Opening a bar is no easy feat.
After you acquire funding, sign a lease, go through the necessary paperwork, and build a menu, then you still have a bar to run. No matter what type of bar you own, some of the same questions are always going to arise when it comes to pricing cocktails and hiring a staff. So we chatted with two Chilled 100 members, Bob Peters and Alicia Walton, to get the inside scoop on some of the most important business aspects of running a bar.
How do you properly price a cocktail? Do you always look at what other establishments in the neighborhood or area are charging? Is it based on material costs? How about the labor that goes into the drink?
Bob Peters: All of the above! I try to look at all the angles as I am pricing out my menus, including wiggle room. For instance, if one of my cocktails costs very little, then I can bump that price up some. That way, if another one of my cocktail’s costs is high, then I can charge the customer less than I should. The two balance out, and the menu is much more cohesive and approachable to the guests.
Alicia Walton: When pricing out our house cocktails, I use the COGs, labor to make (.$25 a minute in San Francisco!), and try to predict the popularity of the cocktail compared to the others on the list—aiming to be less than 20 percent, but staying realistic that some drinks will just be a little higher. I run an overall average of house cocktails definitely under 20 percent. This was also another scenario when we opened three-and-a-half years ago, as the neighborhood was significantly different than it is now. We’ve made subtle increases in that time, but still keep a competitive price within our little Dogpatch neighborhood.
Are there any business mistakes you’ve made in the past that have taught you an important lesson about the bar industry? How did it help you improve your business?
BP: When managing people, I have learned that you simply need to delegate and hold people accountable. Make sure to delegate as soon as you need help. This not only saves time, but it strengthens your team. It’s easy to see who excels in these environments and who doesn’t live up to your expectations. The one thing I have learned is that running a successful bar/restaurant is all about how strong your team is. Give me a strong team, and I can take over the world.
AW: This is the first bar that I’ve owned, so I’ve made plenty of mistakes, big and small. However, learning from these mistakes and using them as a tool moving forward at least gives them some type of purpose. If you screw up, that stinks. Just don’t let it happen to you again!