For many bars, especially those in the neighborhood bar segment, generating a profit involves more than maximizing sales in peak periods. They also need to attract more guests on weekday nights. Hosting recurring events every week is a tool to build more repeat visits, increase your ties in the community, and increase profits.
The largest benefit of weekly events is predictability so that your guests know that every Wednesday they come in to play trivia, or that all their friends will be there every Saturday for live music. This helps to build loyalty and repeat business, but it also helps your guests form the habit of being in your bar on a specific night each week.
Weekly events also create consistency in your revenue, which allows you to plan staffing, forecast sales, and build your guest base and revenue. It brings needed stability to the financial side of your business.
One of the most significant financial advantages of hosting weekly events is the ability to generate traffic on traditionally slow nights. With events, bars often can maintain steady traffic throughout the week.
Financial Strategies for Profitable Weekly Events
It isn’t always easy to understand how weekly events impact your bar’s profits. However, if you take a structured approach to gathering and analyzing your data, you can pinpoint the exact effect of a weekly or recurring event on your business.
The easiest way to understand how to analyze the financial impact of weekly events is to walk through an example step-by-step. Let’s assume you plan to start hosting a trivia night on Tuesdays from 8 to 10 pm and that the trivia hosting company charges you $250 per week.
Before you can measure the impact of trivia on your Tuesday night business, you need to understand your current state. In this case, we know trivia will not impact business all day. More likely than not, the increase in your business would come between 7:30 and 10:30 pm. Some people may arrive a little early for drinks and food before trivia, but a trivia crowd probably has to be at work in the morning, so they are not going to stay much past when the game is over. So, we need to measure key product indicators (KPIs) between those times to understand our current state.
The question then becomes which KPIs to measure. Normally, I focus on four main KPIs: guest count, revenue, labor, and p-mix. Guest count and revenue show you if the weekly event has a positive impact on your business. Labor is important to watch because if a weekly event requires you to have more staff on hand, then you need a larger increase in revenue to justify the event. Finally, looking at your p-mix lets you learn more about who you are bringing in. For example, maybe on a usual Tuesday night you sell mostly domestic beer, but after introducing trivia, you see an increase in craft beer.
For all of these KPIs, I would take the last 12 weeks and calculate a baseline average for Tuesday nights from 7:30-10:30 pm. This gives you your current state. From there, it is a matter of recording what you do every week once you start trivia and seeing how that changes your weekly averages.
How to Determine If a Weekly Event is Profitable Enough
Here’s an equation you can use to calculate the change in your business:
Event Revenue - Prior Average Revenue during Event Period - Event Cost - Increased Labor - ((Event Revenue - Prior Revenue)*COGS) = Event Increase in Profit.
Let’s return to the example we used above. In this case, we first want to identify our variables.
- Event Revenue: How much money did the bar make during the event times, in this case from 7:30 pm to 10:30 pm? For this example, we will say revenue was $1,500.
- Prior Revenue: What was your previous state before starting trivia? We will use $500
- Event Cost: What did it cost you to run the event? We know the company charges $250.
- Increased Labor: Did you have to staff extra employees due to the event? If we needed an additional server for five hours at $10 per hour, after adding in taxes and benefits, it would cost us roughly $12.00 per hour (this will depend on where you are located) for a total of $60.00.
- COGS: How much did the items you sold during the event cost you? This can be based off of the specific period p-mix, if you would like to do that math, but a shortcut would be to take your average COGS percentage. So in this case, let’s say the COGS are 30%.
So, our equation would look like this:
1,500-500-250-60-((1,500-500)*0.30)= Event Increase in Profits.
Doing all of the math, we get an increase of $390 that should go more-or-less straight to your bottom line.
How Profitable Should Events Be?
While you never want to create a situation where you are losing money week after week on an event, you don’t need to generate a huge amount of additional profit either. Any weekly event can be a winner if you just break even.
This is where measuring your guest count comes into play. People are more attracted to busy bars than empty bars. If you increase your guest count for the night from 25 to 75, even if that additional 50 people don’t generate increased profits, you have increased your opportunity to create new regulars. Plus, anyone driving or walking past your bar will see a vibrant and popular establishment.
A good weekly event should attract more patrons and pay for itself. If you achieve those two key goals, your event will drive your business forward and pave the way for more future growth.
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