Data-driven businesses have one key advantage: The ability to accurately measure costs and profitability.
When bar managers can quickly and easily see opportunities to reduce waste in their operations, they enable themselves to run more profitable operations in the long run. And in an industry where as many as 80% of bars and restaurants fail within five years, bar owners can’t afford to pass on easy opportunities to run their establishment more efficiently.
One essential metric for a successful bar is your average pour cost—it directly relates to a bar’s ability to control costs and price for profitability. By accurately calculating pour costs and comparing them to industry benchmarks, a bar manager can easily find out how much their business can improve.
At BevSpot, we provide bar owners and managers with the tools and data they need to streamline their operations, including their pour costs. And to ensure their beverage programs succeed, our Customer Success team works with them to implement operational improvements with that data.
So, how much can we help your bar? For the answer, you could ask a few of our customers. Or, as we like to do, we could show you the data. We looked at the pour costs of all BevSpot bars to see how the numbers change as they begin to use our software.
Prefer a printable file? Download the full report.
Below, you’ll see graphs showing the average pour costs of BevSpot bars. We’ve grouped these bars by how long we’ve been working with them. The blocks represent the ranges of pour costs over time, separated by the middle 50% (colored blocks) and the top and bottom 25% (grey blocks). The white line represents the median (middle) pour cost within each group.
When first implementing BevSpot, the middle 50% of bars have average pour costs of around 21-26%. The median (middle) bar has a total pour cost of 23.5%.
After three months of use, BevSpot bars have the skills and data they need to begin improving. The middle 50%, in the 3-6 month phase, have reduced their pour costs to 19.5-24%. After 6 months, these bars are fully using analytics so well that the middle 50% lower their pour costs to 14.5-18%. Of these, the middle bar has a pour cost of 16.5%.
Among our BevSpot customers, the median bar starts with a pour cost of 23.5%; after 6 months of working with us, that pour cost is 16.5%. For a business with $500,000 in annual revenue, that 7% reduction amounts to $35,000 in savings every year. For a business with $1 million, that’s $70,000. And these dollar savings don’t even include all the time and staff labor saved by not using pen and paper.
Why do these bars reduce their pour costs so much more in the second quarter? Our software is both an operational tool and an analytics platform. From the beginning, we save you hours by streamlining the inventory and ordering process. But those order invoices and inventory logs contain crucial data, so when we later integrate them with your POS system, you can compare revenue and costs for every product.
So, the earliest pour cost improvements come by reducing shrinkage (lost or wasted product). And as managers become immersed in their bar data, they can use our drink pricing tool and other advanced features to fundamentally change their business’ operations.
Of course, your specific product offering could affect your bar’s pour costs and potential savings. So, we’ve broken down the data to see how BevSpot customers’ pour costs changed within each of their product categories: beer, wine and spirits.
The middle 50% of BevSpot bars’ beer sales begin with pour costs of 24-29.5%. 3-6 months after using the software, the middle 50% have reduced these to 21.5-27%; after 6 months, these have been further reduced to 20-21.5%.
As for wine, we see the middle 50% of bars start with pour costs of 25-33.5%. Wine programs can be more difficult to improve on, but with BevSpot’s help, they see their wine category pour cost improve first to 23.5-28% after 3 months and then to 19.5-24% after 6 months.
BevSpot bars take longer to see reductions in their spirit and cocktail pour costs than wine and beer, but those eventual savings are huge. When they begin, the middle 50% have pour costs of 16.5-18.5%; after 3 months, when product variance is declining, those pour costs have gone down to 15.5-18%.
After 6 months, bars are now fully using our drink pricing tool to adjust cocktail prices and recipes. As a result, their pour costs go down significantly—all the way to 12-13.5%.
While BevSpot bars typically see savings on beer and wine within the first 3 months, it takes longer for many of them to see substantial improvements on spirit and cocktail pour costs. Reduced product variance impacts beer and wine’s margins early on, but managers need time to identify and reprice high-cost cocktails. This task becomes easier once clean sales and cost data is available.
After using BevSpot for inventory and ordering for a period of time, bars enable our analytics platform and customer success managers to identify these high-cost cocktails for them. This gives managers the ability to modify their cocktail prices and recipes, in addition to their beer and wine ones. These are the significant pour cost savings seen in the 3-6 month phase.
Want to see what BevSpot can do for your bar’s pour costs? Schedule a call with one of product specialists—we’d love to show you.