Our lives are consumed by the number 3!
We win, loose, judge, consider, select, discard, all based on this number!
Some examples:
| Gradings and competitions | 1st, 2nd and 3rd |
| Sizes | Small, medium and large |
| Restaurants | Starter, main and dessert |
3 is also crucial to a bar business as it’s the key to growing, winning and operating profitably!
When one considers the impact of the power of 3, the thought changes to “drinks philosophy”. Don’t worry, this is not a conversation about the pros and cons of pre or post Prohibition-style drinks, it’s an understanding based on building a model inclusive of supporting engineering process and metrics.
The Bar Rule of Thumb
There’s a direct relationship between guests spend, individual drinks sold and contribution margin towards a venues costs.
A great guide to understanding in easy terms the impact… consider overhead and expenses in terms of 3 drinks sold to one guest.
| Rule of thumb 1 | The 1st drink sold pays the wages |
| Rule of thumb 2 | The 2nd drink sold covers the bills |
| Rule of thumb 3 | The 3rd drink sold is your profit |
Remember a drink purchased by one customer, and then repeated, may not always mean a bar is making a profit.
Each rule of thumb has its own drill down with arising impact:
One drink philosophy - Speed
The focus is on SPEED!
This approach prioritizes getting drinks out quickly to handle high guest turnover. Quality, consistency, and possibly service may take second or third place as it’s all about volume.
This business may be characterised by consequences such as rising wastage, lack of care and possibly high staff turnover!
If this game is not won through unbelievable costs controls, process and execution, it’s easy to just tread water! Let’s face it who's in business just to pay wages?
Two drink philosophy - Profitability
The focus is now on PROFITABILITY!
This approach shifts from slinging it out to looking at ways to drive profitable revenue opportunity by encouraging the guests to stay longer/spend more.
Quality, consistency, and guest experience becomes something to prioritize. Less money can be spent on driving the numbers, more emphasis on customer retention.
As spend per guest rises, the contribution margin required to cover remaining venue costs gets closer and closer to break-even.
Three drink philosophy - Detail
The focus here is DETAIL: heightened guest experience, service levels, quality, perception of value and consistency.
Greater investment can be made on the bells and whistles encouraging guest retention, larger spend!
Supporting processes and activities will be built around engineering this business outcome, with rising profits to show for the effort.
Defining what your business is or aspires to be—measured by the Bar Rule of Thumb—it’ll change the way your business runs.