Economy hurting bars/closing bars.

[grpubboss]

l just had a delivery from my bud guys and he asked how my business was doing and l replied "pretty good, holding my own" and he replied "thats good because a lot of bars are really hurting and ready to close"!!
l am in a college town so l have a ready and willing crowd but was surprised to here of difficulties of bars outside of college areas.Anyone here of similar difficulties in your marketplace??

[owneroper]

I hear the same thing however holding my own here

[Havensloft]

i have a pub in a city that has over 15 colleges in the county. I am slow and most of the other bars and clubs are also. One large club just closed a month ago. Scary.

[seandell]

Very much like that here in the Sacramento CA area. A few have closed and a few have opened, however the ones that have opened have not done great for a new opening. I just sold out to my biz partner of 10 years so I can open something new in a different area. Basically I got bored,

[nrkofover]

We've seen a slight downturn over the past few months, but we've also had two bars open in the past two months that are direct competition and we understand the fear about the economy. We're making some changes to express those fears and hopefully increase our market share and bring out some people who we haven't seen in awhile. Difficult times are when people excel, this is where you can separate yourself from your competition, with creative promotions, with great respect (and bonuses) to regulars, to really work on new ideas with vigor. It's hard and I don't have any hard fast rules about what can work in any particular location, but this is where the strong will stand out from the weak.

[Michael Black]

I agree with nrkofover. Keep in mind, and this applies more to clubs and lounges in major metro areas, that there are plenty of people that still have the same job (s). That is they have not been affected by the economy as much as others except for their stocks being down and home not going up in value as much. The fight for these people who continue to go out is key without resorting to price wars. And those that have a wealthy target market have been affected much less than say a blue collar bar. That being said, there are great numbers that need a reason to come back out of their homes to your place. If it doesn't beat a 6 pack and cable, xbox/playstation, Netflix, the net, home parties, etc. then you just are not doing enough to separate yourself from all things you should consider competition.

[Estefon]

I own a blue collar neighborhood pub in the Phoenix area that has been affected by this economic downturn and a myriad of other things for the past year or so.

While smart marketing and promtions are important, do not forget to look at trimming your expenses as well.

1. Promote in only measurable campaigns. This is not the time to brand. Only spend marketing dollars where you can see a definable ROI.

2. Labor is your most expensive and controllable expense! Trim Trim where necessary. Don't be scared to get dirty and get to work. Furthermore, don't be the nice guy and be timid to lay off some of your employees or cut back his/her hours. Restructure our labor dollars wherever you can.

3. Their is tons of money that flow out of a bar/restaurant. Examine that low hanging fruit.

Things I've done in the last month to cut my expenses.

a. Laid off my cleaning crew and started doing the work myself (money saved -$1,200 per month)

b. Went from 30 NTN player boxes to 25 (money saved - $75/ month)

c. Picked up 2 barshifts per week (money saved, not counting tips earned $400 / month)

d. Started doing my own linens (money saved - $200 / month)

e. Rescheduled my cooks line (money save - $400 / month)

f. Small things... Stopped carrying olives (they are 22 cents each guys and your customers eat them like candy). Stopped putting carrot sticks on wings and went to celery only. Changed the napkins I order. Changed the way I order candy for the vending machines. The list can go on and on.

g. Do your own maintanance if possible. Those guys are rip-offs.

h. Watch your staff. When they aren't making any money, they'll find ways to make it off of you.

i. Watch your food cost and pour cost. See what it would take to trim it by one point and what it would save you.

Be diligent. Never stare the the front door and keep smiling. People don't come to your place or come work for you when you're frowning all the time. Remember why you went in to this business... because you enjoy it.

[Michael Black]

Solid advice, but marketing smart and running lean is something every business should be doing all along and not just a knee jerk reaction to the current economy. That's called good management.

I can't tell you how many successful and usually larger businesses I've seen just piss money away. I'm talking about more than a decent small bar would hope to make in a year. Often it has been corporate management with deep company pockets. The managers have never had to struggle on shoestring money with their ass and/or life savings on the line and make it happen. Many small independent owners and operators who have experience rolling up there sleeves and taking proper action all along are far smarter. This is where true experience and management skills are put to the test. Just because a place looks like it is making money doesn't mean that it is or is making as much as it can.

I've always been a firm believer of reducing outsourcing wherever possible if it makes financial sense (in rare instances, sometimes it doesn't). This can run from soda and lines, linen, dishwashers and equipment leasing and maintenance, construction, property leasing, cleaning crews, atms, valet services,security services, inventory accounting services, etc. to knife sharpening. If you are not experienced or a start-up, you may have more outside companies doing things for you, but I encourage you to try to do some on the list yourself and compare the savings. Keep in mind it's like some food items like peeled and cut potatoes. Will the labor and possibly extra peel garbage worth it to buy whole potatoes? Do you have room and easy hook up for a used commercial Speed Queen washer and dryer for linen and how much will you save yearly once you factor water,electricity or gas,maintenance, detergent and labor? Usually it's worth it but not always. In some cases, in an effort to save money, it may cost you more money because of the time factor and cash flow of money.Everyone should read, educate themselves, and understand Finance 101.

[nrkofover]

I agree with Michael completely. I've been hired for many management positions with the sole purpose of increasing productivity, effeciency and profit (oftentimes because the company was unprofitable) and every single time I found simple money saving elements within days and policies of negativity that are easily changed for business success. Sometimes it means that the company is simply overstaffed but they don't like to let people go, or they are buying supplies from one company 'because we always have' without looking at other suppliers who provide the same things at a lower price. Long-term growth is based on strong economic concepts. One of my rules as a new manager is that 'I will do every single job that I expect you to do' so if I fire outside janitorial services, I'll clean the bathroom myself the first time, so when I ask an employee to do it, they know it's required, not an option. Some people have asked my why I would have a $25 an hour employee do menial work, but if they have 2 hours of downtime per week, they're still getting paid and I'm going to make sure they're still working or they'll start working 38 hours a week, .

As far as surviving slower times, this should be simple if it's short-term and temporary, they should be expected and exist as a reality in the business model and philosophy. In our market, August and September are super slow months for the bar business. We know this, we work to combat it with special events and promotions, but we know it's coming every year and are prepared.

[bruce]

Wow!! I have just read this thread for the third time I think. We are really starting to feel the slow down in the economy now. Our food sales which have really been our main product for the last three years are starting to go down a very noticable amount. We have picked up most of the reduction in food in the lounge. This is not where the previous owner was when we took over, but it is growing compared to food. Almost 36% in alcohol sales in the month of november. This represents close to an 8% growth in the last two months. Not significant compared to most on here, but more than my competitors by a substantial margin if the empty bars are any indication. We are currently up over 7% for the year to date. If we can ride out the rest of this wild economy on the upswing, we wil try to sell soon. I don't want to sell when we aren't making money and my wife thinks we should hold on a little longer if it is making money. The foul weather this week is bringing in business and I really like it. Bring on another storm.

[David]

I feel that the downturn in the economy will weed out those bars that don't have the management skills or smarts to survive. We’ve all had it pretty good over the past five or so years. Sorry I sound so Doom and Gloom but sometimes the truth hurts.

This is what we talk about on this site daily, how to run and manage a profitable property.

So much for coasting on your laurels. It's crunch time baby, only the strong survive.

[emallay]

Hi Estefon -- all the cost-cutting initiatives you mentioned are fine, though keep in mind the following:

1. Concept Delivery
What you cut (such as olives) depends on the product / concept you are trying to deliver. You should prepare a clear definition of what your product is and how it relates to your target market. Anything that is necessary for your concept should be delivered well and without cuts. Anything that isn't critical to the concept should be trimmed ruthlessly.

Depending on what you are trying to accomplish, olives could be critical to your offering -- or a complete waste of money. In tough times, people often cut more than they should, exacerbating their problems by undercutting their own concept's rationale.

Of course, this should be done in good times as well as bad, but you have less margin for error in bad times!

2. Your Time
Substituting your personal time for an existing cost (such as doing the cleaning yourself) only makes sense if your personal time is worth no more than the cost you are replacing. If you are doing the cleaning by replacing an employee earning, say, $9/hr, then you are valuing your time at $9/hr. If you could use your time to generate more than $9 net contribution per hour, you are making a mistake to do the cleaning yourself (except periodically for symbolic value, perhaps).

Of course, if your business is already in a cash crisis, you may have no choice but to use your time in this way purely for emergency cash flow purposes. But if things aren't that bad yet, your time is better spent on marketing, finding ways to increase average spend, improving the "stickiness" of your relationship with your clientele, and so on.

Other than in a cash crisis, don't focus on the absolute dollar value of your costs. Focus instead on the incremental gain you derive from those costs.

Cheers,

Eugene.