There is a healthy debate in the hospitality industry as to whether drinking increases or decreases during troubled economic times. On one hand, the argument goes, people depressed about dwindling stock portfolios and 401K accounts may seek solace in a bottle; on the other, a night out of carousing becomes too much of a luxury as one’s disposable income shrinks. While the “Yin” and the “Yang” of this debate may never be resolved, there is one maxim about the bar and restaurant business that rings true during tough times - managers and owners must keep an especially close eye on costs in order to stay afloat.

As economic times worsen, I am getting more and more calls from hotels and restaurants worried about bar theft and potential missing revenue. While sometimes there are issues with dishonest staff and overt theft, more often than not, these issues are simply a result of a disconnect between management and staff. I like to assume that most staff members are honest and reputable. Operating under this general premise, the primary issues are the result of undefined or lax policies on comp drinks and overpours—issues that are relatively easy, quick, and inexpensive for bar and restaurant managers and owners to remedy.

Believe it or not, in most bars and restaurant the most common form of lost revenue occurs when bartenders give away free or complimentary drinks to friends, co-workers or their favorite regulars. Remember that bartending is a social job. You often hire bartenders because they are friendly, outgoing and extroverted. Therefore, it’s no wonder that bartenders like to be liked and frequently engage in a bit of vigilante promotion to increase tips or treat a friend.

The reason most bars and restaurants have an issue with too many comp drinks or overpours is that they neglect to have a policy on the subject and implement the proper training to enact that policy. Here are some best practices that you can employ to help curb these issues:

1. Expand your training programs to incorporate information on how much the items you serve actually cost. Managers should not shy away from sharing how much money the bar spends on liquor with the staff. I encounter bartenders that have no concept that an extra half-ounce of liquor here and a free draught beer there can cost a bar thousands of dollars over the course of a year. Teach staff that each ounce of alcohol they give away to friends is akin to “stealing” the dollar value of that ounce from the bar.
2. Give staff the freedom to give away two free drinks at their own discretion each shift as a marketing tool. The ability to do this depends on individual state laws, so it is vitally important to verify state and local laws before implementing this policy. I suggest that the bar manager create a simple log book where bartenders can keep a record of how many free drinks they give away in a given shift so that there is some accountability and structure to the comps. In addition, you wouldn’t want to hinder the bartender's ability to fix a problem if a free drink might be the ticket to calm an angry customer with a legitimate beef; creating the log book ensures that those comps are tracked as well. Finally, though we are operating under the premise that the employees in question are essentially honest and good, there may be a rotten apple in the barrel – creating the log book will keep a bartender from pocketing the tab money and then claiming, after the fact, that a drink was comped. If it it was comped, it should be in the log book. No questions, no excuses.
3. Engage a mystery shopping company to perform regularly scheduled cash integrity audits of the bar and /or restaurant to ensure the proper fiscal and portion controls are in place and being utilized. Hmmm, I wonder where you could find a company like that?

With these tips in hand any bar or restaurant owner and manager can implement some common sense practices to mitigate revenue loss and bring some structure to the wild, wild west territory of comp drinks and portion control.

Salud!

Feedback? Email Jeff Gurtman at jeff.gurtman@lraworldwide.com.