Successful Beverage Management — Proven Strategies for the On-Premise Operator

1. Successful Beverage Management —Proven Strategies for the On-Premise Operator APRIL 2010 Presented By: JACK ROBERTIELLO Beverage Writer/Former Editor of Cheers Magazine, Drinks Ink ROBERT PLOTKIN Author/Beverage Management Consultant, BarMedia

2. MODULE THREE:SIX WAYS TO INCREASE SALES IN A DOWN ECONOMY

3. Taking The High Road — Premium Spirits Yield Larger Margins 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

4. Taking The High Road — Premium Spirits Yield Larger Margins Consumers now have higher expectations about the quality of their drinks Consumer Research: 84% said cocktails made with premium spirits taste better Consumers said they expect to pay an additional $2.80 for a branded cocktail

5. Taking The High Road — Premium Spirits Yield Larger Margins Call Brands Deliver Bigger Profits Margarita made with WELL Tequila $ .67 drink cost ÷ $4.50 sales price = 14.9% cost percentage $4.50 sales price - $.67 drink cost = $3.83 gross profit

6. Taking The High Road — Premium Spirits Yield Larger Margins Call Brands Deliver Bigger Profits Margarita made with PREMIUM Tequila $ .98 drink cost ÷ $6.00 sales price = 16.3% cost percentage $6.00 sales price - $ .98 drink cost = $5.02 gross profit

7. Taking The High Road — Premium Spirits Yield Larger Margins Call Brands Deliver Bigger Profits Margarita made with SUPER-PREMIUM Tequila $ 1.83 drink cost ÷ $7.50 sales price = 24.4% cost percentage $7.50 sales price - $1.83 drink cost = $5.67 gross profit

8. Getting More Bang From The Most Important Bottles In The House Well liquor is used in more drinks than any other type of spirits Brands featured in the well significantly impacts profitability

9. Getting More Bang From The Most Important Bottles In The House Selection criteria — featured brands need to conform to concept and clientele The bar’s price structure is based on the well

10. Pouring Brands 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 Getting More Bang From The Most Important Bottles In The House

11. Example of a Pouring Brands Well Getting More Bang From The Most Important Bottles In The House

12. Profit Potential — Pouring Brands Getting More Bang From The Most Important Bottles In The House

13. Premium Brands Getting More Bang From The Most Important Bottles In The House 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

14. Well Liquors — The Most Important Bottles in the House Example of a Premium Brands Well

15. Profit Potential Premium Brands Well Getting More Bang From The Most Important Bottles In The House

16. Profit Comparison Getting More Bang From The Most Important Bottles In The House

17. Profit Comparison Getting More Bang From The Most Important Bottles In The House

18. Merchandising For Success — Increasing The Impact of Your Backbar The backbar is your most effective marketing device It’s essential the backbar is stocked with the right product mix

19. 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 Merchandising For Success — Increasing The Impact of Your Backbar

20. Reducing inventory levels frees working capital & lessens exposure to loss Concentric merchandising — bestselling products positioned in center of backbar Merchandising For Success — Increasing The Impact of Your Backbar

21. Vertically extend each category of spirits with at least one above-premium brand Adopt a marketing position — horizontally expand a select category of spirits Dedicate a portion of the bar’s marketing to that spirit Merchandising For Success — Increasing The Impact of Your Backbar

22. Guests typically spend 2 minutes with food menus; 20 seconds with bar menu Essential your bar menu is well-conceived and easy to read in dim lighting Bar Menus — Increasing Their Capacity To Drive Sales

23. Conduct Your Own Market Research Bar Menus — Increasing Their Capacity To Drive Sales Roll-outthree separate menus; each with different specialty drinks Rotate the menus every two months and track the sales results Bestselling drinks should then be combined in one menu

24. What Consumer Research Reveals Bar Menus — Increasing Their Capacity To Drive Sales 88% of consumers read the drink menus at full-service bars and restaurants 68% 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

25. What Consumer Research Reveals Bar Menus — Increasing Their Capacity To Drive Sales 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

26. Menu Test #1 — Functional Descriptions Only Bar Menus — Increasing Their Capacity To Drive Sales Functional descriptions only include mention of the ingredients in a drink Consumers were presented a Margarita menu with only functional descriptions 47% of consumers ordered the house, 31% top-shelf, 22% the ultra-premium

27. Bar Menus — Increasing Their Capacity To Drive Sales Margarita Menu House Margarita Cuervo Gold Tequila, triple sec and sweet and sour mix. Top Shelf Margarita Sauza Hornitos Tequila, Cointreau and margarita mix. Ultra-Premium, Margarita Patron Silver Tequila, Cointreau, and margarita mix. Source: NextLevel Marketing 2009

28. Menu Test #2 — Added Romance Copy Adding romance drink copy to menus drives significant drink trade-up 14% of consumers switched from ordering the house Margarita to branded a Margarita Bar Menus — Increasing Their Capacity To Drive Sales

29. Bar Menus — Increasing Their Capacity To Drive Sales Margarita Menu House Margarita Cuervo Gold Tequila, triple sec and sweet and sour mix. Top Shelf Margarita Sauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks. Ultra-Premium, Margarita Our 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. Source: NextLevel Marketing 2009

30. Menu Test #3 — With Added Romance Copy and Drink Prices Only 5% of consumers were affected by the higher price of ultra-premium Margarita The switched from the ultra-premium to the premium Margarita Bar Menus — Increasing Their Capacity To Drive Sales

31. Margarita Menu House Margarita $6.00 Cuervo Gold Tequila, triple sec and sweet and sour mix. Top Shelf Margarita $7.00 Sauza Hornitos Reposado Tequila, Cointreau Orange Liqueur and premium margarita mix served frozen or on the rocks. Ultra-Premium, Margarita $8.00 Our 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. Bar Menus — Increasing Their Capacity To Drive Sales Source: NextLevel Marketing 2009

32. Summary of Menu Testing Bar Menus — Increasing Their Capacity To Drive Sales Consumers prefer stand-along bar menus They want descriptions of the drinks they’re ordering They want to know how the drinks will look and how much it will cost

33. Staff Training and Education — What Your Staff Doesn’t Know Can Cost You Training/education yields high ROI in form of increased staff competency Investing In Your Sales Force — Helping Your Staff Help You

34. Education — product knowledge/credibility pivotal to selling premium spirits Training — ensuring core competency - pouring, prices, mixology Challenge your bartenders to expand their professional skills/cross-training Investing In Your Sales Force — Helping Your Staff Help You

35. Suggestive selling techniques — helping the clientele make informed decisions Three sales tactics — how many brands to suggest? Investing In Your Sales Force — Helping Your Staff Help You

36. Alcohol-Free Marketing — Risk-Free Profits in a .08 Universe Leveraging Beverage Trends — Taking Advantage of Latest Intel Americans are increasingly likely to not consume alcohol when entertaining However, few non-alcoholic programs are successful or noteworthy Most have little staff buy-in and don’t capture interest of clientele

37. Success Formula — Alcohol-Free Specialties Leveraging Beverage Trends — Taking Advantage of Latest Intel High production value — muddling, handshaking and floats High perceived value — specialty glassware (16-18 oz. volume) Feature intriguing ingredients and unusual taste combinations Value Priced — avoid any appearance of price gouging

38. Hot Spirit Trends Leveraging Beverage Trends — Taking Advantage of Latest Intel Locally produced, micro-distilled spirits surging in sales Organic spirits gaining traction with consumers New Latin spirits on the rise — cachaça, pisco and mezcal Return to prominence — rye, gin and absinthe Unqiue cordials and amaros — St-Germain, Canton and Hum

39. Cross-Promoting Food and Beverages As they say — “It’s more fun to eat in the bar than drink in the dining room” Cross-promoting food and beverages increase sales and defrays high food costs Practical benefits to clientele eating food while drinking Ensure bartenders familiar with food menu and trained on proper food service Leveraging Beverage Trends — Taking Advantage of Latest Intel

40. Exceeding Guests’ Drink Expectations Leveraging Beverage Trends — Taking Advantage of Latest Intel Don’t offer your clientele the same uninspired drinks as the competitors Enhanced mixology adds panache and perceived value without adding cost

41. Technique Matters — Production Value Sells Handshaking a cocktail communicates freshness and quality to your guests Thoroughly mixes ingredients and chills drink to serving temperature Vigorously handshaking cocktails is an underappreciated mixing technique Adds water; softens the cocktail and melds spirits and modifiers Leveraging Beverage Trends — Taking Advantage of Latest Intel

42. Technique Matters — Production Value Sells Muddling is a high production value technique It does for a cocktail what high-def does for television Muddling injects cocktails with vibrant flavors Muddling fresh ingredients into cocktails requires double-straining Leveraging Beverage Trends — Taking Advantage of Latest Intel

43. MODULE FOUR:PRIORITIZED PROFIT ASSESSMENT

44. Assessing Your Operation’s Areas of Strength and Weakness Answer #1 — 0 points Answer #2 — 5 points Answer #3 — 10 points Scoring:

45. Assessing Your Operation’s Areas of Strength and Weakness Section score of 45-50 = Excellent Section score of 35-40 = Very Good Section score of 25-30 = Average Section score of 0-20 = Below Average Section Scoring:

46. Assessing Your Operation’s Areas of Strength and Weakness 180 - 200 points = Excellent You’re a seasoned pro with a finger firmly on the pulse 140 - 175 points = Very Good When it come to the bar, not much gets past you 100 - 135 points = Average Indicates significant room for improvement 0 - 95 points = Below Average You’re leaving too much money on the table Total Score Four Sections:

47. Assessing Your Operation’s Areas of Strength and Weakness Step One: Sequence sections from lowest score (1st) to highest (4th) Step Two: Within each section, sequence responses from lowest score to highest Step Three: Your areas of weakness now top the lists within each of the four sections Creating a Business Action Plan

48. Assessing Your Operation’s Areas of Strength and Weakness #1 — Identify in what order you will address the areas of weakness #2 — Identify who in the business will be responsible for initiating changes #3 — Assign a date as to when the initiatives are to be implemented #4 — Track each set of initiatives to ensure progress is being made Creating a Business Action Plan

49. Successful Beverage Management —Proven Strategies for the On-Premise Operator JACK ROBERTIELLO Beverage writer/former editor of CheersMagazine Drinks Ink Brooklyn NY 917.439.8467 applejak@earthlink.net drinksink.blogspot.com ROBERT PLOTKIN Author/beverage management consultant BarMedia Tucson AZ 520.747.8131 robert@barmedia.com barmedia.com/barprofits.com AMERICANcocktails.com