a mocktail happy hour special, or you add a specialty mocktail menu, these buzz-free drinks are a great profit booster. Some great options to include are:
- Mocktail twists on your regular menu items
- Themed mocktails for different events at your bar
- Make-your-own mocktails for customers to experiment with (have a set few ingredients to control costs on this)
Whatever you choose, there’s a great market out there for mocktails that you can reach as you boost your profit margin.
Two: Master Bar Marketing
One of the best things you can do for your bar and your bar profits is to find the right marketing strategy. This will be something different for everyone depending on:
- Bar type
- Ideal customers
But it’s absolutely vital that you find a marketing strategy that works for you and your bar. Some options to explore include:
- Social media marketing
- Flyers around town
- Radio and TV advertising
- Word of mouth
A good combination of these practices will bring in more customers and, therefore, more profits to your bar.
One: Streamline Your Inventory
And a truly great way to streamline your bar operations and save money is the practice of streamlining your inventory. Inventory can be a time-consuming process. It can also lead to errors and mix-ups with your inventory, which leads to a loss of profits. Streamlined inventory management is one of the best ways to give your bar a boost and steadily increase your profit margins. If you’re looking for a way to work on your inventory management practices, BinWise can help. BinWise is the leading platform in terms of supporting bar and restaurant beverage management. Working with BinWise can help you find even more ways to boost your bar profits.
How Bar Owners Can Grow Their Profits: Next Steps
As a bar owner, you’re responsible for not just your staff, your customers, and your bar. You have to factor yourself into the process too. While growing profits will be great for your business and everyone who works for you, remember to give back to yourself when you can. It’ll take a lot of work to increase your own individual profits, but using these tips and tricks will get you there.