Effective operators should be reviewing their promo and discounts reports every week. This report details how much you subtracted from regular retail prices over the course of the period. These subtractions include discounts for features (like cheap wing night for example), staff food, manager promo, QSA (made wrong), spill, kitchen usage, and friends and family discounts. This is important to review often because things can get out of hand fast when discounts are not controlled.
I have done this practice with several operators that did not make a habit of reviewing promo reports, and sometimes people are shocked to see how much their staff were actually discounting and for what reason. You don’t want to end up in this situation. Rather, by reviewing promo reports regularly with your team, you can get greater control of your discounting and ultimately create more profit.
Here are some tips for reading a promo report:
1. Having Everything Organized
Make your discount categories as specific as possible. Each one should be on its own and its purpose clearly labeled. If everything is lumped together in general discounting categories, it becomes difficult to know specifics, and this will impede your ability to use the information.
For example, “Owner 25%” (which subtracts 25% off the final bill) should be broken down into individual owners, if there are several. If the bar is owned by Mark, Tom, and Jim, there would be: Mark 25%, Tom 25%, and Jim 25%. If all owner discounts go under “Owner 25%,” you have no idea which owner used it. This same logic should be applied to each individual manager and each individual food and drink promotion.
When you run the promo report, you should be able to look at it and know exactly what each discount costed you, why it was done, and who authorized it.
2. Having Clearly Defined, Acceptable Percentages for Each Category
The idea behind having acceptable promo percentages is to establish a budget for your discounts and stick to it. I am often asked by bar operators, "What is an acceptable percentage for promo categories like manager discounts, spillage, QSA, and others?" There is no concrete answer. Every bar spends money differently, and policies for promos will vary from operator to operator.
For example, I have worked in some venues where it was normal for all staff to get 25% off one meal a shift and 10% off their bill (if they returned as a regular guest). Other places will allow staff meals but no special treatment outside of work. Some places liberally use a 10% discount for friends and family or other industry peers to encourage repeat business.
You will know, based on your personal profit from your business, how much promo is acceptable once all your data is organized and you can clearly analyze how your promo is being used. Remember, promo is a tool to be used to create more business, not for constantly hooking up friends with cheap food and drinks. When you establish your allowable expense for promo and you review it with your team often, you will stay in budget.
3. Limiting Authorizations
Ideally, no workers should be able to delete their own sent transactions or authorize their own discounts. This is a manager-level authority. By keeping authorizations in the hands of a select few, it gives you the ability to ask questions about specific promo use.
However, in smaller venues, it is sometimes normal for a closing bartender to be the last person to leave. In this scenario, they are given authority to do their own deletions, which is not ideal but it happens. The way you manage this arrangement is to have them print out every bill that is deleted, and once it is printed out, they must write on the bill the reason why. Those bills are to be included in their cash out, which will be reviewed by the opening manager the next morning.
Otherwise, in most scenarios, only managers authorize discounts and witness every receipt it is used for (unless we’re talking about discounts for features, which are controlled by timers on the POS system).
4. Look at Deleted Transactions, Voids, and Transfers
This report may not be on the promo report, but reviewing it often will prevent several problems. There are scams involving transfers between bills that very clever employees use to artificially lower their cash to remit. I will not go into all the various scams here, but I will tell you the majority of these games will stop when you consistently review reports that detail all the voids, deleted transactions, and transfers—especially when they include the employee ID of which person is doing these things.
It is normal to have a handful of these at the end of every week. However if someone is deleting and transferring way more transactions than a normal employee, it may warrant a closer look to make sure everything is being done correctly.
I had one situation where a client told me he was suspicious about a server that had an unusually high amount of deleted transactions. When we pulled the report, we discovered that this individual had three times more deleted transactions than the next closest employee and worked fewer hours. After some digging through specific transactions, it was clear something was off. Either the employee was very confused, or they were purposely deleting transactions that were actually paid for in cash, and pocketing the money. This is just one of the various scenarios where employees use deleted transactions, voids, and transfers to scam owners. Reading the actual report often is what enables an operator to detect it before it becomes a massive problem.
5. Use Timers for Weekly Feature Discounts
For your features, use the same buttons that you normally use for these items, but set a timer on the POS to discount the item when the feature is in effect. Do not have separate buttons for cheap wing night or cheap beer night.
Having separate buttons with lower prices for features hinders you in two ways.
1. The sales are not discounted though promo, and therefore will not show up in the discounts and promo reports. Rather, in this configuration, the lower-priced items are lumped together into regular sales. You can still figure out the value of your discounts, but you need to do a separate calculation.
2. It leaves a hole open where staff can ring in the discounted item at any time, and it could potentially result in a scam if the operator is not constantly watching their itemized sales and when things are being rung in.
These problems are avoided by setting your POS up properly, and for feature discounts, the ideal set up is to use timers with the buttons already in place.
Kevin Tam is a Sculpture Hospitality franchisee with more than a decade of experience working directly with bar, restaurant, and nightclub owners on all points of the spectrum. From family-owned single bar operations to large companies with locations on an international scale, Kevin works with them all and understands the unique challenges each kind of company faces. He’s also the author of a book titled Night Club Marketing Systems – How to Get Customers for Your Bar, a regular writer/contributor for Bar & Restaurant, and publisher of an eBook called: The 5 Commonly Overlooked Areas That Kill Your Food Cost.
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