Howdy whiteblackoxford-ga,
No real magical formulas, but as you know, this would be a great way to
increase the check averages. There are other advantages as well, but you
need to watch out for some visible and "hidden" costs.
Let's look at the upside first. First, there is increased profitability.
According to this Restaurant Report article, "For Profit's Sake - Inventory
Your Beverage Cost" by Ron Gorodesky and Ed McCarron, it could be well worth
serving wine and beer at your establishment.
http://www.restaurantreport.com/features/ft_bevcost.html
"Alcohol sales (beverage sales) are an easy way to increase profitability
because the costs are lower and the gross margin is far greater for beverage
than for food. ... A profitable restaurant typically generates a 22% to 28%
beverage cost."
Compare this to the cost of food served. Again, from the Restaurant Report
web site, "For Profit's Sake, Inventory Your Food Cost!" by Ron Gorodesky
and Kate Lange.
http://www.restaurantreport.com/features/ft_inventory.html
"A profitable restaurant typically generates a 28%-35% food cost."
You are looking at increasing your profits by possibly 10% or more by adding
beer, and to lesser degree, because the margin is usually not as good, wine
to your menu.
Yes, turn time does become a downside, but consider the people that eat at
some restaurant other than yours because the other place serves beer. This
increase in patronage should offset, especially with the right promotion,
the table turn. You would also have an ongoing advantage over other places
that do not serve beer and/or wine.
Now, the downside to all of this. The local or state taxes on alcohol sales
might be more than on food. This, unless handled properly, such as passing
this cost to the customer, can eat into your bottom line.
There are increased training costs as your servers need to know they have to,
and need to know how to, check identification for age verification. The staff
need to make sure clients are not getting intoxicated. This cost is mediated
by being part of their overall training, and a one time (with annual updates)
training of the existing staff.
There are increased liability and insurance costs. Most likely, any staff
that is serving the beer or wine, including the wait staff, will have to be
at least 21 years old as well.
You will have to watch, just as you do with food, but possible more so, the
cost of inventory of your beer and wine, as this cost can be more (excuse me)
"fluid" than food costs. Contain your inventory costs as tight as possible.
If you make it all part of the eating experience, such as having plum wine
and Chinese beers, you not only enhance the experience but you avoid the
possible image of being a place to go to drink, but rather yours is a place
to eat while having the choice to have a drink.
The end formula really comes back to you. Get the costs of obtaining the
liquor license, weigh in the possibility of neighborhood opposition and the
bad publicity that would bring, and the costs of training and increase in
liability/insurance. Compare these mostly one time costs to the ongoing
gains in profitability and see if it makes sense.
I think the table turn time is a wash compared to increased business, but
only if the availability of beer/wine is promoted properly.
If you need any clarification, please feel free to ask.
Search strategy:
Personal experience in the food and beverage industry.
Google search on: alcohol OR beverage restaurant profitability
://www.google.com/search?q=alcohol+OR+beverage+restaurant+profitability
Looking Forward, denco-ga - Google Answers Researcher |
