Seeing Through the SmokeDecember 5, 2011 By: Alissa Ponchione Night Club and Bar Magazine
E-cigarettes Keep Guests Staying Longer and Spending More
In the past, smoking at a bar or club was as common as ordering another round, but the spate of regulations and laws banning smoking in licensed establishments in recent years is changing the landscape. In the 27 states and numerous localities where smoking is banned in bars, clubs and restaurants, operators are scrambling to figure out how to keep smoking patrons on the premises while remaining in compliance as well as finding ways to supplement lost revenues as a result of the new rules.
That’s where electronic cigarettes come into play. Operators now can offer smokers — and curious non-smokers — a healthier, smoke-free alternative to regular cigarettes, keeping them in bars and clubs longer and spending more. Additionally, in places where smoking is permitted, e-cigarettes can help owners assuage guests who might not return if they’re constantly engulfed in cigarette smoke.
E-cigarettes are taking hold around the country, thanks to word-of-mouth marketing coupled with the promise of large profit margins and generally happier clientele. The bottom line is that including e-cigarettes among the offerings at your bar or club will have you seeing through the smoke to limitless profit potential.
Light One Up
E-cigarettes typically consist of an atomizer, a nicotine cartridge, a battery and a light-emitting diode (LED) that mimics the lit tip of a real cigarette; disposable e-cigarettes, which are sold at bars and clubs, come in menthol and tobacco flavors. The atomizer activates when the cigarette is inhaled, creating a smoke-like yet odorless vapor that contains no tobacco. Each disposable e-cigarette is equal to about two packs of cigarettes or approximately 400 puffs.
Most e-cigarette companies carry liability insurance, and executives make sure their companies are in full compliance with tobacco laws. (Even though e-cigarettes contain no tobacco, the U.S. Food and Drug Administration announced earlier this year that the devices would be regulated like tobacco products.) These measures not only are necessary for government regulations, they also help demonstrate that e-cigarettes are a smart long-term investment, even if laws change in the future.
Visually, each e-cigarette company chooses its own particular aesthetic; some look like real cigarettes while others supply myriad color options. At Cosmos Café in Charlotte, N.C., General Manager Michael Exum introduced Blu Cig e-cigarettes to patrons, and although Exum keeps the product behind the bar, the e-cigarettes’ black exterior and blue LED make customers stand out in a crowd. The e-cigarettes’ cool look is one reason smokers and non-smokers are lining up to make a purchase at Cosmos.
“It adds an additional aspect to someone’s evening to try something they’ve never tried before. And, it will curb their appetite to have a real cigarette,” Exum remarks.
One thing remains true: The e-cigarette is a conversation-starter — an intriguing accessory that has customers doing the legwork through their own word-of-mouth marketing.
“It just takes one customer smoking one, and people ask questions,” notes Ted McCrary, general manager of Pensacola, Fla., nightclub Emerald City. McCrary is in a unique position because Florida allows smoking in stand-alone bars or clubs that make no more than 10% of their revenue from food sales. Even though smoking is allowed, McCrary still sells Finiti e-cigarettes. It’s “the notion of smoking,” that’s attractive, he says. “I think they’re going to become more popular in time, and I think, at some point, we might not have the luxury of smoking in a nightclub.”
Smart Social Strategies
McCrary has a leg up on his competitors who don’t offer any smoking alternatives at their bars or clubs, and the easiest way for him to persuade new guests to try Finiti e-cigs is through word-of-mouth marketing.
“The very best thing is when someone has one around the bar. Everyone asks where they got [the e-cigarette], and that’s the absolute best thing as far as advertising,” he says.
Garrett Henderson, owner of Marz Bar & Grille in Milford, N.J., uses a scrolling LED screen to spark guest curiosity about the True Vapor Krave 300 and 505 e-cigarettes he sells, but he also knows his demographic.
“I sell them to people who smoke a pack of cigarettes a month — someone who has a cigarette with a drink. That’s my demographic. The heavy smoker is not going to buy this,” he explains.
Initially, Henderson says the novelty of the e-cigarette is what attracted customers. The eye-catching packaging and non-smelling vapor piqued interest.
“At first, you have to give them away a little bit. I would give them to the bartenders, and I would walk around with one,” he says. It wasn’t long before he was able to get patrons talking about and purchasing their own disposable e-cigarettes. His endorsement is enough to sell about 12 to 15 e-cigarettes on a busy weekend night. What’s more, guests specifically go to Marz Bar to buy them again and again.
Located in a blue-collar town, Marz Bar gains value by selling e-cigarettes. Patrons who smoke the $12 e-cigarettes project an air of affluence. “It fits together in our VIP area,” Henderson says, noting that the bar makes between $6 and $6.50 on each purchase.
Exum hopes to capitalize on potential e-cigarette revenue at Cosmos, but he admits there isn’t a steady flow of profits: “On a Saturday, we many not sell a single one, or we may sell 10.” He notices, however, that people who are puffing on an e-cigarette are staying at the bar longer. “The person next to an [e-cigarette smoker] will pick one up because of it.”
“We did a study, and we found that when people stayed inside to smoke, they were ordering 1.4 more drinks than they would have if they had been going outside,” explains Blu Cigs President Jason Healey. “We found in the bars that we work with, they experience a solid increase in general sales because people aren’t going outside as much. That’s always positive.”
At Emerald City, McCrary nets a lucrative 30 to 35% profit margin on e-cigarettes, which are sold for $10 each. Additionally, guests smoking e-cigarettes hang out at the bar longer, buying more drinks. Emerald City has four bars, but McCrary only displays Finiti e-cigarettes at the two toward the front of the club because “people hang out and sit around those two bars opposed to the dance floor.”
Operators have a penchant for making money, and customers will spend more money if they’re spending more time inside the venue. “The more you drink, the more you smoke. From a profit standpoint, it makes a lot of sense,” explains Shelli Knight, brand manager of Finiti e-cigarettes.
The biggest problem keeping e-cigarettes from full-on market dominance is uneducated guests but that can be overcome as more people begin to understand the e-cigarette concept. Louis Rossi, president of Worldwide Distributing, LLC, which sells Clayton e-cigarettes, explains that “when you look at all the factors involved — the bar owners keeping customers happier and in seats instead of outside smoking — it’s just a better atmosphere for patrons. Customers use them more and more. It’s a fantastic alternative.”
In fact, the benefits of selling e-cigarettes at bars and clubs don’t just make smokers happy, they create a welcome environment for all types of clientele.
“It’s just the courtesy to other people, especially on a crowded night,” McCrary explains. “A lot of people feel the pressure from their group of friends. They like the idea of smoking something that doesn’t bother anyone else. Some people are opting [for them] as a courtesy to other people.”
Because there is no odor or lingering smoke, guests are more apt to try e-cigarettes so they can hang around their non-smoking friends, contributing to a friendlier environment and a thriving atmosphere. “You’re not just selling a product to bars and nightclubs, you’re selling a solution to a problem,” Rossi explains.
A problem-solving device that makes your operation money certainly is rare in the fickle bar and nightclub business. Not to mention, e-cigarettes can help your bar or club gain notoriety in your area. Henderson sees this firsthand. “When you’re in a club environment with music going, with videos going, [e-cigarettes] just add to it. As you walk around and are puffing on it — between the flavor and how long it lasts and the light — it’s cool.” NCB