How to Avoid The Most Common Bar Owner Mistakes

Why do most bar owners fail to hit world-class profits—and what can you do differently?

Running a bar is supposed to be fun and profitable, but too many owners get stuck in the weeds, struggling with inefficiency, financial blind spots, and staff turnover. If you’re pouring your time and money into your bar without seeing serious returns, it’s time to change the game.

In today's episode:

• Discover the systems successful bar owners use to scale profits and free up their time.
• Learn how to take control of your finances with bulletproof cost tracking and KPI monitoring.
• Master the leadership and culture strategies that turn average employees into a high-performing team.

Stop working in your bar and start working on it. Listen now and take the first step toward a more profitable and sustainable business!

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 (00:01.602)
Today, learn why most bars never reach world-class profits, discover the system successful bar owners use, and master the art of delegation and automation. The bar business can be incredibly rewarding, but it's also filled with a lot of potential pitfalls. And quite frankly, most of the pitfalls in this industry are not something that if you're experienced in the industry, you're going to realize exists.

Chris Schneider (00:29.516)
And it's important, one the most important things as a bar owner, especially if you lack a hospitality background, and you have not been doing this for decades, is to know what you don't know. So today we're going to explore the most common mistakes bar owners make, and more importantly, how to avoid them.

Whether you're just starting out or looking to improve your existing operation, these insights will help you build a more profitable and sustainable business. And we're going be talking through three separate sets of.

issues that you may run into. Systems and processes, financial controls, and leadership and culture.

because really from a a fundamental financial management standpoint from a fundamental we need to make a profit standpoint your systems and processes and your financial controls are how you get there and then leadership and culture is how you do that.

Chris Schneider (01:28.024)
So let's go ahead and dive in. We're going to start by talking about systems and processes. So with systems and processes, I mean, you guys know I talk about this all the time, that you need systems, you need processes, they need to be documented, and then you need to continuously improve them. But a thing I see all the time when I talk to bar owners is a lack of documented procedures and standards. If you don't document your procedures and standards, it's really hard to train them. It's really hard to enforce them.

It's really hard to make employees realize they have to follow them.

So something that's not documented can't get managed.

And a lot of this comes down to essentially not having accountability measures in place for when people violate those standards and procedures.

Something I like to say a lot on the data end is if you measure something, it gets managed, and what gets managed gets done. So unless you measure something, you can't get it done really, because you don't know what you're managing, or you're managing factors that don't directly relate to a system or process that is wrong that you need to change.

Chris Schneider (02:43.266)
Now along with those documented procedures and standards, as an owner you need to figure out how to delegate and manage your time better.

And I say that because I have not met a single business owner in my entire life who manages their time perfectly. I know I don't. We all have time management issues. But the more we manage our time, the more we strive towards perfect time management, the less waste we have in our day, the more we can get accomplished, the more focused we are, the better our work product is.

So you have to manage your time. Part of managing your time is delegation. There's no way you can do everything. And if you're sitting there listening to this saying, I do everything in my bar and that's just the way it is and I'm never going to train anyone to do it. Good luck. Some people can make that work, some can't. But in general, that's not the way to go.

In general, you want to create those procedures and standards so that you can delegate.

But then where this falls apart for a lot of folks, they make the standards and procedures. They try the delegation and it doesn't work because they have inconsistent training programs. They're not teaching their team what they need to know in order to be successful. And because of that, they are unable to actually ever fully delegate something, to actually ever move that ball from them to their employees. So you have to document your standards and procedures.

Chris Schneider (04:19.736)
And then you have to put in accountability measures to know when they're not followed. You have to train your team around those standards and procedures very well, including telling them the accountability measures. And then you have to use that training, those standards and procedures to delegate to allow you as the owner to better manage your time.

Because when you're just doing...

Generally?

You're not focusing enough on your business and you're not making the money that you should be. Now, once you get standards and procedures in place, the important thing is financial controls. Now, when I say financial controls, and if you've listened to the podcast for a long time, you know I love to talk about data and finances and money and all of that.

And the thing is that financial controls have to be in place to understand how you're doing. Right? The whole reason we need financial controls is to measure KPIs. It is to make sure that we're making a profit because net profit is a key performance indicator. That's what a key KPI is, a key performance indicator. It is a metric that you measure that tells you how your business is doing.

Chris Schneider (05:33.934)
And there are a lot of different KPIs that you can use. I have some that I really like. And if you go back, there are multiple episodes that we've done on different KPIs and how to use them.

Chris Schneider (05:48.354)
But if your finances aren't accurate, there's no way you'll ever know your sales per labor hour. Yes, Toast tells you, but if you have Toast, it's going to say, hey, this is your sales per labor hour because we know how much you're paying your people. That's actually not all inclusive. It's not covering all the employer side. So I'm not sure that's a great metric to use. And the way that you can actually calculate that is to add up all your labor hours and then look at your net sales.

And that gives you sales for labor.

Chris Schneider (06:23.756)
And more importantly, if you know your total payroll cost, you can look at sales per average labor hour cost. So I don't want to just know how much did I sell per labor hour because I paid different employees different rates. I want to know what did it cost me per hour to employ people in relation to my sales? What is that percentage? Because to me, that's a lot more interesting and meaningful metric.

But regardless of the metrics, the exact KPIs that you're measuring, the only way you measure a KPI in a meaningful manner is to have accurate cost calculations. Inaccurate cost calculations always lead to bad data. Bad data always leads to improper decisions. They still may be good decisions, but when you make a good decision based on bad data, you just got lucky. You didn't actually do it.

Right, you didn't actually make an informed scientific decision. You just got lucky. Now I will say, and I do this, I've been in this industry for a long time. I talk about this stuff all the time. I spend all my time looking at data analysis and data we can get out of bars and restaurants and then how we can use that data to drive them forward. Spend a lot of time doing it? Yeah, you have a gut instinct.

I can look at a menu and guess more or less your food cost if I know how much waste you have. But that doesn't mean that my guesses are always right. That doesn't mean that my guesses are what I should be working from. I may make a great guess and I may be to guess pretty consistently. But it's not accurate enough to actually know what's going on because your guess is going to be off my guess is off 10, 20 % most of time.

So if people's guesses are off even 5 %...

Chris Schneider (08:24.878)
you don't have proper data to use to manage your business. Now, inaccurate cost calculations, not knowing what a food item costs you, is going to be most people's biggest issue when it comes to their financial controls. Because in theory, what something costs us, we multiply that by a percentage, or divide that by a percentage, I should say, and that gives us what our price should be on that item.

So if I want to have a 25 % bottle beer cost and I buy a beer and it costs me a dollar a bottle, one divided by 0.25 gives me four. I need to charge four bucks. That's easy. But where it gets really complex is what if I'm talking about a burger and that burger comes with fries. So now I cut, price the fries and I gotta price the bun and I gotta price the ground beef. But also I'm probably putting lettuce, tomato, onion, pickle. I might be putting mayo, ketchup, mustard on it.

I'm probably putting some kind of cheese on it. All that has to get added into that cost. And it's important that you include all of that in order to ensure that your prices are accurate, because your costs are accurate. And then once you have your costs and your prices accurate, then you look at inventory management. And we've talked about inventory management a lot. But inventory management is not just counting what you have to make an order. It's counting everything you have.

determining what your actual usage of items was, and then comparing that to what you should have used. Now, a lot of times to compare actual and theoretical usage, software is the way to go. Let's be honest here. Because it's not easy to do all that math. There are ways to make a Google Sheet or an Excel Sheet that will do all that math for you. I've done that before. But in general, that's where software can help. Because inventory management is

Basically.

Chris Schneider (10:22.946)
the number one cost factor that will kill your business once you get past labor.

And it's waste, it's spoilage, it's failure to understand that maybe your cost is only 2 % above your theoretical, your actual cost is 2 % above your theoretical cost. That's a problem that needs to be fixed. But unless everything is measured accurately, unless you have all that data, unless your costing is perfect, you will never know that.

So the main thing when we're talking about financial controls that you need to manage your business and to avoid falling into the pitfall of bad decisions based on bad data is to make sure your data is as accurate as humanly possible. It may never be perfect, but you want to be as close to perfect as you can be because that's how you make smart choices.

Because if we really think about this, the difference between a bar that makes 2 % net profit and 10 % net profit is big things. It's big changes. It's waste, it's labor costs, it's big structural issues. But the difference between a bar that makes 10 % and a bar that makes 15 % or even 20 % is the culmination of a lot of tiny, tiny changes. It's a quarter of a percent here and a quarter of a percent there.

that cumulatively, all put together, give you the data you need to be able to make those decisions and tweak those little percentages so that you can get more profit.

Chris Schneider (12:09.794)
Now the last piece of this, once you've gotten your systems and procedures in place, once you have financial controls that are as tight as you can make them given what you have,

And again, you can use software here. can get some help here if you need it. Or you can call me. I can help you with this stuff too. But software is probably, if you call me and ask me about it, I'll probably just tell you to buy software. But if you don't want to go that route, talk to me. But then finally we have leadership and culture. Now why is leadership and culture important?

Chris Schneider (12:48.322)
Well, if we think about the framework I use, mindset, concept, culture, we can call mindset why, concept what, and culture how. So your systems and processes and your financial controls are your what. Your leadership and your culture are your how. They're how you accomplish what you're trying to do.

And so there are a number of pitfalls here that you have to avoid because these four pitfalls will kill your business faster than anything else.

Chris Schneider (13:26.328)
Number one, it's gonna be working in your business instead of on it. As an owner, your goal should not be, I mean, obviously, yeah, you gotta help out during the rush. You have to be there supporting your team. And when you're at the back end of the rush and all your tables are dirty, you should be going around busing tables, and then you should probably be washing those dishes if your cooks aren't caught up yet. So yes, you have to work in your business some. It's very important as a bar owner.

to be present in your business, to be active in your business, to show your employees, by example, how to do their jobs.

But let's be honest, that's a requirement for you as an owner.

Assuming you have or don't have a general manager and you're the one managing day in and day out and you're there all the time?

Actually helping your team working in the business is a couple hours during lunch, maybe a couple hours for dinner. It's getting your team through that rush. It's managing the hard parts, managing where you can have degradation in customer experience. But when it's not really busy, your team should be capable of doing all this without you being there. And that's when you work on your business. That's the time you need for yourself to get your systems and processes, your financial controls, to look at data.

Chris Schneider (14:48.91)
to look at ordering, to review things, to figure out how to make your business better and more efficient.

Chris Schneider (14:57.378)
Because that is what separates your average bar from operators that are making world-class products.

The second point on leadership and culture that you need to avoid is failing to build a strong team culture. A strong team culture is what's going to drive your business forward always. A strong team culture is what's going to solidify your team, make them better. And it's also what's going to help them support each other. Now when I say strong team culture, that can mean a lot of different things, right? No team is going to behave exactly the same as another team.

No owner has the exact same management style as another owner. So, it's not ridiculous to think.

Hey, I want to build a culture and I want it to look like this. Great, do that. But when I say strong team culture, there's a couple things that every culture should have together. One, it should be employee focused. Right? You need a team focus. And I've said it before, I will say it again, I will stand by this forever. How you treat your team is how they treat their guests. And if you want a great guest experience, you have to provide a great team experience. It starts with the team experience.

A strong team culture also involves training your team, promoting them, helping them get ahead in life. And that can be bar skills, that can also be outside skills. You know, something I've talked about before, and if you go back and listen to, there was an episode about a year ago, I did with Sean Finter. And he talked about bringing in people for employee meetings that just were real estate agents or auto loan experts or bankers. Help your team learn.

Chris Schneider (16:43.83)
life skills, help your team learn the skills they need to succeed in your bar. Help them with all of that because all of that builds a strong team culture that will make sure that your team experience is great so then you have a great guest experience. Which brings us to the third piece here under leadership and culture, inconsistent guest experience. And inconsistent guest experience will kill you faster than anything else.

If I go into a bar restaurant and I have a great experience, I'll go back. And if I go back and I have a totally different experience that's not great, I'm gonna go back again. And if I have a decent but kind of mediocre experience that's different than the first two, the one that was great and the one that was bad, probably not going there anymore.

people, especially today, when we see not everybody has as much money to go out as they did in the past. Now hopefully that changes. we see the economy get better. But for now, we see less guests dining out. Now the guests that are still dining out tend to spend more money. That's how we've all been surviving. Lower cover counts, higher average spends. And that's fine. But the only way you're going to maintain that is by providing a consistent and

awesome guest experience. And when we talk about guest experience, my favorite way to go through this is to actually sit down with a like a poster board. If you're do this in person digitally, you can use different things, but I like to do it in person with a poster board. And you take.

Chris Schneider (18:17.378)
Post-its. And you write every step of your guest experience on your post-its. You put it on the poster board, and then you draw lines, and then you write notes about it.

But you don't want to write on the poster board until after you know all your post-its are in the right order. And something to consider, and we've talked about this before, you can go listen to the interview I did with Dave Nitzel last year. We were talking about his book, Hospitality of DNA. One of the things they bring up is the inception archetype, and that came from Dave Kaplan at Death & Co. And the whole idea there is your guest experience does not start when the guest walks in your door, your guest experience starts when your guest thinks about your concept.

When they say on Monday, hey, I want to go out on Friday night, and they start trying to figure out where to go, that's when your guest experience starts. So you need to map it out all the way from when they think about dining with you to when they do dine with you and pay and leave. And map out that entire experience, and then every step of the way, work to build consistency. Work to make sure that the way your website feels corresponds with how you say goodbye to your guests when they leave your bar.

And the final thing I will say on leadership and culture, and this is a killer in ways that are sometimes silent.

But as an owner, you have to maintain your own health and maintain a work-life balance. Because I frequently see two things in this industry. I see people that just work themselves to death and burn out, and everything's great while they're working themselves to death, but they haven't put in place the systems and the procedures and the financial controls. And the only reason they're being successful is because they're there forcing it all day every day.

Chris Schneider (19:58.2)
Those folks burn out. Those bars tend to not do well once they burn out.

Chris Schneider (20:05.496)
So you need a work-life balance. You need to give yourself time in the bar and away from the bar. You need to give yourself time to think every day. But if you don't maintain a good work-life balance as an owner, it's going to be very difficult for you to have the best part possible. The other thing that goes along with work-life balance is just your overall health, your mental health, your physical health. Too often in this business, we have owners that like to drink.

Now, I have said before and I will maintain, as an owner, you should never drink in your own bar. You want to have a drink? Go to somebody else's bar. Go to the place down the street, have drinks there.

really should never drink in your own bar. And you gotta watch how much you drink and you gotta watch how much you eat. I mean, it's very easy in the hospitality industry, in bars and restaurants, to become fat and an alcoholic. That is going to hurt you. That takes away from your energy. That takes away from your creativity. That takes away from your ability to operate your brain at optimal efficiency.

So the healthier you are, the more you are able to take care of your business, the less stress you're going to have on you. And if you have a substance abuse problem or something like that, you need to get that fixed. Because rarely, if ever, does someone with a substance abuse problem make it through this industry and survive well.

Chris Schneider (21:30.094)
So to wrap us up for today, success in the bar business is not about working harder. It's about working smarter. You have to implement proper systems, maintain strict financial controls, build a strong team culture, and take care of yourself and have good leadership on your end. If you avoid the common pitfalls we've talked about, you can create a business that runs efficiently, whether you're there or not, and is capable of achieving world-class profits.