Putting The P Back In ProfitsSeptember 3, 2013 By: Chris Lenahan
As the US economy limps back to health the nightlife and bar scene is still trying to recover from the hits it has taken over the past few years. One of the biggest blows to revenues when the economy began to slip was consumers stepping down from premium and call spirits to well.
For a quick example, let’s look at this in mathematical terms. If a premium vodka tonic is $12 and a well vodka tonic is $8 that is a $4 swing to the top line. This might not seem like a lot but serve a thousand well cocktails per night vs. premium and loss adds up; $4,000 a night, $8,000 a weekend, $40,000 a month, $480,000 a year to the top line. Therefore, it is time to “change or adjust” the consumer’s lifestyle and preference back to premium cocktails.
Now, let’s look at the challenge and the strategy in putting the “P” back on the board, Premium = Profits.
Step One: Education
Lack of consumer education is something that needs to be tackled. You need to be selling the customer the benefits of premium and call products. This includes the consistency, the quality, the mixability, etc. of high end spirits. Too often we fail to deliver basic information to consumers. Failing in the delivery of the message to the consumer of the benefits of premium spirits inhibits you bartenders from upselling to cocktails with higher profits.
Education and training needs to start with the point-of-contact. Explain server fundamentals on how you are looking out for the good of the customer through educating them. There are also personal benefits for servers to educate and upsell to premium products. Again, let’s break down the mathematics. On average, if a venue does $10,000 in sales then 20% of the gross total should be equal to the total take in [tips] of the staff or $2,000. Looking above do you remember the $480,000 per year drop in sales? Take this number and then take 20% of that total. Yes, $96,000 in lost tips to the staff, now if that is not a number that gets someone's attention you need a new staff.
Step Two: Training
You need to condition your staff to always up sell. Roll play with your team in order for them to grasp the concept.
Server: Hello my name is Charity what can I get you today?
Customer: I would like a Vodka Tonic please.
Server: Great! Grey Goose, Absolute or Ketel One?
You have now provided the customer with quality choices. The majority of the time the customer will choose one of the premium brands that you have recommended versus reverting to a well spirit. Bartenders should not underestimate their true sphere of influence. In the minds of the majority of consumers the bartender is the leading authority on spirits. Therefore, train your bartenders to upsell and educate.
Bartender: Hello my name is Michael what can I get you?
Customer: Vodka tonic please.
Bartender: I would recommend [insert premium product] because it has a clean taste and smooth finish.
Always compliment or thank the consumer for making the premium choice, by reinforcing the choice of the premium spirit you’re following through on educating/conditioning the consumer to purchase premium spirits.
Following through, roll playing, and incentive programs are key to reinforcing the training and messaging. You need to make this a habit in your service staff. As operators we need to be aware of the benefits of up selling and the affect it has on our operations in order to gain higher profits.