3 Simple Tools for 1% More Profit: Finding Incremental Income in your Bar or Pub

What if three simple tools could add thousands to your bottom line without changing your prices or cutting staff?

Many bar owners struggle with profit margins, often implementing drastic changes that can hurt guest experience or staff morale. Small, strategic improvements can create significant financial impact.

Learn how to implement automated financial tracking, optimize your operating hours based on real data, and leverage technology to reduce administrative tasks.

Discover how these three proven tools can give you an extra 1% profit margin while making your life easier - press play now.

Learn More:
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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.
**We are a SpotOn affiliate and earn commissions from the link above.

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 (00:01.144)
Today, learn how to harness the power of financial tracking to spot profit leaks instantly. Use data-driven decisions to optimize your operating hours for maximum profitability and learn how to transform administrative efficiency with smart technological solutions.

Today we're exploring three simple but powerful tools that can help you add 1 % to your bottom line through automation and financial analysis, strategic scheduling and administrative optimization. So if you've listened to podcast for a long time, you know one thing that I love to say and I love to talk about a lot is that the bar business and all of hospitality and really all of any business, but the bar business is what we're talking about here, is a game of percentages.

And what I mean by that is the difference between a bar that makes 10 % and a bar that makes 20 % profit. So bottom line is that the bar that makes 10 % is missing not one thing, not five things, not 20 things, but like a thousand tiny little things that would add significant value to the P &L if they were all done.

So we're going to focus on three things you can do that should all be worth, depending on where you're starting from, anywhere from, you know, a quarter of a percent to three or four percent. And if you implement these tools strategically or, I mean, let's be honest here, maybe these aren't things that you need to work on. Or you implement other strategies that save you a half a percent here or a quarter percent there. Over time, that builds

to be the difference between a 10 % net profit and a 20 % met profit.

Chris Schneider (01:55.512)
Now the big thing to think about as we go into these, because we're going to talk about financial tracking and optimization and things of that nature. And I know I say this all the time, but it always bears repeating. Hasty decisions can damage your guest experience. And focusing too much on profits over your guests. Yeah, you might put more money on the bottom line, but if it hurts your business, the top line gets a lot smaller, so that bottom line percentage gets a lot smaller.

So always think about implementing any financial tools strategically so you can maintain financial improvements, but also enhance your atmosphere, your team culture and your guest experience. So to get started today, we are going to talk about automated financial tracking or just financial tracking in general. Now, today, one of the differences when I think about when I first bought a bar 14 years ago and today.

14 years ago, there weren't software options available for us. And so there weren't things we could implement as easily that automated financial tracking or that showed us issues in our financial tracking on a regular basis. It wasn't easy to do. Now today, there are multiple types of software you can implement that are going to help you either automatically analyze your P &Ls,

or monitor other pieces of your financial situation and help you understand where there are issues and where there are not issues.

And again, you can do this in Excel or through buying software. We're going to talk about some software options. We're also going to talk about how to do this in Excel. So when we think about software we can implement.

Chris Schneider (03:44.526)
The first thing that springs to mind, and this is not because they're a partner of the show and I like Jordan who owns it, but because it's good software, is Starfish. And Starfish, if you've listened to the episodes I've done with Jordan, or listened to the intro because we talked about it a little bit there, essentially analyzes your P &L and looks for abnormalities, things that seem off, things that change.

Chris Schneider (04:12.546)
And that way you don't have to read through everything. So you can implement something like Starfish. It's going to automatically look at your QuickBooks, what's coming in through all the feeds and say, hey, know, why is your labor cost 5 % higher this month? Or why is your lending cost 100 % higher than it was last month? Which are huge things that AI and software can automatically track and analyze for us. You can also do this same thing

by comparing PNLs next to each other.

But the question you always have to ask with software, especially when we're talking financial tracking and business optimization, is the time I would spend doing it more than the money I would spend? And so if you look at something like Starfish, which I think is still like 50 bucks a month, 50 bucks a month as an owner, that's like an hour of your time. Can you do that analysis on paper in an hour? Probably. I mean, I can, but I do financial analysis all day every day. That's my thing.

I look at P &Ls all day and they speak to me in ways they don't speak to most people. So could I do that in 45 minutes maybe and even make it less than an hour of time? Sure. But for most people, that's going to take two, three, four hours to get all that data put together and then to analyze it. So something like Starfish, it's automated. It's going to save you time. It doesn't cost you extra money when you compare money to time. So it's a great option.

But again, you could do the same exact thing every month just by putting P &Ls down and looking at them line by line last month versus this month last year, this month versus this month.

Chris Schneider (05:58.688)
Another place where you can automate some of your financial analysis is with your inventory and menus. And this is huge because proper menu cost control, updating it, maintaining an inventory system that you're actually reconciling takes a lot of time and work. Like, let's be honest here, that's not an easy thing to do.

And so create using an automated system, something like Market Man, Margin Edge. There's another one out there that starts with a chef something. I forget what it is, but using one of those automated systems to track your inventory. Not only make sure you have accurate, timely data that's always updated with cost that update in your models and all of that.

It also just allows you to look at it. gives you your theoretical costs. Because you can say, okay, what does this cost? It says, okay, well, based on your invoices this week from Cisco, that cost you $237. And by the way, when you've got this menu item up, it cost you $206. So you can see inflation and things in that. It can be very helpful. And when you're looking at inventory,

And this is true whether you're using an automated system or you're doing all that math and calculating yourself. We always want to look for a 2 % variation between actual and theoretical. If your actual is 26 % and your theoretical is 25%, okay, you're a percent off. Like that's not something, unless everything else in the business is perfect, that's not something I'm going to spend the time to go into. But if your actual is 26 and your theoretical is 23, that's a big gap.

And that's where you then get into root cause analysis, figuring out why and fixing it. But you have to have that information in order to do it. And unless you're going to take the time to learn how to do that on paper, to track it on paper, you can use something like margin edge to do that for you. It is expensive, granted, but for most operations, it's worth it because getting that data together manually is just time consuming and frankly,

Chris Schneider (08:16.046)
Not something most people know how to do unless you've done it a couple of times and you understand the whole data gathering and analysis process. So something like margin edge makes it a lot easier. Plus, if you're doing it manually, literally when I used to do this, I would have to sort through invoices, update Excel sheets, update updates on Excel sheets, make sure that I was calculating prices that change constantly throughout a period. It's just a pain in the ass. So by automating that.

Either you're saving yourself a lot of time, if you're doing it manually, or more likely, I see with most bar owners, you didn't have that information before because it took too much time, so now you do.

Chris Schneider (08:59.042)
The other place that we can leverage technology is with our bookkeeping system. So say you're using like QuickBooks, there are ways to connect that to a POS system and to have everything feed over and your books get done from your POS, your books get done within the QuickBooks. I can set up rules in your banking. So QuickBooks is going to pull all your banking transactions from your bank and you can set up rules to automatically categorize and enter those into the books.

It's not a difficult thing to do. The only worry that you should have when you're looking at automating the bookkeeping side of the financial piece. Is that sometimes connecting things makes it more messy than it needs to be. And often that's POS systems. I find when they connect to QuickBooks tend to want to bring over way too much data and not just daily summary information, which is all you really want in your books. Because if you make a mistake, if something is set up wrong,

And you connect toast to say QuickBooks wrong or spot on you connect to QuickBooks wrong.

you're going to potentially end up with a situation where the amount of time and money it costs you to fix that is ridiculous. A mapping error between a POS system and QuickBooks can cause a cleanup that costs five, 10, $15,000. Whereas if you just are entering manually that summary data every day, or have a way to automate that summary data entry,

There's one entry for each day that accounts for all your revenue and breaks everything down. So if there's a mistake, it's now easier to fix. And when I say easier, mean easier by a lot. It's a whole freaking lot easier.

Chris Schneider (10:51.438)
Now the second thing that I am going to talk about with you today that should be able to give you about a 1 % bump on your bottom line is looking at your operating hours. It's amazing how many times I go into a bar and they open at 3, but no one's there at 3. A couple people there at 4 and they start getting busy about 5. The question is, why are you opening at 3? Are you wasting

you know, for people's hour of labor for no customers. Maybe you are, maybe you're not.

And even more so, say you're in a tourist town, like I live in a tourist town. January, we don't have tourists because it's Indiana and it's freaking cold and gross and snowy and gray outside. And I don't even want to walk out my front door. So I'm not going to be a tourist somewhere else in Indiana. If I'm going on vacation, I'm going to like Florida or Arizona where it's sun and hot and nice.

Chris Schneider (11:53.998)
So should you necessarily in a tourist area have the same hours across the year? I'd probably say not. Should you even be open the same days throughout the year? I'd probably say not. You know where I live? At Tuesdays? When it's in January, nobody's doing business. There's hardly a reason to be open. So you need to always look at your operating hours. And sometimes that means you need to add hours. Sometimes that means you need to subtract hours. That can all be true.

But the way to evaluate when you should and should not be open, especially if you're in one of these tourist areas where it's going to change throughout the year, is you need to look at your revenue per hour. And there is some level at which, and you can calculate this essentially by just looking at labor and then factoring in your prime cost percentages.

Chris Schneider (12:49.294)
That allows you to figure out, hey, what is the revenue per hour I need to make a profit? And there's no reason to be open. If every Tuesday during January and February, you don't make a profit, then you probably shouldn't be open those days. Now, conversely, if you see, Saturdays, we normally close at 11, but during our busier season, we're closing at 11 and...

that 10 to 11 sales hour is strong, maybe you should close at midnight or maybe even one. It depends. But you need to understand your hourly revenue, your hourly labor cost, and your overall bottom line to say, okay, if I'm open, how much sales do I need per hour?

To run through that calculation really quick, it would be revenue minus labor. That gives me what I'm kind of netting that hour, right? Minus food cost, beverage cost, whatever. Those just standard percentages. So if you knew your prime cost rather was 62%, because that's the sum of food, beverage, and labor costs.

and you make a hundred bucks at 62%, you're left with $38. Is that $38 going to cover utilities overhead at all of that? That's a great question because that's the other side of this coin. Even if I'm open and maybe I lost some money that hour I was open, if I'm bringing in revenue that's covering utilities overhead, those non-controllable expenses in a slow month, I'm still making some progress forward, maybe kind of. That becomes a strategic situation.

but always make sure your hours are profitable, essentially. Now, along with that, let's talk a little bit about staff scheduling. Because one thing you never want to end up with is employees in overtime. That costs extra money you don't need to spend. So you need to look at not only when you should be open, but how does that affect your staff schedule? Obviously, if your data shows, okay, well, I'm a tourist area, it's January, it's gross outside, it's cold, it's snowy, no one wants to be there, I should be open four hours on Tuesday.

Chris Schneider (15:08.526)
Does it actually make sense for your team to come in for four hours on Tuesday? How will your guests perceive you only being open for four hours on Tuesday? So 99.99 % of the time, the thing I will always tell you is you must follow your stated hours and you should change them very rarely. That is true. But you should also, at least on an annual basis, analyze your hours, analyze your sales in those hours, analyze, especially, like I said, in a tourist area,

month to month, how is my business changing? When are my busy times changing? And then use that the next year to make smarter decisions and to be open more when it's important and less when it's not.

Chris Schneider (16:21.528)
Now our final tip today that's aimed is, again, cut off about 1%. So we've talked about automation on the financial end. We've talked about optimizing those hours and making sure that your hours fit your revenue and that it makes sense to be open when you are, obviously without hurting the team or guest experience. And finally, we're going to administrative technology.

and administrative processes and procedures.

So what do mean by that? Well, most managers spend most their time doing paperwork. And we always need a balance between getting paperwork done and being on the floor. Right? Because you actually have to serve guests. You actually have to be out there and taking care of things. But also you got to do some administrative tasks. And whether that is doing the bookkeeping as an owner or it looks like creating a system or using a system for cash management.

Or we're talking about filling out just standard reports about labor and shift logs, anything like that. You want to streamline those as much as possible.

Now, a good way to do this is to look at where can we throw in tech to streamline our administrative processes. Some of this, especially when it comes to just data entry and recording things internally, is just Google Sheets, Google Forms. I mean, I really like Google Forms because then that's going to shoot it to a Google Sheet. My manager just knows, hey, there was an incident. Rather than having paper incidents reports, I go fill out this form. It goes on the spreadsheet. We're good. The other thing I like about doing a lot of this administrative stuff nowadays

Chris Schneider (18:03.38)
in something like Google Docs and Google Forms and Google Sheets versus say Word, Excel and all of that is it keeps everything cloud based. So as an owner, I don't have to go in to read the incident report. I get a text from my GM that says, hey.

Somebody, there was a slip and fall today. I go, cool, did you fill out the report? Great. I can just jump on my computer, jump on my phone, pull up the spreadsheet where that form deposits information, read it, and I know what happened.

So that's going to save you a lot of administrative time when you put things in the cloud and you work in a way that is streamlining your processes to the cloud.

Now another place where you can implement digital systems that are going to help a lot on the administrative end is staff scheduling and communication. And scheduling is one of the largest time sucks for managers, and it's really easy if you're a dive bar and everybody has standard shifts and they just work the same shifts every week. It's really hard if you're a college bar. All your employees are in school and.

you have this event this night and can't work and You used to be able to work Tuesdays, but now you're in this club or this group and you can't. and by the way, you're going on vacation for two weeks for spring break and you know college students managing cons students in a college bar and figuring out that schedule is one of the most giant games of Tetris that exists on the planet. So that's where technology can come in and help. And there are a lot of scheduling software is out there.

Chris Schneider (19:47.182)
personally, kind of a fan of some and not a huge fan of others. My personal favorite is Will Brawley's one, which

Seven shifts.

Chris Schneider (20:18.784)
Edit. My personal favorite one is Will Brawley's Schedule Fly. He is a really cool dude, but he also has a great scheduling software. It's not expensive, great customer service. All it does is schedule. They're not trying to integrate a whole bunch of things together and make it hard. But Schedule Fly, a great software there that helps eliminate a lot of that time and also allows people to like switch shifts digitally and things.

Again, there are a lot of other tools, so it's about which one works for you, whether it's schedule, fly seven shifts. I think toast has an integrated one spot on as an integrated one. So whatever you're using, but if you can just get the communications paperwork in the cloud and you can get your scheduling. Digital where let's be honest, a lot of these scheduling programs basically fill out the schedule for you. You can take a three or four hour task and shorten it down to.

30 minutes or less. So that's saving you huge time. as a manager, right? So let's talk through this a second. As a manager, saving manager time, how does that lead to a bottom line that gets bigger?

Well, it's not the automation of the inventory and ordering. It's not the automation of the scheduling. It's not cloud-based everything for greater visibility and speed and accuracy. Those are all things that just free up your time as an owner or free up time for your manager. So how does that lead to bigger profits? The answer is actually quite simple. It leads to bigger profits because when a manager has more time or when an owner has more time,

Or hell, when you as the owner and your manager have more time, you can work on more problem solving. You can work on more projects. You can work on more promotions. You can interact with your guests more, work on that guest experience more.

Chris Schneider (22:14.978)
So all automation you can do on the backend, anything you can do to shorten your admin time gives you more time to work on projects, problem solving, and take care of guests. And I will tell you right now, problem solving, which we've talked about going through, here's a problem, let's figure out the root cause analysis. Now let's solve it, let's test it, let's go back and see if our hypothesis was correct. That entire process

is where you find all these nickels and dimes that add up to a 20 % bottom line. So you have to put in the administrative automations and the cloud-based systems and focus on making that administrative process as efficient as possible in order to have the time to do the problem solving, which is going to get those bottom line percentages where you want them.

Chris Schneider (23:11.374)
So to wrap us up today, by implementing automated financial tracking and financial systems, optimizing your operating hours, and integrating smart administrative technology, you can achieve multiple percent higher on your bottom line. All of these small improvements and all of this set up for more small improvements, these compound over time. Because like I said at the start,

a quarter of a percent there and a quarter of a percent here and a quarter percent there and a tenth of a percent there and a one percent over there, at the end of the day is the only difference between a bar that makes 10 % and a bar that makes 20%. And if you want to make 20%, you have to give yourself the time to be able to do it and then optimize your way through the data in order to reach that profit goal.