MCC5425 Bar & Beverage Management

Lecture 4
Creating and Maintaining Bar Business

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Overview

• Review on the Lecture Three

• Creating and Maintaining Bar Business
• In-class Online Quiz Exercise (30 mins)

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Learning Outcomes of 1st Part
After completing this lecture, you are able to:
• Develop an overall concept and tailor it to
meet the needs and desires of a particular
clientele.
• Plan an atmosphere, design and décor
suitable to a concept and its intended
clientele.
• Plan the efficient use of available space.
• Analyze the design and space needs of the
bar itself.
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Learning Outcomes of 2nd Part
After completing this lecture, you are able to:
• Establish a profit goal for a bar business.
• Prepare a budget.
• Price drinks on the basis of beverage cost.
• Standardize drink size, recipes, and
glassware.
• Establish a control system.

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Targeting Your Clientele
• Types of Customers
– Diners at restaurants where drinks
are served;
– Drop-in customers who are on their
way elsewhere;
– Entertainment seekers;
– Sports fans; and
– Regular patrons
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Selling High-End Spirits
• The experienced entrepreneur
concentrates primarily on a single,
definable customer group, or market
segment, whose members will have
similar reasons for visiting a bar

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Planning Services to Define Your
Image
• Much of what will set your bar
business apart from competitors’ is
your overall image
• Make an effort to define whatever
special character your bar exudes
that will entice people to visit your
establishment instead of your
competitors’
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Planning Services to Define Your
Image (Cont.)
• Some components of image involve
very practical decisions
• What services will you perform for
your target market, and how?
• What kind of bar do you envisage?
• What kinds of drinks will you serve?
– An integral part of any bar’s image
is the bartender or mixologist
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Location and Market Feasibility
• Choosing an area.
• Estimating customer potential
• Sizing up the competition
• Selecting a site
– Consider the structure
– Determine financial feasibility

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Layout and Design
• Trends in Bar Design
– The gastro pub, a bar that also offers
world-class lunches and dinners
– The concept bar, where the goal of
the décor is to whisk patrons away to
new or exotic locales
– Another trend is participatory bars,
where customers are part of the
action

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Basic Elements of Layout
• Available Space
• Activities and Traffic Patterns
• Furniture
• Utilities, Codes, and Licensing
Restrictions
– The room layout must accommodate
persons with disabilities; they must be given
equal access to public or commercial
buildings, according to the Cap 487
Disabilities Discrimination Ordinance.
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Basic Elements of Layout (Cont.)
• It is made up of three parts and each
part has its special functions
– The Front Bar;
– The Backbar;
– The Underbar; and
– Often it may have a fourth part: the
Overbar

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Figure Source: https://aissmschmct.in/ 13
Basic Elements of Layout – Front
Bar
• Customers order their drinks and these
drinks are served at the Front Bar. Thus,
front bar is also called the customers' area

• It is typically 16 to 18 inches wide with an

alcohol-proof and waterproof top surface,
usually made of laminated plastic

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 Basic Elements of Layout – Front
Bar (Cont.)
• An often-padded armrest runs along the
front edge. It is usually 13 inches wide.
Thus, the total width of front bar is 24-26
inches
• The last few inches of the back edge of the
front bar are usually recessed, and the
bartender pours the drinks here, to
demonstrate liquor (well or call) brand and
pouring skill. This recessed area is known
by various names like rail, glass rail, drip rail,
or spill trough
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Photo Source: https://www.hotelrestaurantsupply.com/ & https://barproducts.com/products/single-rail-glass-hanger-rack-size-and-finish-options
 Basic Elements of Layout – Front
Bar (Cont.)
• The vertical structure supporting the front
bar is known as the bar die, It is like a wall
separating the customer from the working
area.
• It forms a 'T' with the bar, making a kind of
table on the customer side, with the other
side shielding the underbar from public
view. There is usually a footrest running the
length of the die on the customer side,
about a foot off the ground.
Photo Source: https://krowne.com/modular-bar-die/
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Basic Elements of Layout – Front
Bar (Cont.)
• The height of the front bar, usually 42 to 48
inches, is a good working height for the
bartender.

• It also makes the front bar just right for

leaning against, with one foot on the
footrest.

• All underbar equipment is designed to fit

under this 42-inch high front bar.
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 Basic Elements of Layout – Front
Bar (Cont.)
• If it is a sit-down bar, it will have stools tall
enough (usually seat rung 30" high) to turn the
front-bar into a table.
• Each stool is allotted a 2-feet length of bar.
• The stools should look & feel comfortable and
should have upholstered backs and seats.
• Since the seats are high off the ground, the stools
have rungs for footrests, or else the footrest of
the bar is within easy reach
• Even numbers of stools make it convenient for
couples.
Photo Source: https://suchprice.com/products

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Basic Elements of Layout – Front
Bar (Cont.)
• Where drinks are served from tile main
public bar for table service, the front bar
must always have a pickup station-set
off from the customers' bar area with
the help of a railing, where serving
personnel turn in, receive orders and
return empty glasses.

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Basic Elements of Layout – The
Backbar
• The backbar has a dual function: as a
decorative display area and as a hard-
working storage space.
• The backbar is a good place to display
call brands as a subtle form of
merchandising.
– Multiple facings are used, meaning
several bottles of a known brand are
displayed side by side.
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Basic Elements of Layout (Cont.)

Backbar
Photo Source: https://aissmschmct.in/
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Basic Elements of Layout – The
Underbar
• The underbar is where most of the
equipment and supplies for the
products you are selling must be
arranged compactly and efficiently,
to facilitate speed of service.
• The area where individual bartenders
work is called a pouring station.

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Photo Source: https://aissmschmct.in/ 23
Basic Elements of Layout – The
Underbar (Cont.)
• Most operations use an automatic
dispensing system.
– Such a system has lines running from
bulk supplies to a dispensing head with
multiple push-buttons. It has several
nicknames:
 A handgun or six-shooter (it is aimed into
the glass and buttons are pushed to
dispense liquids).
 A cobra gun (it has snaking lines that
connect to the head).
Photo Source: http://www.sodadispenserdepot.com/barguns.html &
https://easybar.com/liquor-control/liquor-gun-systems/ 24
Basic Elements of Layout – The
Overbar (Cont.)
• It is a fitting or fixture (a part of bar itself)
found above the front bar (not all bars
feature an overbar)

• It serves the function of design and decor

and also a storage as the glasses (stemware)
are hung from slots (in the overbar).

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Parts of the Bar
• The bar floor
• Materials and upkeep
• Bar size, shape, and position in the
room
• The bar as control center

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 Smaller, Specialty Bars
• The term service bar refers to a bar that
pours for table service only in conjunction
with foodservice. It does not serve
customers directly; it deals only with filling
drink orders brought by wait staff.

• The same goes for the portable bar, a

typical extension of a hotel’s beverage
service where banquets, meetings,
receptions, conferences, and conventions
are being held.
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Photo Source: https://theportablebarcompany.com/professional-portable-bar/
Working With a Designer or
Consultant
• Choosing Design Assistance
– Working Arrangements
– Smaller-Scale or Remote Projects
– Make a Checklist of Bar Design
Essentials

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Interior Design & Décor
• Space allocation
– aesthetic & functional
– table and seating arrangements
– determined by type of bar being
planned: airport lounge, disco, luxury
lounge, pubs, etc.

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Planning for Traffic Flow
• Avoid congestion
• Difficult passage
• Reduce risk
• Balance
– Guest flow & work flow
– Cost/benefit

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Flooring
• Around the bar
- hard, durable, safe surface, easily cleaned
• Heavy traffic areas
- durable wood, flame-retardant nylon
carpeting, stain resistant; short, hard, knobby
carpeting
• Bar seating areas
- hard durable surface, easily cleaned
• Work areas
- slip proof, durable, easily cleanable, padded
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Walls & Ceilings
• Walls: oil-based enamel for walls that
require frequent cleaning; plastic coated
plywood, glass fiberboard, wood paneling,
pressed boards, plastic; real wood is
expensive

• Ceilings: ducts, piping, sound reflection,

and absorption; acoustical tiles

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Furniture & Equipment
• Read trade magazines, supplier catalogs and
brochures; attend trade shows; visit supplier
warehouses, other operators; hire consultant;
• Select supplier with reputation for quality &
reliability – all representing value that lasts;
• Select furniture from the standpoint of safety;
• Choose washable coverings to fit décor;
• Expensive upholstery appropriate for affluent
market;
• Colors in keeping with color scheme; and
• Flame-resistance often required by law
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Color, angles, intensity, purpose, (low tech – high tech) impact the moment.

Gobo Arc Light

Helicopter Pin Spot Pin Spot 34

Exterior Design
• Objectives
– Attract targeted customers;
– Be in accord with interior design;
– Lighting; and
– Access

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Summing Up for the 1st Part
• The first step for turning a building,
room, or space into a popular and
profitable bar is determining your target
clientele.
• The next step involves choosing the
products and services you will offer to
this clientele, or market segment. (it will
be discussed in latter lecture)
• The third step is defining a unifying
concept with a special character or
identity for a bar.
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A Pre-Opening Budget
Six types of expenses to consider:
• Construction and/or remodeling
costs
• Professional services
• Organizational and development
costs
• Equipment and finish-out expenses
• Pre-opening expenses
• Contingency and working capital
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Budgeting for Profit
• A budget is a financial plan for a
given period of time that coordinates
anticipated income and expenditures
to ensure solvency and yield a profit.
– The budget is a continuing two-
phase process
• The planning phase
• The control phase
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The Planning Phase
• Expenses are usually grouped into two
categories: fixed and variable.
– Fixed expenses are those that are not
related in any way to sales volume but
are fixed by contract or simply by being
in business.
– Variable expenses are those that move
up and down with sales volume.
• Unallocable expenses are listed separately;
they consist of general expenses that are
neither fixed or tied to sales.
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The Planning Phase (Cont.)
• Calculation of each individual
expense item as a percentage of your
expected sales for the year is known
as the percent-of-sales figure.
– It is referred to in the industry as
percentage

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The Control Phase
• The control process consists of three
steps:
• Compare performance to the plan.
• Analyze operations.
• Act promptly to solve problems.
• A budget deviation analysis (BDA)
– Takes a second look at the month’s
budget to see if the actual figures
deviated from budget.
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Pricing for Profit
• The essence of profitable pricing is to set
individual prices that produce the
maximum difference between total sales
and total costs.
– Pricing works best when you choose and
stick to a standard system.
– Whatever the pricing policy, the goal
should be to set prices that will
maximize the gross profit or
contribution margin (the sales less the
product cost).
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The Cost/Price Relationship
• The cost percentage of the price pays
for the ingredients in the drink.
– The remaining percentage of the
price (gross margin) goes to pay that
drink’s share of all of your other costs
and your profit.
• To find the price, divide the cost of the
ingredients by the cost percentage.

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The Cost/Price Relationship (Cont.)
• When you price mixed drinks, the simplest
version of this cost/price formula is to use the
cost of the beverage alone.
– This is known as the beverage-cost method.
• A truly accurate cost/price relationship must
be based on the costs of all of the ingredients.
– The technique of determining total cost is
based on the drink’s recipe and is known as
costing the recipe.

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The Cost/Price Relationship (Cont.)
• The prime ingredient method:
– The selling price is based on the cost
of the prime ingredient, the base
liquor—instead of the actual recipe
cost adding a percentage for the
extra ingredients.
• The gross-profit method:
– Divide the amount of gross profit by
the sales price of the drink.

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Establishing Product Controls
• The term drink size refers to the amount
of the prime ingredient used per drink
poured.
• A recipe that specifies exactly how a
given drink is made at a given bar is
known as a standardized recipe.
• Each standard drink should be served in
a standard glass, a glass of specified size
and shape.
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Establishing Beverage Controls
(Cont.)
• The most effective way to ensure the
honesty of your workforce is to remove
the opportunity for theft or shrinkage.
– A product no longer available for sale.

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Technology at the Bar
• Historically, bars have used two types of
sales-capture and cash-control devices:
– The computerized point-of-sale (POS)
system
Almost every facet of management—
inventory, purchasing, sales, payroll, and
accounting functions, can be tracked by
POS.
– The electronic cash register (ECR)
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Skimming
• Bars and restaurants are traditionally
places where a guest and their credit
card are parted, servers take the card to
run it through the payment
authorization system.
– An illegal device is used to skim, or
surreptitiously read, the stored data on
the magnetic strip on a credit card.
– Then counterfeit cards can be made
using the same data and are used
promptly.
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 Summing Up of 2nd Part
• A budget is the financial plan for your
business; it is a measurement of actual
performance and forecast your anticipated
performance.
• Since profit is the margin of sales over costs,
the profit plan sets up a two-pronged effort:
to maximize sales and to minimize costs.
• Pricing is of strategic importance in
maximizing profit per drink without
inhibiting demand and reducing volume.

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References:
• Austin, G, A. (1985) Alcohol in Western Society from Antiquity to
1800: A Chronological History, Santa Barbara, CA.:ABC Clio.
• Brandwood, G.K, Davison, A. and Slaughter M. (2004). Licensed to
sell: the history and heritage of the public house. English Heritage:
UK.
• Babor, T. (1986) Alcohol: Customs and Rituals, Chelsea House: New
York.
• Brown, J. and Miller, A. (2009) Spirituous Journey: A History of
Drink, Book Two. Mixellany Limited: USA.
• Cavan, S. (1966) Liquor License: An Ethnography of Bar Behaviour,
Chicago: Aldine Publishing Co.
• Cole, S. (2007) West from Paddington. Etica Press Ltd: UK.

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References: (Cont.)
• Cousins, J. and Lillicrap, D. (2010) Essential Food and Beverage
Service, London: Hodder Education.
• Cherrington, E. H. (1925) Standard Encyclopaedia of the Alcohol
Problem, American Issue Publishing Co: Westerville, OH.
• Doxat, J. (1972) The World of Drinks and Drinking, Drake Publishers:
NY.
• Granet, M. (1957) Chinese Civilization. Barnes and Noble: London.
• Haigh, T. (2007) Vintage Spirits and Forgotten Cocktails, Quarry
Books, Quayside Publishing Group: USA.
• Katsigris, K., Thomas, C. (2012) The Bar and Beverage Book. 5th ed.
Wiley
• Murphy, J. (2009) Bar Design – converging form and function,
Licensing World, April, Dublin: Jemma Publications Ltd.

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References:(Cont.)
• Murphy, J. (2013) Principles and Practices of Bar and Beverage
Management, Goodfellow Publishing Ltd, Oxford: England.
• Murphy, J. (2013) Principles and Practices of Bar and Beverage
Management – The Drinks Handbook, Goodfellow Publishing Ltd,
Oxford: England.
• Molloy, C. (2002) The Story of the Irish Pub, Vintners Federation of
Ireland, Liffey Press: Dublin.
• Norrington-Davies, T. (2005) Is the gastropub making a meal of it?.
24th November, The Daily Telegraph (London). Retrieved [July
2008]
• Patrick, C, H. (1952) Alcohol, Culture, and Society, Duke University
Press: Durham, NC.
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References:(Cont.)
• Porter, R. (1990) Introduction. In: Sournia, Jean-Charles. A
History of Alcoholism. Trans by Hindley and Stanton, Basil
Blackwell: Oxford.
• Raymond, I, W. (1927) The Teaching of the Early Church on
the Use of Wine and Strong Drink, Columbia University Press:
New York.
• Roberts, R. (2008) Drinks Focus bar Design, September,
Hospitality Ireland, Dublin: Madison Publishing Ltd.
• Times (1928) The New York Times, January 7th Issue: USA.
• Trevor, P. (2013) Tied House Laws Revisited – Middle Ground
May be the way to go Vaneast Beer Blog,

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References:(Cont.)
• Wondrich, D (2007) Imbibe: From Absinthe Cocktail to
Whisky Smash, a Salute in Stories and Drinks to
‘Professor’ Jerry Thomas Pioneer of the American Bar,
Perigee Trade: USA.
• Wilson, T, M. (2005) Drinking Cultures: Alcohol and
Identity, Oxford: Berg.

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