3 Game-Changing Strategies for Bar Owners in 2025

Are you tired of watching your bar stay stagnant while your competitors seem to be thriving?

Many bar owners struggle with implementing meaningful changes that actually impact their bottom line, often feeling overwhelmed by where to start or what changes will yield the best results. 

• Learn practical, cost-effective improvements that can transform your bar's performance 
• Discover proven strategies to increase customer satisfaction and loyalty 
• Master modern operational techniques that reduce waste and boost profits

Listen now to unlock the three essential changes that successful bar owners are implementing in 2025.

Learn More:
Email Chris
Schedule a Strategy Session
Bar Business Nation Facebook Group
The Bar Business Podcast Website
Chris' Book 'How to Make Top-Shelf Profits in the Bar Business'

Thank you to our show sponsors, SpotOn and Starfish. SpotOn's modern, cloud-based POS system allows bars to increase team productivity and provides the reporting you need to make smart financial decisions. Starfish works with your bookkeeping software using AI to help you make data-driven decisions and maximize your profits while giving you benchmarking data to understand how you compare to the industry at large.
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A podcast for bar, pub, tavern, nightclub, and restaurant owners, managers, and hospitality professionals, covering essential topics like bar inventory, marketing strategies, restaurant financials, and hospitality profits to help increase b...

Transcript

Chris Schneider (00:01.966)
Today, discover why small operational changes can lead to massive profit increases, learn how modernizing your systems can save thousands in lost revenue, and master modern operational techniques that reduce waste and boost profits.

So welcome to the first episode of the Bar Business Podcast for 2025. And what we're going to talk about today is three things that you should do this year to increase your profits and work on your bottom line. Now, as always, we're talking about data-driven ways to improve your bottom line. And these are all more on the financial end. But these are three things that if you're not doing them, you really should be doing them. So it's all about

How can we transform your bar's performance, modernize your operations, and enhance your guest experience? Now, enhancing guest experience in this case is going to come not through actually talking to our guests, but through providing our guests with the best possible menu. And we will get into that a little bit later. But the important thing to think about here is how many of your systems are the same in 2025 as they were before COVID?

We are in an evolving industry. And quite frankly, the industry has evolved almost more in the last four or five years, right, post COVID than it has in a long time. And not only has how we deliver things changed when you think about things like QR menus, paying at the table, just technology coming into play and some technology that we adopted because of COVID and never got rid of.

But also...

Chris Schneider (01:49.09)
Some things that people do, just they haven't evolved and adapted. So we need to work on those outdated systems that we have in place and look at how can we modernize these. And so today we're going to talk about modernizing your inventory management, enhancing your menu engineering and streamlining your financial controls, because those are three things that I think are great and really necessary. And a lot of folks, yeah, we change menus and QR codes and we change POS systems and we do a lot of enhancement.

of what's right in front of our guests, but not as often do we worry about the backend. And as an owner, if you really think about it, yes, you are schmoozing your guests. Yes, you are going out there and making sure people have a great experience. However, the other thing that you're doing mostly is backend work. Owners are, by definition, backend employees. So our time is best spent.

as owners working on the back end of the bar.

So like I said, we're going to talk through three things today. Inventory management, menu engineering, and financial controls. So let's start with modernizing your inventory management. And we've talked a lot about inventory management on this podcast. And why do we always talk about inventory management? Because I'm sure some of you have heard me say very similar things about inventory management way too many times potentially. Well, a few reasons. A, I love to talk about inventory management because most people aren't getting this right. And B, a lot of people, even though

They may listen to the podcast and hear me say, you know, different ways to do your inventory, or maybe they listen to the episode we did last year with Dave Nitzel and talking about inventory management. But the thing is, you actually have to make some changes in how you're doing things to manage your inventory because inventory is the lifeblood of your business. And if you don't properly manage your inventory, it's hard to ensure you're making as much profit as you possibly could. So how can we manage?

Chris Schneider (03:53.93)
modernize our inventory management. Well, the first thing that I would suggest you might want to do is look into digital inventory tracking systems. Now, this is not a solution for everybody. You know, I mean, I love margin edge. I think it's a great digital system. There are other ones out there like market man and some different ones, but I am still a huge fan of Excel spreadsheets and doing it all that way. Why? Because I have a spreadsheet.

that I have used off and on for years through multiple different establishments and it works for me.

At the same time though, moving to a more modern system gives you a lot more data. It's a lot easier, especially when you talk about costing items and having up to date costing on your items. So if you have a digital inventory management system, whichever one you decide to use, you have the ability to input pricing, update your costs, and actually really understand your actual versus theoretical

food and beverage costs, which you cannot really do with pen and paper or Excel. You can get close, but it's much more difficult than if you just have an inventory management system that is digital and plugged into your POS so you have all that data moving back and forth.

The second thing we should do to modernize our inventory management, and this is not really modernization in the terms of investing in new technology or implementing new technology. This is true whether or not you have the technology and that is make sure your par levels are correct. Far too often I see bars and restaurants that they have their par levels set.

Chris Schneider (05:43.294)
And they leave them that way for a year or two. Well, someday something won't be popular.

And I think I've used this example before, but I remember when Fireball became a thing. Immediately, I was selling cases of something I had never carried before, really. And because I was selling a huge amount of Fireball, other things dropped. So Jaeger dropped, Fireball came in. That was an immediate switch. Had I not changed my par levels, I would not have the right

stuff on hand to keep my guests happy. So it's the beginning of the year. Now is the time to look at part levels and for the record, how do we establish good part levels? We look at our P mix. We see what sells, what doesn't sell. Look for trends. Look for categorical trends too. Maybe it's not as simple as, we're selling more of this beer. Because maybe you're not, but maybe you can see, OK, all IPAs were down a little bit. All lagers were up a little bit. OK.

I need lower PARs on IPAs and higher PARs on loggers. It's all going to be based on your P mix to know your proper PAR levels. And the other thing with PAR levels while we're talking about this, how much inventory should you have on hand? Well, that depends how frequently you get deliveries. If you're in a city, you can get frequent deliveries. I mean, a week, maybe two weeks of inventory on hand. That's enough. Now, if you are like me and you live in the middle of nowhere and...

We had a snow storm this week. I have been stuck in my house for three days and just got my driveway plowed so I can get out. You might want to have some more inventory on hand because you know sometimes there are going to be travel issues and you may not get a delivery that you need. But in general, those par levels should help you maintain two, really two weeks of inventory and no more because you can order more.

Chris Schneider (07:45.004)
And that way you don't have a bunch of your money tied up and sitting on the shelf in the form of bottles or kegs in the walk-in.

Chris Schneider (07:55.798)
Now the third thing I will say about modernizing your inventory management, and again, this is not really modernizing, but it is something you need to implement if you have not done it yet, which is standardizing your ordering procedures. Your order should be done the same way every week.

I used to do that by having my inventory list and it was a complex. And again, you can do this digitally. You can use programs that will do this for you. But you can do it in Excel, which is how I always used to do it, where I would have inventory. I'd have my par levels and then it would say, OK, we need to order this much. And then it would flow through to sheets for all my salesmen.

And either they would come in and they would read the sheet and write it, put it in their computer, or I would call them up on the phone and read the sheet. But I was never questioning what I needed to order when I made the order. That was all done the day ahead of time. So it created a standardized procedure that was less prone to failure, less prone to human error, because we're working off a written document in this case, and it just made life easy.

But whether you have a rep coming in to do your orders, whether you're calling them in or whether you're entering them on a website, I highly suggest that rather than just work off inventory sheets, you are creating an order sheet that you know is correct, that you can double check, and then you can just read it off and make sure that your order is correct.

Chris Schneider (09:34.508)
Now the other thing that really comes into play when we talk about inventory is training your staff on how to properly pour a beverage, training your staff on if you're free pouring, proper counts, and training your staff or working on yourself, whomever is counting that inventory and making sure that is systematic and the same week to week. There are lots of situations when it comes to actually physically counting inventory.

where maybe you don't count everything every week.

Right? Like I had beer in a cooler and I never counted. I only counted the beer in the walking because I knew the beer in the cooler had been restocked. It was about, you know, I think on Miller Lite, was four and a half cases is what we would put in there when we restocked every night. So on Miller Lite, I was always short four and a half cases on my count because I had four and a half cases more than I counted. But because I had consistency and I knew what I was counting every time, it allowed me to maintain a consistent par.

Inventory.

Chris Schneider (10:42.67)
So moving past inventory, what else would I encourage you to work on in 2025 as we start off the new year and have some time, especially because it's January, things are a little slower, to really sink our teeth in and get some good work done? The second thing I would tell you to do is enhance your menu engineering. Now, I know menu engineering can be a pain in the ass. I know it is mathematical and analytical, and that is not everyone's cup of tea. In fact, I would say a lot of folks in hospitality

are not particularly fond of the math and finance side of the business, and that's okay.

But if you have not been doing menu engineering, you need to start. Because menu engineering is how you learn the relationship between your margins on items and the popularity of items and how to manipulate and change your items, update your menu in a way that makes sure not only are your guests being served what they want to eat, but also that you're making the most money off that food possible or those drinks possible.

that what you're pushing towards them and what they're enjoying are your higher margin items.

So menu engineering is the essential way that we can update our menus, that we can analyze our profits on our menu items. The other thing about menu engineering, right? Because we're, remember with menu engineering, our goal is to classify all of our food or all of our beverages, whichever we're doing, into four categories. Stars, plow horses, puzzles, and dogs. A star, high margin, high...

Chris Schneider (12:27.01)
popularity. So people like it, we make a lot of money on it. That's fantastic. That's what we would love everything to be there. But also remember with menu engineering, all these quadrants are relative. So you can never have a menu where everything is a star because something has to be less popular and have slightly less margin. So just because an item isn't popular when you do the analysis and doesn't have the best margin doesn't mean it's not a good item. It just means it's something you need to look at.

But you have those four quadrants. So we have stars, which are popular and sell really well. We have dogs, which are not popular and don't sell. Those are the things you normally want to pull off your menu. Now again, everything is relative, so you need to do some analysis and decide, hey, do I want to pull this off? But if you don't make a lot of money on it and people aren't ordering it, it's time for that menu item to go nine times out of 10. Then you have plow horses. Plow horses, people like them, but you don't make as much money.

Now, depending on how popular they are, you probably need to leave them on there. And plow horses are not always a bad thing. If you think about the concept of a loss leader, where we're bringing people in the door with something that's popular, but at the same time, we're not making a huge margin on it, you need some of those on your menu. And if people love something, yeah, maybe you can move the price up a little bit, increase your margin. That's a great thing to do. But obviously, you don't want to get rid of necessarily a

an item that people enjoy and order over and over again, unless you're losing money on it.

Chris Schneider (14:05.59)
And then our final quadrant are our puzzles. Those are things that we have a high margin on, but low popularity. And so with those, we need to figure out, is it not popular because it's crap? Because let's be honest here, I've never made a menu. I've never had a menu in any restaurant or bar I have worked in ever in my life where there wasn't at least one item on the menu that was crap. So if it's a high margin and no one likes it, maybe it's just crap. But let's assume for a second.

that the item is actually good. Well, we need to figure out, okay, why isn't it popular? And there are a few things to look at. Like I said, A, is the menu item any good? That's the first thing I look at. B, is it about how the menu item is described on the menu, like the physical menu that guests are holding? Or is it about how it's, or rather I should say it's location.

on the menu. So people read the tops of columns and the bottoms of columns more than the middle of columns. Generally speaking, you want to put those high profit items on the top and bottom of your columns because that's where they're going to get the most visibility. That's where people are most likely to order them. Something dead center in a list of 10 is probably not going to get ordered as much. So you need to think through that and decide, OK, do I want to do this here? And is the reason this item isn't selling because

I put it in the wrong spot. Now that could be the case. It frequently isn't. Again, it could just be that the item sucks. And that's why you need to...

remove the item even though you have a high margin.

Chris Schneider (15:51.01)
The other thing that you need to look at when you're doing menu engineering is what can I learn about my prices? So when we have, again, when we have those plow horses that are popular and low margin, maybe we can take that price up. Now, again, you want to be careful there because if we take that price up too much, it has the possibility of becoming a dog or a puzzle because the popularity might be based on it being a good deal.

So you can bump prices up a little bit. If you have something that's really popular, your stars, usually that's a great place to increase a little margin. And that may sound odd because those are already our highest margin items, but if it's a high margin item and you move it up a quarter or 50 cents, a lot of people aren't going to notice.

Chris Schneider (16:40.108)
The other thing you should always look at when you're doing menu engineering is can I take this item, whether it's a dog or a plow horse or a puzzle,

And can I create something that is more attractive that's essentially the same?

Chris Schneider (17:02.584)
And it's also great for cross-utilization of ingredients, which helps control food costs. But the big thing there is, can I create an item that I have high margins on based on what I already know from what my guests like? See, menu engineering, not only does it tell us, okay, here's the moisture-prevention pricing, but it's giving you an indication of what your guests like. And if you look at menu engineering, if you do it every quarter, which is what I would do,

And then you look every quarter at what is falling in what categories you might realize, like, hey, my customers don't like soup every time I try to sell them soup. They really don't order it. Well, if you find out every time you try to sell soup, nobody buys soup, you probably shouldn't sell soup. So you need to look for those larger trends and you need to look for those larger trends, assuming you're doing menu engineering on a regular basis across different time periods.

So you can put that data together and understand your guests more, which then allows you to create signature items that they will pay more for because you understand what sits in that star category and where your high profit, high margin items, high popularity items live and what your guests will enjoy.

So that's going to take us to the third thing that I would encourage you to work on for 2025, which is streamlining your financial controls. Something that amazes me almost every time I talk with a bar owner is how much money they are leaking that they don't know they're leaking. And it's really reminiscent to me of the commercials you'll see on TV for, I don't know, what is it, rocket money maybe?

These programs where they will go in and they use AI to read your bank statement to tell you what subscriptions you have and then charge you money to cancel those subscriptions.

Chris Schneider (19:03.394)
You could have just read your bank statement and seen that those subscriptions exist.

But a lot of folks, when it comes to their business, are not looking at their bank statements and their P &L enough to see where just money is leaking out of the system. And it could be subscriptions that they're not paying for. But again, all you got to do is look for them. They're not that hard to find. And you can do it yourself. You can use a company like Starfish, which you know, is a great partner of the show. And Jordan over there is fantastic. And they use AI to do that for you. But

Whether you're doing it personally or you're using, you know, talking to Jordan over at Starfish and using his software, you need to look at where you're leaking money.

Chris Schneider (19:52.982)
Now, one of the things that you run into, it's impossible to know where you're leaking money if you have not set up a detailed profit and loss tracking. You need to know your P &L. You need to have detailed books. And so if your books have not been set up right and they're messy or you're not caught up, it's January, it's slow. Now is the time to do that.

And because it's January, yeah, we're already into January. But if you have to redo bookkeeping for January, that's not that much. So if you want to implement a new chart of accounts to get better granularity on what's going on in your business, if you want to change the way you're doing your bookkeeping to make it better for financial analysis, now's the time of year to do it.

Chris Schneider (20:47.342)
Because people aren't that busy.

And it's the beginning of the year, so you only have to redo one month or part of a month at this point. mean, heck, you could have a new chart of accounts done this weekend and you only have to redo 10, 12 days of accounting. So now is the time to get detailed profit and loss tracking in place.

If you don't do it now is also the time to implement daily sales report. Implement actually looking at your Z's every day. Implement putting that data somewhere and tracking it. Now, if you have a great POS system, you know, if you're working like with a spot on system that will do that for you. It'll give you all sorts of reports.

But the thing about POS systems and reports, and the thing I find happens a lot, just because you have access to information doesn't mean you actually look at it. So you may have daily and weekly and monthly reports available to you in your POS. And so you don't have to do anything to get the numbers, but you still need to look at the freaking numbers. You need to actually, you know, I'm a huge fan of paper. I know that not everyone that listens is, and I might be a little bit weird on that, but...

I actually would print them out and look at them. Put them in front of your face, set them down on a table, look at them. Understand your daily sales.

Chris Schneider (22:11.694)
Because if you ever have a chance of doing forecasting that actually isn't just totally wrong, you're going have to understand your sales day today.

The other thing that you should be doing in your financial controls if you aren't already is have solid cash handling procedures. Many, many restaurants and bars lose a huge amount of money to employee theft they don't even know is going on.

And having loose cash handling procedures does not work. I mean, I'm not saying that if someone has a drawer that's short by 25 cents, you should make them pull 25 cents out of their pocket and put it in the drawer. No, that's not required. But in general, if you account for every penny, pennies don't go missing. If you only account for every 20, anything less than a 20 can go missing. So make sure you have solid cash handling procedures.

that work down to the penny and have multiple checks and balances. And if you need a way to do that, we did a whole episode on cash management last fall. So you can go pull that one up.

Also with financial controls, what's the biggest problem for almost every bar or restaurant out there? Labor cost. So you need to find a way to monitor your labor cost effectively. Now for a lot of chains, this would come down to labor per sales, right? Labor per sales hour and understanding how many people we actually need on the floor or in the kitchen to deliver a certain number of sales.

Chris Schneider (23:59.074)
There's a correlation between how much labor you have and how much you can put out. And so you need to understand your labor needs per your sales. And that gives you a way to look at sales per labor hour and to work on optimizing that metric. Just like anything else.

If you don't measure it, you can't manage it. So if you aren't tracking sales per labor hour or some other labor management KPI, again, we've had shows on labor management and on KPIs, you can go listen to those and get some better ideas, but you should implement a way to measure your labor cost as effectively as possible in a way that gives you actual information for this year.

The final thing I will suggest to you for streamlining financial controls for 2025 is to establish regular financial review meetings with your leadership team.

Let say that again, that last part again, with your leadership team, your managers, they cannot help you control your costs if they don't know whether or not you're making or losing money.

Now I would be remiss to say that there can be complications there, right? And we have to acknowledge that. We have to accept that in order to share financial information with our team, in order to keep them aware of what's going on and have them help us, we have to be a little bit vulnerable. And if you have people working for you that are not the most mature, they might get the wrong idea.

Chris Schneider (25:42.816)
And I have heard multiple stories where you have something like the owner goes to the team and says, hey, you know, I'm just trying to figure this all out and we have some cost issues here. What do we do? What ideas do you have? And people come back with.

ideas, but then they also start spreading rumors that the place is going to close and that they're not going to have a job. So if you're to do financial review, you need to make sure people understand like this is a solid gig and the job's not going anywhere and we're not closing. You need to tell them that. And even if you are maybe potentially closing, still tell them that because you need to have them trust you and trust the process. But regardless of any of that,

Regular financial review meetings with your leadership team is critical to making sure they are all on the same page with helping you establish and streamline your financial controls so that you can have a great 2025.

Chris Schneider (26:46.36)
So to sum everything up for this week, if you implement these three changes, you modernize your inventory management, you enhance your manual engineering, and you streamline your financial controls, your bar will be better set up for success in 2025 and beyond. You'll know your numbers better than you ever have before. And you will have the proper data to make the proper decisions to drive your business forward into the new year.