Before we dive into various revenue generating ideas for bars, let’s sip a little on recent trends within the bar industry. It’s been a year since the coronavirus pandemic upended the U.S. restaurant and hospitality industry, necessitating innovations in takeout, carry-out cocktails, expanding outdoor dining, and contactless technology. The acceleration of these trends have left many wondering about recovery post-pandemic. Bars seem to be particularly slow to recover, and while growth looks promising, it may still take time.
According to the National Restaurant Association, more than 110,000 eating and drinking establishments nationwide closed for business–temporarily or permanently. Additionally, restaurant and foodservice industry sales fell by a whopping $240 billion in 2020 from an expected level of $899 billion. Spurred by shutdowns and closures across the country, takeout and delivery services became the primary lifeline for bars and restaurants. Now, bartenders and owners are hustling to get back on their feet, even with staffing shortages and navigating the ever-ending hurdles of social distance and safety.
Bar World Pre-COVID-19
The truth is, even before a worldwide virus outbreak, bars faced many obstacles. Understanding the common issues among bars, nightclubs, pubs, taverns and taprooms is paramount to overcoming them. The economics of owning a bar is challenging, including:
- Start up costs
- Licensing, permits, and insurance
- Cost margins
- Inventory management
But the demand for alcohol is still present. According to IBISWorld, the bar industry – to include nightclubs, taprooms, breweries, and more – has steadily grown since 2013 with total revenues of $28 billion for 2018. What’s more, profit margins are exceedingly high, especially on alcohol. Bar owners can expect to make anywhere between 200 to 400% on drinks. What is the breakdown of drinks? According to American Nightlife Association, the breakdown is as follows:
- Beer and ale represent 35% of sales
- Distilled spirits represent another 35%
- Wine brings in around 10%
The demand is there, but navigating the bar world after closures is another beast entirely.
Bar Outlooks Post-Pandemic
We’re still amid the early stages of reopening, but trends look promising. According to an NPR article, people seem keener on drinking than retail therapy these days. In fact, retail sales stall in April as Americans ventured out to more bars and restaurants. While retail sales on things like clothes and sporting goods were flat, restaurant and bar sales rose 3% from the previous month.
Bar owners and bartenders are looking toward innovation and technology to help offset the losses from 2020. In addition, many are focusing on increasing profits. We’re reviewing some revenue generating ideas for bars that should help with profitability.
Revenue Generating Ideas for Bars in 2021
Every bar is well aware (or should be) that success in this industry is determined by differentiating factors and the implementation of best practices. This means providing patrons with a unique experience while also decreasing operating costs. Sounds like a utopian recipe, but how do bars accomplish this?
Previously, some bar owners considered cost control and frugality to be synonymous with a better operation. However, trends have indicated that this approach may actually result in a lack of quality. As Bar Patrol put it, “sending out a Cosmo to a table with a shriveled lime, crusty from age and dehydration, because you want to save 3 cents is hardly the magic recipe for boosting sales and growing repeat customers.”
Being cost-conscious doesn’t always yield the best results from a buyer’s perspective. The focus is, therefore, quality with simplicity. Here are some revenue generating ideas for bars in 2021:
Okay, hear us out. The staple to any bar, we know, is the alcohol. However, in 2021 times have changed. Staying on top of industry trends is one of the best ways to adapt to market changes and get ahead of your competitors. Friends, the demand for healthier drinks is increasing. KPMG reports that sales of low-alcoholic wines, beers, and spirits are on the rise. In addition, if you haven’t seen the explosion of low-calorie hard seltzers expand (hitting $2.5 billion) then you’ve probably been under a rock.
There are two primary reasons mocktails are important to have on your menu in 2021. The first is that it promotes new and unique offerings that may not have been present prior to COVID-19. The second is that it accounts for individuals choosing to abstain from alcohol (or designated drivers) who want to experience a great night out. With a unique blend of juices and other bar-specific staples, the profit margins will remain without the cost of more liquor.
Growth rarely happens without marketing. That’s never been more true as the majority of people rely heavily on digital methods to connect with family, friends, and yes even businesses. Bars that incorporate some form of digital media promotion garner more visibility and return on investment for their marketing dollars.
For example, a highly engaged Instagram page that profiles a bar’s unique cocktail specials list–especially when executed well–can generate buzz and bring excitement to menu changes, weekend promotions, and loyalty programs. Working in tandem with localized marketing, digital media can help answer how to increase bar sales quickly.
Branding is Important for Bars
Every industry hyper focuses on competitors and the competitive landscape of the service industry. As generational shifts occur, some bar owner’s are recognizing the importance of building a brand rather than exclusively focusing on competition. More apt is that bars are competing, instead, with the last great experience their customers had. In other words, bars should work to make the experience such that it exceeds expectations and is memorable.
Building a brand can help create a cohesive vision that pronounces how a bar operates and what their customers can expect from the service and unique drink offerings.
3. Social Media Promotion
Social media is here to stay, and customers are using it more now than ever before. Using social media such as Instagram, and Facebook can bring in more customers to your bar and keep them engaged and entertained.
Here’s how you can use social media marketing:
- Promote new drinks and drink specials.
- Feature images of the inside of your bar.
- Announce bar events and themed nights.
- Interact with your customers through comments to build relationships.
- Profile and applaud your employees by featuring personal stories.
4. Controlling Costs
Controlling your liquor and food costs is essential to increasing your bar profitability. Here are some of the main areas you’ll need to consider:
A reliable inventory management system will let you accurately keep track of what you’re selling and how much inventory cost you have on hand at all times.
Reducing waste (spills)
Bar waste, including over pouring and spills, can quickly eat up your profits. You can reduce waste by:
- Developing a pour policy
- Keeping track of spills
- Avoiding over-buying inventory
Standardizing your drink and food recipes will help you set menu prices that can give you the best profit margin.
Increasing Bar Sales with Seamless Technology
If digital is the future, bars should be looking toward up and coming technology, software, and apps to answer efficiencies and flows within a given operation. The major bar industry disruptors include:
- Self-service options
- Mobile check out
- Contact less ordering
A few bars are creating a different environment built entirely on a self-service model. These establishments allow patrons to pour their own beers, mix their own flavored cocktails, and more. It certainly helps with efficiency and flow, but more importantly, does it address the issues that came to the forefront with coronavirus?
Gloworder for Bars
A newer option is utilizing an app designed to service patrons from a simple interface. Gloworder was created to address an existing demand that met COVID-19 regulations while helping to answer questions around how to increase bar sales. This app allows customers to create new orders in advance and provides a seamless experience for receiving drinks and checking out. From start to finish, bar patrons and bartenders can integrate technology for a better buyer and seller experience.
Alcohol Selling Best During & After COVID-19
Finally, it’s also to continually examine industry trends to incorporate new selections that resonate most with bar patrons.
There are a wide variety of trends taking place in response to COVID-19. For example, tequila experienced a 75% uplift, confirming its spot as the fastest growing spirit in the industry. It was followed closely by gin. Wine sales were up 66% and beer sales rose 42%, although trends indicated slower moving progress for beer sales.
For more information on our app and how to integrate your bar with our proprietary system, contact us here.