Business Math for Managers

Being able to successfully manage and grow a restaurant or bar requires business math. It is very surprising how many hospitality managers are not familiar with basic math that is required to profitably run a business. I cannot count the amount of times that I have asked a bar manager what margin or markup they work on and they have no clue. Understating the principles of business math can help you properly manage an enterprise and deliver results with numerical backing. I have laid out the three basic formulas that ever bar or restaurant operator should know in order to properly manager their establishment. The Margin, Markup and pour cost are vital to anyone dealing with food and beverage.

BUSINESS MATH FORMULAS

  • Margin: A profit as a percentage of the selling price.
    • Margin = PTC – PTR / PTC
    • PTR = PTC x (1-Margin)
    • PTC = PTR / (1-Margin)
  • Markup: A profit as a percentage of the cost.
    • Markup: PTC – PTR / PTR
    • PTR / Cost = Selling Price / 1+Mark Up
    • PTC = PTR x (1+Markup)
  • Pour Cost: The percentage of the selling Price that is cost.
    • Pour Cost: PTR / PTC
    • PTR = Pour Cost x PTC Price
    • PTC = Cost / Pour Cost

WORD KEY:

  • PTR = Price to Retailer
  • PTC = Price to Consumer

I don’t care what it cost, I care what it’s worth.

Strategic Beverages Sales

As a beverage supplier understanding your retailer’s goals, strategies & tactics is an important aspect of building a strong and successful partnership. The goal should be a desired result or specific measurable achievement for your brand. Build your strategy for your accounts or distributor by following these 5 steps.

5 Steps to Selling Beverage

  1. Identify the buyer influencer Types
    1. I.C.E: Decision Maker, Influencer, Coach, End User
  2. Identify the degree of influence for each of your buyer types
    1. High – Medium – Low
  3. Identify red flags and where you can leverage strength
    1. Reassess your situation and identify trouble before it finds you
  4. Identify the buyer response modes
    1. Growth mode, Trouble mode, even keel mode, overconfident mode
  5. Identify and prepare individual win/results statements for each of your buyer types
    1. Results – Corporate goals that are tangible and measurable
    2. Wins – Personal goals that are intangible

You have to strategies or plan to bring out a desired future objective for your sales call.

Affability of a natural born salesman.

Well-Served Libation

Proper pouring techniques can make or break an experience at a restaurant or bar. Beverage is not always fussy but if the proper steps aren’t taken a beautiful bottle of rare and pricey wine can seem like an unmemorable experience. Beverage has a generous spirit, so if you make a small effort, it will reward you with a rich and memorable experience.

Checklist for Well Served Drink

  1. Beverage at proper temperature, think cold beer and hot coffee as rule of thumb
  2. Correct glass wear for type of drink and occasion, think beer mug vs. wine glass
  3. Proper pour technique, pouring draft beer vs. strained cocktail
  4. Clean and properly rinsed bar tools at all times as a prerequisite
  5. Proper expectation of customer. Explain drink if the drinker has never tried what you are serving them.

If you stick to these basic principles of beverage service you will be rewarded by higher customer experience and usually higher gratuity averages. Sure you can grab a beer or wine, open it and place it on a table, but if you take the proper time present it beautifully the guest experience can be magnified. Understanding the mood, cuisine type, occasion, holiday, or even things like weather can help any bartender cater there beverage recommendations to a patron. Have fun with it and always remember that a little effort goes a long way.

Experiences are today’s social currency.