A well-run food service program can increase profits by 35%, when proportionate to your venue and capacity.
Food service is difficult. What I mean is that preparing meals and the like for the dining public can be a daunting task, even for the most experienced food service professional. The preparation and service of meals can be an even more intimidating proposition for beverage professionals and bar operators who are experts in the preparation and service of libations from the bar, but not so much victuals from the kitchen. Even worse, if poorly executed, potentially large initial outlays of capital and the ongoing expenses associated with operating a kitchen can lead to the loss of significant amounts of money or even a business.
As hard as this may be to believe, that paragraph above introduces an article describing why you should be offering food in your bar. There are some current and relatively long-term trends regarding America’s eating habits that are simply too significant for the beverage professional to ignore. And, if executed correctly, a food program that compliments your current beverage offerings can result in significant additions to the bottom line.
So let’s see if we can do something to counteract that first paragraph.
The Rationale: Trends
A number of the trends trade publications have identified in recent years either directly relate to the food offered in bars or the kinds of foods that should be considered by bars and beverage managers.
Recenty, traditional bar food was identified itself as a trend to watch. It is simple and satisfying and appropriately priced for a down economy.
As has been the case for many years, small plates (tapas in the Latin world, izakaya in Japan) continue to be a trend and can probably be considered a well-established style of dining at this point.
Lastly, traditional snacks done in new ways appear to be a strong current and future trend. Late-night snacking has very successfully been dubbed the “Fourth Meal” by Taco Bell. Perhaps the “Fourth Meal” is something bar owners should consider, as many late-night food runs are initiated by a few drinks beforehand. These trends—bar food, small plates and snacking—can clearly and relatively simply be taken advantage of by bar operators to increase the bottom line.
More Rationale: Numbers
Food service is hard, so why bother? The profit margin can be low, especially when compared to the profit margin for beverages.
You should consider food service because a well-crafted offering of foods can significantly and positively impact your bottom line. Let’s say you operate a six-night-per-week bar with gross sales of $500,000 annually, almost all of which is generated through the sale of beverages. At the end of the year you net 20% or $100,000. Let’s examine a scenario in which you add food service:
You institute a limited but well-thought-out menu that includes a combination of traditional bar favorites and interesting small plates. As your hours of operation include the dinner and post-dinner snacking hours, you are able to realize food sales of $100,000. You achieve a reasonable net, after depreciation, of $14,000.
Research indicates that the addition of food can result in an improvement of bar sales of as much as ten percent, as the combination of good food and drink will keep customers in your establishment longer. Add another $50,000 in bar sales for a bottom line increase of $20,000. That’s a total of $34,000 in increased profit, or a 34% increase to the bottom line.
The Execution: Menu and Equipment
Snookers, in Rhode Island, was a well established pool hall with limited and often varying food offerings. They recently relocated and hired Chef David Livesey to implement a large and diverse menu, including traditional pub offerings like wings, fries, and onion rings, as well as more interesting, less traditional offerings like tempura asparagus, and jasmine rice.
This type of “all-in” approach requires skilled management and significant capital expenditure to build-out space and purchase all of the equipment required to store and prepare such a large and diverse menu. This strategy is clearly designed to use food as one of the key components to attract and keep customers, and if successful can lead to huge sales and corresponding profits. However, it is clearly not without some significant financial risk, as investing in higher-end offerings (and possibly a chef) can be pricey.
The second direction to take with food offerings is more appropriate for less ambitious or more cautious operators not comfortable with expending a lot of capital on space and equipment and lots of payroll on experienced staff. It includes a smaller menu of a few interesting and carefully selected items and should include bar foods, small plates, and snacks.
The Conclusion
Edibles delivered well in a bar setting, whether consisting of a large and varied menu prepared by a large and experienced staff or a smaller, well-crafted menu prepared by one or a few less experienced staff, can lead not only to profits from the sale of that food but can significantly increase the sale of and profit derived from beverages.
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Brian J. Warrener is an Associate Professor at the The Hospitality College of Johnson & Wales University in Providence, Rhode Island. Warrener last appeared in the January 2010 issue of Bar Business covering digital signage and displays (Don’t Go Blank, pg. 25).
