las vegas nightclub & bar show march 2010 presented by: jack robertiello

Copyright BarProfits 2010

Successful Beverage Management —

Proven Strategies for the On-Premise Operator

Part Two:Increasing Sales In A Down Economy

LAS VEGAS NIGHTCLUB & BAR SHOW

MARCH 2010

Presented By:

JACK ROBERTIELLOBeverage Writer/Former Editor of Cheers Magazine, Drinks Ink

ROBERT PLOTKIN

Author/Beverage Management Consultant, BarMedia


Premium Sales Trending Up — Americans Are Drinking Less But Better

• Despite the Recession, on-premise sales of premium spirits continue to increase

• Prevailing attitude in U.S. — life’s too short to drink cheap booze

• As evidence, on-premise sales of inexpensive value brands are flat or dropping

• Consumers now have higher expectations about the quality of their drinks



A recent consumer research study:• Conducted August 2009 by NextLevel Marketing

and Nightclub & Bar

• Involved 1250 on-premise consumers — LDA, split 50% male / 50% female

• Over 80% strongly agreed that cocktails made with premium spirits taste better than those prepared with house brands

• Consumers said they expect to pay an additional $2.80 for a branded cocktail


$ .68 drink cost ÷ $4.50 sales price = 15.1% cost percentage


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

Call Brands Deliver Bigger Profits

$4.50 sales price - $.68 drink cost = $3.82 gross profit



Margarita made with PREMIUM Tequila

1 ¼ oz. Premium Tequila $ .72



Drink Cost = $1.05


$ 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 Tequila

1 ¼ oz. Super-Premium Tequila $1.39



Drink Cost = $1.72


$ 1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage$7.50 sales price - $1.72 drink cost = $5.78 gross profit


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 Tequila

$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 Tequila

$1.72 drink cost ÷ $7.50 sales price = 22.9% cost percentage$7.50 sales price - $1.72 drink cost = $5.78 gross profit



Well Liquors — The Most Important Bottles in the House

• Well liquor is used in more drinks than any other type of spirits and typically has the highest sales volume

• As a result, featured brands will significantly impact profitability

• Bar’s price structure based on the well (e.g. well price plus $1 = call price, etc.)

• Selection criteria — featured brands need to conform to concept and clientele



• Often featured at operations with a predominantly price-conscious clientele

• Advantages — low cost per ounce and relatively low carrying cost

• Disadvantages — low quality, no brand recognition, heightened liability

Pouring Brands in the Well


Brand NameLiter Cost

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

Example of a Pouring Brands Well




Average Well 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

Profit Potential — Pouring Brands


• Best suited for a value-conscious clientele or brand-conscious clientele

• Advantages — moderate cost per oz, high quality, enhanced brand recognition

• Disadvantages — elevated cost per ounce, slightly higher carrying costs


Premium Brands in the Well



Example of a Premium Brands Well

Brand NameLiter 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)



Profit Potential Premium Brands Well

Average Well Cost = $ .39/ounce

Average Portion Cost (1.25 oz) = $ .49

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



Profit Comparison

Drink Price

Cost Percentage

Gross Profit

Pouring Brands $4.50 7.6% $4.16

Premium Well $4.50 10.8% $4.01



Profit Comparison

Drink Price

Cost Percentage

Gross Profit

Pouring Brands $4.50 7.6% $4.16

Premium Well $4.75 10.3% $4.26


Backbar Management — Setting the Stage For Success

• Beverage sales in casual and tablecloth restaurants average nationally around 25% of gross revenue and account for over 50% of average net profits

• The backbar is an operation’s principal and most effective marketing device

• It’s essential to assess whether the backbar is stocked with the right product mix


• Look to reduce inventory levels — frees working capital & lessens exposure to loss

• Reassess status of underperforming products — those that take 4+ months to deplete

• Drop dead stock — products that take longer than 9 months to deplete

• Drop duplicate flavors or repetitive styles

• Concentric merchandising — bestselling products positioned in center of backbar

Backbar Management — Adopting a Marketing Position


• Vertically extend each category of spirits with at least one above-premium brand

• Adopt a marketing position — horizontally expand a select category of spirits

• Staff education crucial to success of the strategy, facilitates server credibility

• Focus a portion of the bar’s marketing to that spirit:• Create a line of specialty cocktails

featuring the adopted spirit• Devote space in the bar menu to list

the name brand spirits stocked• Promote tasting flights to showcase

nuances between various brands

Backbar Management — Adopting a Marketing Position


• Suggestive selling helps clientele make informed decisions

• A look at consumer perceptions about suggestive selling:• Nearly 70% of the consumers said they

walk into a restaurant without knowing beforehand what they were going to drink

• About two-thirds said they listen to server suggestions and trade-up to a premium brand

• Only 3% responded of the consumers said they stick with their original order

Suggestive Selling — A Small Skill Set that Yields Big Results


• Three sales tactics — suggesting one, two or no name brands spirits

• Bar staff should deliver suggestions as if relaying insider information

• Guest hesitation before ordering is opportunity to present bar menu

• Of those consumers who typically stop after one drink, almost 25% said they would order another drink if only the server asked or didn’t take the cocktail menu away

Suggestive Selling — A Small Skill Set that Yields Big Results


• Every bar regardless of size should promote using a bar menu

• While guests will typically spend 2 minutes perusing a food menu — people on average spend 20 seconds looking through a bar menu

• That makes it essential your bar menu is well-conceived, easy to read in dim lighting and loaded with sensational cocktails

• On average, consumers want to see 14 beers, 14 wines and 16 cocktails promoted on a bar menu

Bar Menus — Proven Sales Drivers


• Test the appeal of specialty drinks before dubbing them your house signatures

• Create three separate menus each with different specialty drinks

• Rotate the menus every two months and track the sales results

• The bestselling drinks should then be combined in one menu

Bar Menus — Proven Sales Drivers

Conduct Your Own Market Research


• Nearly 90% of consumers read the drink menus at full-service bars and restaurants

• The majority of consumers surveyed said the bar menu is the most significant choice influencer

• 58% of the consumers want the bar menu on the table at all times

• 17% responded that the prefer table top cards to menus

• Only 11% said they prefer specialty drinks listed in the main food menu

Bar Menu Effectiveness — Consumer Research

Consumers Prefer Stand-Alone Drink Menus


• 81% of the consumers want drink prices listed on the menu

• 68% said they wanted to be able to read descriptions of the drinks

• 41% responded that they prefer seeing pictures of the drinks

• 35% of the consumers want brand names listed in descriptions


Most Consumers Want Drink Prices and Drink Descriptions on Menus


• Functional descriptions only include mention of the ingredients in a drink

• Consumers presented a Margarita menu with only functional descriptions

• 47% of consumers would order house, 31% top-shelf, 22% the ultra-premium


Menu Test #1 — Functional Descriptions Only



22%

31%

47%

0% 10% 20% 30% 40% 50% 60%

Ultra-premium

Top Shelf

House

Source: NextLevel Marketing 2009

Margarita Menu

House MargaritaCuervo Gold Tequila, triple sec and sweet and sour mix.

Top Shelf MargaritaSauza Hornitos Tequila, Cointreau and margarita mix.

Ultra-Premium, MargaritaPatron Silver Tequila, Cointreau, and margarita mix.



• Adding romance drink copy to menus drives significant drink trade-up

• Consumer interest in ordering the house Margarita dropped from 47% to 33%

• Those interested in trading-up to a branded Margarita rose from 53% to 67%

Menu Test #2 — With Added Romance Copy



36%

31%

33%

28% 30% 32% 34% 36% 38%

Ultra-premium

Top Shelf

House


Margarita Menu

House MargaritaCuervo Gold Tequila, triple sec and sweet and sour mix.

Top Shelf MargaritaSauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks.

Ultra-Premium, MargaritaOur distinctive, hand-shaken ultimate Margarita made with Patron Silver 100 Agave Tequila, Cointreau, and fresh squeezed lime juice served straight up or on the rocks.



• When romance copy and drink prices were included on the menu…

• … 67% still wanted to order a branded Margarita

• … However, after seeing the price of the ultra-premium Margarita 5% of the consumers changed their minds and opted for the premium Margarita

Menu Test #3 — With Added Romance Copy and Drink Prices



31%

36%

33%

28% 30% 32% 34% 36% 38%

Ultra-premium

Top Shelf

House


Margarita Menu

House Margarita $6.00Cuervo Gold Tequila, triple sec and sweet and sour mix.

Top Shelf Margarita $7.00Sauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks.

Ultra-Premium, Margarita $8.00Our distinctive, hand-shaken ultimate Margarita made with Patron Silver 100 Agave Tequila, Cointreau, and fresh squeezed lime juice served straight up or on the rocks.


• People want to know details about the drinks they’re ordering, just as they want to know about items on a food menu

• Consumers also want to know in advance how the drinks will look, what the ingredients are and how much they will cost


Summary of Menu Testing


• Don’t offer your clientele the same uninspired drinks as the competitors

• Enhanced mixology adds panache and perceived value without adding cost

Increasing Revenue Through Mixology — Exceeding Guest Expectations

Profit Through Enhanced Mixology


Achieving Sessionability in Your Drinks:• Sessionability is the most elusive of all qualities in a

drink to achieve • Term used to describe a cocktail that people can

enjoy throughout an evening• Cocktails must taste sufficiently interesting to make

guests want another• Drinks lacking character are a bore and guaranteed

to send people packing• Excessively flavorful cocktails quickly overwhelm

the palate• Alcohol strength a factor — sessionability

decreases as potency increases



Technique Matters — Handshaking

• Vigorously handshaking cocktails is an underappreciated mixing technique

• Shaking a cocktail communicates freshness and quality to your guests

• Handshaking accomplishes a number of objectives:• It thoroughly mixes ingredients into a

homogenous cocktail• Handshaking chills ingredients to serving

temperature, around 37-38˚F• Vigorous shaking also aerates the cocktail

and produces froth on top• Technique adds water; softens the cocktail

and melds spirits and modifiers



Technique Matters — Muddling

• Enhanced production sells the sizzle, adds to the guest experience

• Muddling is a high production value technique• It does for a cocktail what high-def does for

television• Muddling injects cocktails with fresh, vibrant flavors• Drinks muddled in service glass — Mojitos,

Caipirinhas, Old Fashioneds



Successful Beverage Management —

Proven Strategies for the On-Premise Operator

Part Two:Increasing Sales In A Down Economy

JACK ROBERTIELLOBeverage writer/former editor of Cheers Magazine

Drinks InkBrooklyn NY

[email protected]

drinksink.blogspot.com/

ROBERT PLOTKINAuthor/beverage management consultant

BarMediaTucson AZ

[email protected]

barmedia.com/barprofits.com

las vegas nightclub & bar show march 2010 presented by: jack robertiello

Documents