Five Strategies to Help Your Bar in a Recession

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Five strategies to help your Bar, Nightclub or Lounge conquer the current recession.

Unless you’ve been living under a rock for the last two years, you are aware that we’re in the midst of the most severe financial crisis since the great depression. Although there is light at the end of the proverbial tunnel as we begin to emerge from “The Great Recession”, we are certainly not out of the woods yet. While the service sector exhibited growth for the past two months, consumer still hold a tight grip around their free cash evidenced by significantly depressed spending levels as compared to the 2007 highs and a national saving rate that is hovering around 6%. The bad news is that consumer dollars are becoming more elusive and completion to capture a portion of the consumer wallet is increasing. The good news is that with a little bit of knowhow and ingenuity your bar, nightclub or lounge can stand apart from the competition and attract patrons who are looking for that perfect place to escape the harsh reality of today’s economic life. Here are basic strategies that are easy to implement and will help you increase patronage and most importantly profits.

1) The Human Experience: Any one of your patrons can go to the bodega on the corner and get a six-pack and a bag of chips. Remember, you’re not selling alcohol or food; you’re selling the human experience, which is the interaction that your customers have with you, your staff and your customers. Offering great customer service does not cost you anything; all you have to do is train your staff to be outgoing, vivacious and courteous. Everyone who works at your club is a family and everybody depends on everybody else for their income. Here is an example; if the staff at the front door is rude to a customer, that person’s night is already off to a bad start, so he’ll order fewer drinks, tip less, and ultimately everyone suffers. Hospitality begins at the front door so eliminate the obnoxious people that stand behind the velvet rope and sneer at clients who are waiting on line to spend money at your club. Make sure that the bouncer checking IDs is courteous to your guests. The wait staff and bartenders should definitely keep the smiles on their faces, their tips depend on it. Believe it or not, bars and nightclubs are part of the hospitality industry, and as such, great customer service is the key to a successful club.

2) Promotion, Promotion, Promotion: Many nightclubs and bars make the common mistake to slash or eliminate their advertising and marketing campaign during recessionary times. Don’t you fall into that trap! In a study of US recessions, McGraw-Hill Research found that businesses that maintained or increased their advertising expenditures during recessions, averaged significantly higher sales growth, both during the recession and for the subsequent 3 years as compared to businesses that eliminated or decreased advertising. Sounds counterintuitive, but its true; if every nightclub and bar around you is dropping advertising due to the recession, but you continue to advertise, which establishment are potential patrons going to read about in magazines or newspapers? Now you see my point. You want your community you know that you’re in business and going strong. The good news is that during tough times you can stretch your advertising dollars since internet, print, television and radio media have significantly slashed their advertising rates. Further, media companies want to lock-in future cash flow so if you negotiate a long term contract in a time of distress you will benefit from favorable discounted advertising for a long time.

3) Cover Charge! What Cover Charge? I know that a cover charge is easy money in the bank, but these days people are looking for a deal. Paying a cover charge represents a risky proposition to a cash strapped patron. If he pays a cover charge and your bar is having an off night, the patron will not enjoy the time that he spends at your establishment and will tell all his friends that he had a bad time AND he had to pay a cover charge for that privilege. So what you’ve done is generated $20 in short term cash but forewent hundreds of dollars in future revenues from this person and a dozen of his friends due to negative word-of-mouth advertising. Now imagine you have no cover charge. The same person comes to your bar on an off night, has a few drinks and leaves. What does he tell his friends the next day: “I went to a bar, it was an off night, had a few drinks”. No harm, No foul.

4) Reduce Liquor Costs: In a difficult economic climate it is very important to cut costs, but the trick is to cut costs without sacrificing quality or service. Strategically adjusting your liquor purchasing is a clever way of reducing costs and increasing profits. You’re in one of the best buyer markets in years, which puts you, the bar owner, in a position to dictate terms to liquor brands, distillers and distributors. In addition, you should take advantage of new liquor brands trying to penetrate the alcohol market. These companies are looking to aggressively market their new brands so you can arrange promotional parties and events. In addition, you can obtain promotional pricing from these new brands and offer your patrons discounts on drinks made with the promotional alcohol brand. In this case everyone wins: the liquor company gets to promote its product and the customer gets inexpensive drinks and you save significant amount of money on alcohol procurement while still generating alcohol revenue.

5) Let Your Furniture Work For You: Décor is your business card. It tells customers who you are and dictates how much you can charge for your products such as alcohol and food. Furniture is a critical element of your décor because if directly effects guests’ comfort level. The more comfortable your guests are, the longer they stay, the more drinks the order, the more money you make. As you can see, it’s a pretty simple cause and effect relationship. There are many different options to choose from when purchasing furniture for your establishment, but I believe that modular furniture is the best option because of its versatility and price. Modern modular furniture specifically designed for use in nightclubs bars and lounges and is typically comprised of 2 to 4 components and allows you to construct a variety of furniture pieces. For example, you can use armless chairs and corners to construct love seats, sofas, sectionals, perimeter seating or VIP booths. The most amazing thing is that modular furniture allows you to create a different look for your nightclub each night, which gives your patrons a different experience every night. In addition, modular furniture allows you to make your VIPs to truly feel like very important people. Here is an example. Let’s say that you have a party of 50 guests at your club, you can create one VIP area and accommodate this large party. The next day you have 5 parties of 10 people; in this case you can disassemble the perimeter seating area and create 5 separate nooks that will give each group of people their own VIP area. Offering a high level of service will separate you from the competition and will attract crowds of patrons to your establishment.

There is a multitude of ways to ensure that your nightclub or bar prospers in today’s market. In addition to the above mentioned strategies you can also run cross promotions with other businesses in the area, set up an informative web site and send out e-mail blasts to existing clients.

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