Wednesday, February 27, 2013

Upselling is an easy way to improve profits immediately

Upselling is an easy way to improve profits immediately. To increase customer satisfaction and check size, train your servers and cashiers in effective upselling techniques. Follow these guidelines to implement a successful upselling campaign in your restaurant:

1. Predetermine items and times for upselling.

Train your servers to always upsell certain menu items at certain times. For example, if your Thai tea is a profitable item and is usually well-received, you could tell servers to mention the Thai tea when they take customers’ drink orders. Or, if you run a Mexican restaurant, servers could always ask customers if they would like chips and salsa to start off.

2. Do not annoy the customer.
The best time for servers to upsell is when the customer asks for their opinion. Then, they can suggest whatever you want them to. Otherwise, they can typically only pitch 1 or 2 upsells without annoying the customer. It is important to be subtle with your upselling techniques. Otherwise, the customer will feel pressured. Getting a few extra dollars from the customer does not do any good if you permanently lose that customer due to pushy upselling techniques.

3. Provide useful suggestions.

Upselling should seem like good service rather than a sales pitch. For this reason, it is best that the server know everything about menu offerings so they can practice good consultative sellingand make appropriate suggestions. They should also have significant knowledge of wine and food pairings and techniques for reading customer behaviors and signals. That way, servers can offer a wine suggestion to go with a particular meal, or a dessert suggestion when they see that the customers are not quite ready to go. Such upselling techniques will be viewed not as a sales tactic, but as quality service.

4. Make the upsell enticing and convincing.

Servers should be knowledgeable and seem excited about the things they are selling. For example, servers should not just ask, “Would you like a dessert?” Instead, they should mention the benefits of getting a dessert and make the dessert sound enticing: “Would you like to end with something sweet? Our special today is dark chocolate cheesecake with a tart raspberry glaze.” Remember, a lot of people really do want the item you are upselling, but perhaps they are hesitant to overindulge or spend too much. All they need is to be convinced.

5. Mention your takeout.

Encourage customers to bring something home with them “to-go.” If customers are too full for dessert, you can recommend they take dessert home with them. For example, Perkins Restaurant often encourages customers to take home one of their signature pies. If customers are not interested in dessert, you can still offer them a take-out and delivery menu to take home with them when they leave. This could result in future take-out and delivery sales, if they enjoyed their experience. »

6. Upsell to uncertain customers.

Customers who look at the menu a long time or seem indecisive about what to order or hesitant in any way are most open to suggestion. Servers should be trained to read body language and attitude, so they can identify the customers who might respond well to suggestions.

7. Make assumptions as well as suggestions.

For example, when a customer asks for a cocktail, assume they want the more expensive liquor by asking, “Do you have a vodka preference? We offer Grey Goose and Smirnoff.” If the customer says, “Grey Goose, please,” then you have just converted a well-drink sale into a high-end drink sale, adding several dollars to the check. Another example is the “nod” technique. If a customer orders fries, the cashier should look them in the eye and say, “A large fry?” while nodding. Most likely, customers will reply in the affirmative, even if they were originally planning on ordering a medium fry.

8. Routinely train servers.

Each server should taste test all menu items and memorize ingredients and preparation for all dishes. Servers should also be aware of good food combinations, like wine and entrée pairings, as well as what is and is not available at any given time and which items are most profitable for the restaurant.

9. Try downselling.

Although it is usually ignored, downselling can be the perfect alternative to upselling, especially in times of economic hardship. Downselling involves offering a more expensive option first, and then offering a more economical alternative when the customer refuses. For example, servers could offer a $10 glass of wine, and when the customer refuses, explain to them why the $7 glass of wine is the perfect alternative to complement their meal, and almost as good as the more expensive wine. This will make customers perceive the more economical item as a higher value.

10. Cross-sell more profitable items.
Cross-selling your most profitable items is always a good marketing technique. For example, if a customer is considering ordering wine and says, “I’m thinking about the x pinot noir,” but the server knows that a certain cabernet (y) is the same price but has a higher profit margin, he or she could say, “The x pinot noir is a good wine. Personally, I am also a big fan of y cabernet sauvignon. It’s really smooth and has an excellent finish.”

Opportunities for up selling come along all the time in your restaurant or cafe and unless you and your staff take advantage of them you are leaving money on the table so to speak. Today I wanted to give you some information on how to capitalize on these opportunities to make you more sales, combined with having the right restaurant management tools will get you the results you require.


There are basically three areas we can outline to up sell to a customer.

1. Set opportunities

2. Up-sell

3. Spontaneity (monitoring customers' needs)

                                     SET OPPORTUNITIES

A Set Opportunity means that there are set times that are suitable to suggestive selling, from when the customer enters the restaurant to when they leave.

There are three'-such Set Opportunities:

1. When the customer is initially taken to the table

2. When the order is taken

3. When dessert is ordered


When taking the customer to the table it is a good opportunity to let them know about drinks. Saying something like "Would you like a wine, cocktail or soft drink while you think about your order?" is a good way to have them make a decision as to what drink they may like.


When the order is taken, many waitpersons will make the mistake of asking a `closed' question like, would you like an entree? A better way is to `assume' the sale. Try something like "which entree would you like to try sir/ma'am?" If an entree is declined, proceed to the next opportunity, which is asking which main meal they would like, perhaps suggesting a favourite. Upon the customer choosing, it provides another opportunity to `upsell' to say a larger serve or a side order etc.


Asking for the dessert order can sometimes produce and obstacle for the unwary waitperson. Many customers will say no because they have just finished eating and feel a little full. However, the astute waitperson will see an opportunity. By `seductively' describing what desserts are available or describing `their' favourite, they can sometimes entice the customer to have a dessert.

Appearing' to accept the customer's `no' decision can create another opportunity. By suggesting that they bring the dessert menu back `later' will give the customer a chance to have the main meal settle and perhaps when they are approached later, they may be able to be enticed.


Probably the most famous up selling phrase is "would you like fries with that?" Many people nowadays actually refer to up selling by that phrase. So use it to your advantage - because it works!

As a general rule, when a customer orders one thing, ask if they would like another `thing'. It is a good idea to have set `up sell' items. Again, the most famous is fries with a hamburger.

After the meal for example, referring back to the dessert opportunity, if the `follow up' dessert offer is still declined, then offer after-dinner drinks.

                                                          DOWN SELLING

A different (indeed opposite) approach to up selling is down selling. As the name suggests, it's a matter of suggesting a higher priced and/or quality product in the beginning and if the suggestion is not heeded they can then suggest a `down market' or less expensive item. This can be particularly effective when the customer is a little indecisive.

                                                           CROSS SELLING

Similar to up selling and down selling, cross selling is about suggesting something of similar value but of a different range but perhaps with a better margin. For example, if your client managed to buy a quantity of say Budwieser for a special price, then they might have their team begin to `Cross Sell' it in place of the Molsen Dry that they had bought at regular price.


A spontaneous suggestion, as the name suggests, is when the suggestion is made from an impromptu situation.

There are many, many opportunities that may exist, far too many to list, however, an example of a spontaneous suggestive sell, might be a `top up' on a half full wine glass. Good bar persons are particularly adept at this. They assume the sale! Suffice to say, that Spontaneous Suggestive Selling will improve as product knowledge, confidence and team motivation improves.

There are a number of practical things that can be done when used alongside the various techniques covered in the previous sections.

The Restaurant Management Center has a large selection of sales and marketing tools available designed specifically for restaurants and cafes.

Show Bartenders and Servers the Value of Salesmanship, and Watch Your Revenues Grow

During your next staff meeting, gather your bartenders and cocktail servers and ask, “What is your main responsibility here?” Most likely, the bartenders will answer, “To make drinks,” and the servers will reply, “To serve drinks.” Many front-line team members make the mistake of believing — or are trained to believe — that their job is to take and fill orders for food and drink. That perception could not be further from the truth. For truly successful people, serving and bartending is actually a sales position.

To reinforce the importance of selling rather than simply serving, frame the benefits of adopting selling behaviors to your staff around how they can affect tip income drastically. Here are some powerful nuggets:

• Research shows that check total is the greatest influencer of tip amount, more than all other factors combined, including quality of service. Most Americans instinctively apply a standard tip percentage to the sales total with an expectation of perfect service.

• Knowing how and when to sell a second drink increases tips in increments of 100%. Who isn’t interested in doubling their income?
• Suggesting and selling premium beverages delivers even more explosive results. Sell a $10 signature cocktail instead of a $4 well drink, and you instantly have increased your tip income by 150%!

Now that you have your staff’s attention (and you will — every server and bartender I’ve ever met is coin-operated), give them some tools. Frequently, the only salesmanship technique being trained and practiced on the floor is the “upsell.” The upsell may be the most difficult sales technique available because a server must wait for a guest to make up his or her mind, then try to change it. It also delivers diminished results — 25 cents here, $1 there — hardly the explosive tip gains that will inspire a change in staff mindset and behavior.

To that end, we present a few techniques that address the timing and language of selling on the floor and deliver radically increased tips as well as sales for the business.

Stop leading with “the deal.” When a customer asks, “What’s good here?” resist the temptation to simply tell them what’s on sale. Instead, tell them what you like or what the house specialty is, as well as other guests’ reactions to it. Remember, drink discounts are designed to get people in the door. Once inside, it is to your benefit to sell them full-priced signature beverages.

When asked to recite a product list, such as which beers you carry, start at the top (specifically, the most expensive) and work your way down. Too often, a server or bartender begins at the bottom and works his or her way up the list. By the time the server mentions the seventh domestic draft, which likely is on special anyway, guests are fatigued and shout out a beer just to stop the rambling list, all before the server ever gets to the premium stuff.

Always approach with a specific suggestion. Asking, “What can I get you to drink?” does not sell premium beverages. In fact, it puts the onus on the guests, who may not be familiar with your top-of-the-line offerings and simply will settle in to their usual, less expensive choice. Always lead with a reference to your premium beverage menu or personal favorites.

When selling the second drink, avoid asking a group if they are “ready for another round.” Group ordering dynamics tend to drive sales down. This type of approach puts people in the uncomfortable position of either having to make a decision for others or to build consensus within a group, neither of which benefit the quick-decision sales cycle. Additionally, guests often perceive the offer of getting a round as a time commitment. Notice that when you ask a group if they’d like another round, someone always looks at his or her watch. It’s never a good sign if guests are looking at their watches in a bar or nightclub. The best approach is to go to each guest individually and offer another of the specific beverage they are enjoying.


When taking an order, always begin by finding the person who’s most likely to buy a premium beverage and let him or her order first. Taking orders based on seating position (starting at your right and moving around the table, etc.) leaves your tip to chance. If you simply begin with the person in “Position 1,” you are placing the group’s sales for the entire evening in his or her hands. If the guest orders a half-priced well drink, research shows that the rest of the table is more likely to order the same or something similar, even if they were predisposed to order something more expensive. Instead, take the order by suggesting a premium beverage to the table and find out who’s interested. If you can identify the guest who is predisposed to ordering a premium beverage first, the trend at the table will work more in your favor, with high-end purchases all around.

When selling a second drink, timing is crucial. Different organizations train with different approaches but nearly all are based on the content level of the guest’s first drink: i.e., suggest the next beverage when the first is half-full, or one-third full, etc. Studies show, however, that the second-drink decision is more influenced by the content level of a guest’s companions’ glasses. You may notice that, when offered a second drink, most people look at how much their companions have left to decide whether they have time to consume another beverage. Considering this, you will have more success selling to the guest with an empty glass while his or her companion’s glass is still relatively full. (Note: Be aware if a guest appears to be consuming very quickly to avoid over-service.)

Change is hard; if you want your team to sell drinks rather than simply serve drinks, you have to give them a good reason to do so. Often, when we ask our front-line teams to sell more or serve better, they hear: “I want you to work harder so I can make more money.” Most of them are not interested in helping you make more money (they likely think you make too much as it is). Phrasing salesmanship conversations around how it will benefit them and their tips will result in immediate engagement and real change. Servers and bartenders measure their success by how much they take home, not how much the bar sells, so teach them how to drive that success. Remember, the behaviors that make more money for your team are behaviors that will make more money for your business. NCB

The “Happy” Occasion, Part II

Last week I claimed “F&B Directors: if you’re promoting the same specials and menus to all of your Happy Hour guests, you’re missing revenue opportunities.” And I explained why a hotel Happy Hour is a multi-occasion marketing challenge. This week’s blog breaks it down.

Let’s be strategic for a moment and lay it out. The chart below demonstrates that the offering itself as well as the means of marketing should differ for your different occasion targets.

Of course there’s one more marketing issue to address: what about collateral in the lounge itself? Consider merchandising that entices your happy hour guests to try your restaurant. Think like your customer, what might persuade a happy hour customer to try the restaurant? The after-work customer might be swayed by a nicely packaged to-go offering. The pre-dinner guest by convenience? Excitement?

And what of the happy hour offer details? I don’t recommend discounting with dollars off or percentage off offers. If your value message is “we’re inexpensive” it may be inferred, albeit incorrectly, that you are overpriced at other times, and/or you are not a “quality” establishment. And this could rub off on the hotel, so think twice about it.

Consider a unique offering with special prices.

Special menus mean a little bit more work. But a happy hour menu with authentic values, not offered at other times, can really help you target. An example of a non-discount happy hour offering might be “premium brand beers and cocktails at House brand prices”. Nice to get your customers used to the premium labels as well. The food portion of the menu might be geared to the after-work or after-meetings crowd, as suggested above, while the beverage specials might have the hotel guest in mind. Of course all of your other offerings remain available at regular price.

So, get Happy, and get strategic. Don’t plan for Happy Hour – plan for Happy Occasions, and develop offers and marketing that work for those occasions.

The “Happy” Occasion, Part I

F&B Directors: if you’re promoting the same specials and menus to all of your Happy Hour guests, you’re missing revenue opportunities. “One size doesn’t fit all” in 2011.

Most hotel bars, the ones I know, are indeed Happy, having offerings at a specified period described by them as “happy hour”. What is “happy hour” anyway? Well, the phrase is a marketing term that refers to a high value offering at a drinking establishment during the late afternoon to early evening hours. There are several stories about its origin. The one that resonates best with me is centered around Prohibition.

Restaurants could no longer serve beverage alcohol, as you know. So, customers would visit their favorite speakeasy first, then go off to their spirits/beer/wine-free restaurant, sufficiently lubricated. But a euphemism was needed to describe a newly-illegal activity. Apparently it wasn’t cool to announce that you were “going to an illegal bar”. “Happy hour”, possibly borrowed from the Navy, became that euphemism.

Whether true or not, the term as we use it today gained widespread popularity in the early sixties.

Why does the term remain popular, even in the face of legal obstacles in several states? Because the occasions that drive it are as commonplace today as ever. In other words, customer demand is strong.

Those occasions are:

· Before dinner

· After work

· After a day of meetings in a hotel

These occasions may seem like different ways to say the same thing, but in fact they are not. Recognizing the difference can help a bar, especially hotel bar, develop strategy and promote more effectively.

· The pre-dinner customer is likely to be a hotel guest, and pre-dinner usually means dinner outside the hotel.

· The after-meetings guest may be a hotel guest as well, or may be a local who attended a meeting.

· And the after-work customer will be a local.

How else are the occasions different? For one thing, pre-dinner is a seven-nights-a-week occasion, the others are four to five nights. Pre-dinner potential at a hotel bar is driven by occupancy and mitigated by the number of in-house receptions.

After-work potential is driven by the day of the week – Friday is the highest traffic Happy Hour, and Tuesday is the second-highest traffic Happy Hour. This potential will be moderated by numerous hard-to-predict local variables such as weather and traffic conditions.

After-meetings should be easy to project if a hotel has good communications with its meeting planners. Planned functions, or their absence, will be primary indicators here, as will the nature of booking: local group or in-house group.

Next week’s blog will illustrate a very specific strategic approach, based on the Happy Occasion, and it’s easy to implement.

The Russians are Coming the Russians are Coming is a great, hilarious movie from 1966. That’s the same year Woody Allen urged us to try the Moscow Mule cocktail.

Russia’s most famous cocktail. Well, not exactly their cocktail, actually it’s American.

Regardless, the Moscow Mule is back. What is it back from, and why is this important? The answer to the first part of the question is the forties, fifties and sixties. The second part is a little more involved.

First, what is a Moscow Mule anyway? It’s a cocktail made with vodka, ginger beer and lime. Sometimes simple syrup is added, which seems like overkill as ginger beer has ample sugar. One of its unique features is that the Moscow Mule is traditionally and “properly” served in a copper mug.

Why it’s popular today is partly due to the rebirth of “cocktailism” and the newfound respect for the great classic cocktails: the Mule is at least a semi-classic. But there’s another reason: 45 years after Woody Allen mugged for Smirnoff, Oprah has let it be known that the Moscow Mule is now her favorite cocktail.

The Moscow Mule origin is a fun and interesting story. It involves both New York and Hollywood. Of course. There were these two guys in a bar. Really. In fact, they were in a hotel bar. One worked for a distillery that made a product no one in America wanted or even knew about. The other one owned a bar and an interest in a soft drink franchise that left him way overstocked in another unknown product, ginger beer. Legend has it that a third person, a woman, was present and had somehow acquired an inventory of copper mugs.

The little known distilled product mentioned in the previous paragraph was vodka and the distillery was Smirnoff, which had been purchased by G.F. Heublein Brothers, Inc. for $14,000. In 1941 the most popular spirit in America was gin, but what happened at New York’s Chatham Hotel Bar on this day would ultimately bring about the “fall” of gin in favor of vodka. The players were John G. Martin of Heublein and John “Jack” Morgan, President of Cock ‘n’ Bull Products (which produced ginger beer) and proprietor of the Cock ‘n’ Bull Tavern, a bar on Sunset Boulevard in Los Angeles popular with celebrities. While the inspiration occurred in New York’s Chatham Hotel Bar, the drink caught on fire, much like the Margarita, in Hollywood and its environs.

And there are many more Mule-related stories. There are stories behind copper drinking vessels which were used in ancient times, and more recently by American colonists. There are plenty of stories behind ginger beer. And vodka, of course.

OK. Interesting, but so what?

The answer is “stories are important”. We all love stories. They are the building blocks for developing a Mixology Culture or Cocktail Culture for your bar. There are similar stories for nearly every well-known, and certainly every “classic” cocktail.

What is your point of difference, what separates you from the competition? Your competitor can carry the same products, show the same TV shows and play the same music you do. But your bartenders are unique to your establishment. What if your cocktail list has a Moscow Mule and your bartenders, every bartender, could talk about the Oprah connection or the Smirnoff connection or the “hotel bar” connection? The message isn’t “you should have a Moscow Mule in your bar”, it’s “use the great cocktail stories to build a culture of high quality for your bar”.

Your dinner menu lists appetizers, right? Or maybe “Starters” or “Small Plates” or a clever synonym suggesting that this is where you start your meal.

But really, it isn’t the start, is it? I mean the start is usually a beverage. Perhaps you offer a beverage menu or a table tent that promotes beverages. OK.

Are you using your dinner menu to optimize beverage sales?

Well, this IS the month to trim fat, right? Every fitness center is filled, this is the number one month for fitness center enrollments, etc. But I’m not concerned here about body fat. Not that I don’t have plenty to be concerned about. The topic today is inventory fat. That’s right: inventory fat – otherwise known as dead inventory – is bad for you.

What is dead inventory? Usually I think of beverage inventory. Mostly wine. Food inventory is easy to work out: banquet menus, employee feeding and systems for daily specials enable us to do this with some ease. We’ve gotten good at it because it’s perishable, and because storage space is limited. Dead beer inventory happens – hard to sell that summer seasonal in December. But in my experience it doesn’t represent a lot of dollars. Spirits can be a problem if you let distributors make your inventory decisions for you by giving you “free” sample products you wouldn’t otherwise order. How’s that banana-lime tequila cordial working for you, the one your distributor swore was the hottest thing going in (name any trendy area in California)?

So, we’re back to wine. I’ve seen dead inventories as high as $100,000. I’ve seen dead inventories that increase year after year after year with no movement. Does your bar accounting team wear dust masks when they do your beverage inventory? Like those extra pounds you want to shed, you know the risks of too much dead wine inventory:

· Ties up cash

· Perishable – it goes bad eventually

· Takes up valuable storage space

· Discourages you from updating your lists with the latest products

The most commonly used methods for reducing old inventory still work. “Selling” it to the kitchen and “selling” it to your sales and marketing department for VIP amenities, sales gifts, etc.

Here are some additional ideas:

· Have a “Wine Sale” – Use this to build business on slower nights by offering it on those nights only. Example: Sunday & Monday half-price bottles

· Or, make a separate half-price wine list, noting that these are available until sold out

· Or, where legal regulations allows this, prepare a half-price “to take home after dinner” list (unopened by you, of course)

· Or, a variation – a BOGO. Buy a bottle from our “special” list for dinner, get a second bottle “free” to take home. (Promotional wording and procedures subject to your local regulations, of course.)

· Pour off as a special BTG Happy Hour promotion

· Create a “special” list with lucrative employee incentives for selling these itrems. Increase the value of the incentive with each sale. $2 for selling the first bottle. $3 for the second. Up to $5 per bottle. In other words, “give” the discount to your employee instead of the guest (or price it so the discount is “shared”).

· Create the world’s best Sangria, and promote it

Once last month I was thinking too hard and managed to work myself right into a contradiction. I was at a property roughly 75 miles from Wine Country. I was congratulating management on their wine promotion, a simple but effective Best Practice, how I reported it. I was also congratulating myself on congratulating management as this would reinforce the Company’s excellent wine sales culture that I had supported in previous reports and meetings.

Regrettably, while compiling the report I encountered a sinister force trying to destroy the superb writing and brilliant conclusions of my masterful report: data. Oops.

Turns out, the customer didn’t follow the well-merchandised direction: “drink more wine…drink more wine…” This is the thing about customers, that just when you expect them to do just one simple thing…well, you know.

Previously I had looked at sales, or the beverage mix. So, the spirits-beer-wine mix might be 30% – 32% – 38%. Great, we’re selling more wine. Keep it up. Promote wine. Good job. Report emailed.

Then I stumbled across some additional information. By “stumbled across” I mean I decided to look at the other data contained in the sales mix report. The other data was “number of items sold” though it wasn’t labeled clearly and this will continue to be my excuse for missing it first time around.

So, it turns out, incidents of beer sales surpass, significantly, incidents of spirits or wine sales in the lounge. Of course spirits and wine sales are critical and must be promoted, but promoted strategically. In fact wine sales and incidents of wine sales dominate room service beverage, for example.

But back to beer. Digging some more. Beer at this location wasn’t discounted significantly. Craft and imports were popular. The beer selection paled (pun?) next to the wine selection. There is a wine list but no beer list. There was excess capacity in the beer cooler. Management is smart and open minded. In other words, all of the usual obstacles were gone, and opportunities abound.

The hotel is adjusting inventories, re-writing beverage menus and developing new promotions. Adding some taps in the Lounge. Ratcheting up room service wine promos. All because of some data.

Six months from now I’ll request an updated mix and overall sales analysis, and we’ll see happened. We’ll see together – I’ll share it here.

Let’s get this out right now: this is not “how many _______ does it take to screw in a light bulb” or anything like that. I’m not good at screwing in light bulbs. My wife will ask her seven-year-old daughter to replace a bulb, before she’ll ask me. Sure, I’m exaggerating. Sometimes she asks the ten-year-old.

But once that bulb is in, I can manage it as well as anyone. No so at some bars and restaurants I’ve seen in hotels. Bright lights in the bar. Bright lights at dinner. Lighting levels that change dramatically for no apparent reason. Lighting levels that differ from area to area within a restaurant or lounge, for no apparent reason.

We often overlook the importance of managing lighting levels. Lighting levels? How about music levels? Type of music? And TV’s. What’s showing – and why? It’s 9 o’clock, do you know where yourmute button is? Do your guests like the cacophony of three separate programs blaring in your bar? We don’t understand why our places are sometimes empty, yet we’ve effectively killed any and every opportunity for energy.

How do you fix this? Sure, sometimes a better speaker or two and an additional dimmer switch might be required. But mostly it’s about strategy and scheduling.

We schedule our teams to service the guest. Every week. No problem. So why can’t we schedule theenvironment in which the guest will be served as well? The answer is, we can. Here’s one way to do it.

Make a grid for each outlet, with the hours of operation in columns, an hour for each column. TIP: if the outlet is open to or visible from a public area when closed, it’s just as important to manage its look and “feel” for that time period as well.


At the top row, write “customer” – who is the customer you are targeting each hour the outlet is open?

Next row, write “occasion” – what is the occasion of their visit? Breakfast (re-fueling)? Meeting? Unwind after work? Unwind after meetings? Returning from dinner outside the hotel? Etc.

Finally, third row, write “energy level” or “mood” or whatever best sets the tone for the “feel” you want to support.


Record the appropriate level or channel or number for each hour, for each of the managed ambience items, including:

· Lighting level #

· Music volume

· Music channel

· TV station (mute except for scheduled “events”)

You will have multiple light controls, multiple TV’s, etc. And you can add items – maybe how the bar looks (“meal set” for certain hours, for example).

Recently I was at a smartly managed hotel in the New York area and the Lobby Lizard – here known as a Lobby Ambassador – has a checklist that includes six items that influence bar atmosphere, and they are checked multiple times each evening. I like that.

Teach your lizard how to manage that light bulb.

Heads up: you may think this blog is about RFID technology (it is not). Or, you may think it’s about beverage controls (it is not). It is about using technology to unleash practices that change behavior and enhance the guest experience.

RFID – Radio Frequency IDentification – is among the latest and most sophisticated technologies to be applied to beverage cost control.

Are you familiar with the technology? Does an image of Mel Gibson with a tin foil skullcap pop into your head when you hear “information through radio frequency”? If this is news to you, take a quick peak at the sites of some of the companies that offer these systems (Capton,, Beverage Metrics,, and Liquor Monitor, are three that come to mind).

"Signs" 2002

In short, a bottle’s pour spout (or collar) contains an RFID chip and battery, and by measuring the tilt of the bottle along with other information such as the bottle’s contents, size and initial volume, the system measures amounts poured with remarkable accuracy, and reports data via radio frequency to a pre-specified program which may be accessed later or even in real time by a computer. They provide best results when interfaced with the POS, which enables management to learn, for example, if a specific recipe was executed properly.

Cool. But how do you “control” beverage costs? Historically we control costs by restricting access to the raw materials, or restricting output. Locks & keys are a timeworn technology for restricting access.

Mechanical and electronic devices have been in place for decades: mechanical portion-pourers like Posi-Pour ( and electronic pour restriction systems like Berg Company’s ( have been industry standards for years and continue to have relevance today.

But this is an age-old paradigm: control through constraint. Now let’s look at the RFID model again: thereis no restriction of pouring or access, there is only information. THIS is the “paradigm shift”: controlling through information rather than restriction. How do you “control through information”? The answer: by changing employee behavior.

That’s right. Results are achieved when these time-honored practices are employed:

· Measurement & analysis

· Training & teaching

· Feedback (two-way!) & recognition

· Re-training as needed, more teaching

· Recognition & reward

Restrictions, though sometimes necessary (I’m not advocating open storerooms, for example) don’t “stick” without help. The locked liquor storeroom requires a second lock, perpetual inventory, broken-empty requisition procedure, marked bottles and cameras in the hallway. This might be OK – but all of it adds little value to the customer experience.

On the other hand, behaviors changed through training, teaching, measurement, recognition and reward will “stick”. And they will impact the customer experience in a positive way.

And THAT is why this blog is not about RFID or beverage control. It’s about combining the measurement systems you have (RFID, POS, Guest Survey System, P&L) with training, teaching, analysis, feedback, recognition and reward to achieve the results you are after.

The purpose of controlling beverage cost is to increase your sales. I’ll explain.

First, let’s digress. You are an F&B Director, or perhaps Beverage Manager or Bar Manager. You work hard to keep your beverage costs in line. If your cost margin is over budget you are “challenged” by your boss. If the cost is better than budget you are praised in the short term (but sometimes “punished” by future budgets that will now set this lower number as the new expectation).

Here is the typical scenario:

But if the current economic environment teaches us anything it’s this: the model above isn’t sustainable. And here’s why – eventually the never-ending demand for lower cost will create pressure to raise prices, and this could threaten your business.

So, what should your bar cost be – what is a “good” bar cost? I’ve seen everything from 14% to 35%. BTW both numbers might be “good”, because a “good” cost is any cost within acceptable variance to the theoretical (or “potential”) cost. That’s right: 14% might be good, and 35% might be good.

Then what should your theoretical cost be? That’s a strategic decision, and the tactics that will fulfill yourcost strategy begin with your target market and include pricing, purchasing, promoting, merchandising, inventory and accounting practices, recipes, menu engineering, equipment selection and more.Controlling costs is about meeting your cost strategy targets – 14%, or 35%, or somewhere in between – and is success measured by the variance between your theoretical and actual costs. Ideally your budget is based upon this “cost strategy”.

Your cost strategy should allow for “targeted pricing”, i.e. pricing (supported by promotions and merchandising) that will promote sales. I’m not saying lower prices across the board, rather consider the category of products favored by the primary customer target, and then find ways to add value to select offerings in that category. Incorporate this into your cost strategy, factor it into your theoretical cost analysis, support it with a special program or promotion with merchandising and marketing: and now you have a sustainable process. You are controlling your costs strategically so that you can increase sales.

My wife and I enter an upscale restaurant. The door is opened for us, or not, and we’re greeted warmly as we enter. Perfect. At the hostess stand (it could be a host, of course) we are again welcomed and asked if we have reserved a table. We have not. However a table will be made available to us and although the hostess does not know us, she is happy to see us, and we are delighted to have made her happy.Perfect. The hostess gathers the appropriate menus, points at something on the screen, huddles briefly with others gathered around the stand, makes eye contact with us again, and explains that “Elaine will seat us”. (Of course, it is not always Elaine, it could be any name but Elaine seems suitable for illustrative purposes.) Perfect.

This is going rather well, don’t you think?

Once seated, we are handed two menus, one for each of us. Perfect. Often we are also handed a single wine list, should we wish to peruse the contents of the restaurant’s cellar (or not). Perfect. Now comes the cocktail list. Possibly including popular beers and wines by the glass, and other drink specials. Or not. And herein lies the insanity.

We are handed just one cocktail list. Note – there are still two of us at the table. Not Perfect.

Let’s recap. What is the most profitable incremental sale the restaurant can make? (Hint: beverages.) What is the first thing the restaurant would like us to order? (Hint: still thinking, “beverages”). What is the first thing the server will ask us. (OK, after “tap” or “bottled” water.) That’s right – what is our beverage order?

But wait, there are two of us. And we have one beverage list. We are sitting across from each other and cannot both read it at the same time. (I know what you’re thinking and of course we prefer side by side but since that seating preference requires a four-top, our wish is not always granted.) We both like to scrutinize the list and so our ordering is delayed, or we feel rushed and therefore do not allow our selections to be influenced by the drinks’ enchanting descriptions. Or both.

What are the reasons that two persons get two menus, two sets of plates and silverware, two napkins, two chairs, etc. – but just one cocktail menu? Maybe history, or old habits? Because the cocktail menu is embedded in the 20-page 7-pound leather-bound and logo-embossed wine list, and these are expensive to reproduce? Whatever. Let’s get with the program. It’s nearly 2010. Each adult is entitled to their own menu now.

OK, it’s apparent that most of the industry recognizes that food is king. Owners, operators, managers and cooks fawn over the entrees, appetizers and desserts on their menus. Managers slavishly sample and in detail describe their food to waitstaff in pre-shift meetings, hoping to encourage more sales. CFOs and chefs labor over portioning, specs, flavors and recipes of their center-of-the-plate offerings, ciphering ways to wrangle a few pennies more from each item. But meanwhile, sitting alone, unattended, tucked into the corner in tiny type on the last page of the menu, sits the red-headed step-child of top line sales: the beverage selection. Overlooked more often than an O’Doul’s in Ted Kennedy’s fridge, the beverage menu is sadly under-promoted and overlooked by most operators. Sure, they’ll occasionally spotlight the alcohol or wine menu, but it’s time to wake up and smell the water and soda, too.

The gross profit margins on beverages are astronomical compared to food, yet strangely, most beverage incidence (ratio of beverages sold to food sold) is less than 10% in foodservice operations. And yet beverages can contribute as much as 70-80% gross profit margin per serving…so what’s wrong with this picture? Opportunity knocks if you’re willing to listen, and here’s a few ideas to help you start managing your beverage sales like the (overlooked) profit center they are.

1.Liquid assets deserve focus. “Beverage is sometimes treated by crew and management as an accessory to the dining experience--like a silverware roll-up, or a condiment--rather than a pivotal part of the guest experience,” says Tim Kirkland, Beverage Training and Development Manager for Rock Bottom Restaurants Inc in Louisville CO. “While all good restaurant managers teach their sales teams to be familiar with and suggest their signature food items, few stress the importance of the beverage as the companion centerpiece of a customized experience.” He’s right. Consider the fact that a guest would never hear “What do you want to eat?” from a well-trained server, but that same server commonly asks “What can I getcha to drink?”

2.Sell two beverages to every guest. At breakfast, train servers to suggest a glass of juice and a coffee. At lunch, a soda, or a bottle of water or mango-raspberry tea, or coffee. At dinner, a beer, cocktail or glass of wine and later, a cappuccino.

3.Keep the lines clean. If you want to get the most out of your fountain beverage sales make sure you listen to the advice of your account reps relative to maintaining clean lines, nozzles and syrup/carbonation mixes. Take as much pride in the quality of your carbonated fountain beverages as you do in your food. Your customers notice and will buy more—and more often.

4.Just say no to tap water. I figure that giving away a glass of ice water to a customer costs you about $1.08 per serving once you factor in the cost of the glass, ice, and labor to store and serve it, coupled with the cost of the detergent, hot water, rinse and labor necessary to clean it. So I say carry bottled water on your beverage menu and suggest it always instead of faucet water when a guest asks. This is applicable no matter what segment you operate in, full-service or quick service, fast-casual or on-site dining. A glass of tap water is not “free”!

5.Offer to re-fill alcohol beverages at 1/3 full. The best time to offer a new alcohol beverage like beer or wine or a cocktail is when the glass is about 1/3 full. Which reminds me of a classic Bill Cosby line: “Is the glass half empty, or half-full? That depends on who’s buying.”

6.Suggestively sell non-refillables. Rock Bottom’s Kirkland likes the profit inherent in fountain beverages, but has another perspective too: “Every time you allow a guest to slide into a default beverage choice that comes with unlimited free refills, you not only miss a chance to distinguish yourself, but you potentially lose money too. Consider the number of times a $1.99 iced tea is refilled at lunch on a hot day—four, six? If that beverage was two non-refillable Cokes or bottled water or a signature fruit/spice premium tea at the same price instead, you’d already be ahead by 100% and your guest has a better tasting drink to remember you by.” You can get your waitstaff to warm up to this thought process by asking them how many times and how much they’re tipped on six refills of iced tea or tap water.

7.Say what, say when. The best way to offer a new alcohol beverage is by being specific. Don’t say “Didja want another drink?” The word “another” can be off-putting. Instead, servers could say: “Ready for a glass of the Woodbridge Chardonnay, sir?”

8.Offer another drink before delivering entrée. Our good friends at The Cheesecake Factory have taught me that the best time to suggest dessert is right before you bring the entrees out, and that is also the ideal time to suggest another beverage.

9.Be a Devil’s Advocate. With your fellow managers, compile a list of reasons why your team doesn’t sell more beverages. Now do everything you need to do training-wise and operations-wise to remove those obstacles and make those objections irrelevant.

10.Don’t sell “rounds” (unless it’s shots). “When you have four or more people drinking alcohol beverages with dinner, try to stagger the drink orders and avoid the phrase ‘Another round?’, unless it’s shots.” says Mr. Kirkland. Although it can affect a server’s table timing, selling new drinks one-on-one, actually raises the number of beverages sold.

11.Suggest your best. When a guest orders a vodka/tonic, many servers respond robotically: “Would you like Absolut or Grey Goose in that?” Nice try, but a better, softer way to sell might be to phrase the question thusly: “Do you have a favorite vodka that you’d like in there?” Servers tend to suggest more top shelf liquor when they’re reminded that when the guest drinks better, they do too! Better tips now, better drinks for the staff after the shift. (If you don’t serve alcohol, this is another example of where suggesting bottled water over tap water can improve service and increase sales).

12.List wines from driest to sweetest. If your servers are novices at wine selling, I recommend that you list your wines from driest to sweetest so they have an easier time remembering the flavor profile.

13.Use the Sullivan Nod. Whenever servers suggest a beverage, have them smile and slowly nod their heads up and own as they make the suggestion. Body language is powerful, and research shows
that over 60% of the time, the guest will nod right back and take your suggestion!

14.Remember to ring them up! This should go without saying, but I won’t let it. A beverage sale ain’t a beverage sale till it’s rung up and in the till. And you can take that to the bank.

15.No train, no gain. Practice doesn’t make perfect, perfect practice does. Rehearse how to make beverage suggestions with your team every single shift. Repetition is the mother of all learning.
Jim Sullivan is the CEO of and a popular consultant, author and speaker at manager conferences worldwide

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