How to Run Profitable Bar Events Without Breaking the Bank

Chris Schneider (00:01)
Today on the Bar Business Podcast, learn the critical numbers you must know before planning any event, discover smart staffing strategies that protect your margins, and master hidden costs that sink most bar events and how to avoid them. Today we're breaking down how to plan and execute bar events that actually make money instead of draining your resources. We'll cover the essential calculations, staffing approaches, and cost control measures that ensure profitability. Now we've talked on the podcast before about events, and normally when we talk about events, we talk about weekly events.

Today we're talking about things that apply to weekly events, but these are also going to apply to your special events. And as we're getting into summer, I know a lot of bars are looking at running special events in the next few months. So I want to break down what we need to look at from an economic perspective, how we look at pre-event planning, some notes on staff management, and then a little bit of a cost control today. So the first thing I want to dive into, like I said, is understanding event economics. So what is an event?

from a numbers perspective. And how do we understand it from a numbers perspective? Well, the first thing that we need to understand before we can even worry about how the event works is what are your fix and your variable costs? What are your normal costs, your normal variable costs, but what additional fix and variable costs do you have in relation to this event? Maybe you have a band coming in, they charge 500 bucks. Well, that's a $500 fixed cost. Maybe you're holding a cornhole tournament.

And in order to get the boards and to get someone there to judge it, you're going to need like a referee type person, whatever that may be. Those are additional fixed costs that you would normally have. So we need to look at all of those with relation to that event. Then we take those new fixed and variable costs that we define and we add those into your standard model, what you're already doing, because you should know your fixed and variable costs for your bar as a whole.

we add those new fixing variable costs on top, and that's going to give us a break even point for that event. And a break even point at the end of the day, essentially we're saying is the minimum revenue you need to make on that event in order to be profitable, in order for that event to have been good. Now, minimum revenue, that is your break even. So we don't want to just aim to break even on event. Let me rephrase that. Most of the time, we don't want to actually aim to just break even on event.

Sometimes you're going to have an event where you say, you know what? This brings a lot of people in. It's great for the community. I always enjoy doing this every year. I don't care if I really make money. I just want to break even. That's fine. But most of time in the bar business, we're running an event. Our goal is to increase our revenue, not just break even. So on top of that, knowing our minimum revenue requirement, we also want to know what is our profit target. So maybe we're going to say, OK, I want to make five hundred dollars today on this event on the bottom line.

All right, then we need to model out. We know the minimum revenue, but if we want to make that $500, how much additional sales do we have to have to make a $500 profit? And just as a way of example, let's say that our breakeven point is $3,500 in sales. We want $500, so that gives us $4,000. But in order to get that $4,000 and actually have a $500 profit, we probably need to sell more like $5,500 to end up with a $500 profit.

So you need to understand that profit is not just...

on top of that minimum, it is on top of that minimum plus all the variable cost associated. Now, let's talk a little bit about pre-event planning. So anytime you're have an event, one of the most important things is to set yourself up for success. When you're not set up for success, you have a tendency to fail. Right. And one thing that I always am a huge fan of is being way over prepared for an event because the worst case scenario, less people show up, you're over prepared.

As long as that over preparation doesn't cost too much money, it's always worth it. And that's a much better position to be in than to be under prepared, have more people than you expected and end up running out of things and not being able to provide people good service. That's going to hurt people's opinion of your bar in that event in the future.

So in order to do this, we need to make sure that our bars are set up efficiently, that the bartenders have everything they need at their fingertips. Just like we talk about when you're designing a bar and you're designing stations within the bar, you need to design stations for an event very specifically. And specifically, what I mean by that is that that bartender has everything they could need in their general vicinity, and they're not going to have to run across the bar across the event venue.

across the parking lot, wherever this event is, to restock and get things on a regular basis that's going to stop them from serving your guests. Now, the other thing that I always recommend with events is create a specialized menu. Now, why create a specialized menu for an event? Well, probably that event has some cocktails that you can tie into the theme. But beyond that, a lot of times if we're doing a special event, especially if it's like a parking lot party or something, you can get a little bit higher margin on some items.

And that is always great for helping control those event costs. So when you create a specialized event menu, you have the ability to put in higher margin items, but you also have the ability to structure your menu specifically for that event.

Now the other thing we want to look at when we're doing our pre-event planning is to calculate our labor costs, right? We're bringing in additional people. What does that additional labor for that event look like? Obviously, we're going to need that to generate our profit margin target revenue. We're going need that to generate our breakeven point. But you have to be honest with yourself about the labor costs that you're incurring. You know, if you have a kid that's going to help direct people where to park, let's say because it's a big event, and

That kit costs you 10 bucks an hour, but you don't include that. Well, if your event's five hours, you've missed 50 bucks of cost. So make sure you're including all that additional labor that you may incur. Now, if you are an event that is going to charge an entry ticket to the event, make sure you're realistically pricing your tickets. I think a lot of us the last few years, and I will straight up blame Taylor Swift and Ticketmaster for this, but a lot of us the last few years have gotten

used to tickets for events costing way more than they should. And I have seen plenty of times when there is an event, something local going on where people could capitalize on it, but they charge too much money. And because they charge so much money, no one actually shows up.

And so being realistic in your ticket prices is absolutely crucial when you're doing your pre event planning.

Now let's talk a little bit about staff management because just like every day in the bar business, something that I've heard people say for ever my entire life, the only problems in the restaurant industry are people problems. People problems are the only problems. However you want to say that, but...

The bottom line is for an event, we need to look at our staff management. So first thing I would say is make sure you're scheduling based on your projected volume, right? We don't want too many people. We don't want too few people, but we want enough people. So it's not a bad idea to build in some buffer capacity in your staff. Just like a normal day, you can always cut people if it's slow.

Absolutely. Look at that scheduled volume and say, do I have enough people? Do I have the right people to execute this? Then the other thing we want to make sure on events when we're looking at who we're bringing in to staff those events is have they been cross trained? Right? We want as many people that are working a big event to be able to jump into any other role in that event as possible at any given time. Because with any big event with the public, we can't predict everything that's going to happen.

We can guess and we can be really good at our guesses, but a guess is never 100 % accurate prediction. So we need to make sure that everyone on the team is cross trained. Along with that, in order to cross train properly, but also in order to make sure the event runs properly, we need to create clear role assignments. We need to very specifically tell people, hey, here is your job. Here is a checklist. Here is how you open. Here's how you close. Here's what I expected to do during the event.

This is particularly true if you're bringing in outside folks. You know, in one of my past lives, I was a country club food and beverage manager, and we would bring in temp workers all the time for events. And the more standards I could give them, the more procedures I could give them, the better I could tell them how to do their job, the better they did their job. So make sure you have clear role assignments, especially when you're bringing in outside people. And the final note on staffing for events.

Make sure that you actually are planning breaks for your people. They should not be working without a break ever. So if you have enough people for that, make sure you have break rotations already planned out so that that part can happen without a hitch and you can keep your team refreshed and able to do their job. Now, final note on events. Look at your cost control systems. And these are going to be the same as every time we talk about these cost control systems.

but make sure that you have inventory controls in place. Monitor your pores, especially on events. It's really easy for those to get out of hand, particularly if you're bringing in outside labor to help. Watch your labor percentages, right? If your event doesn't have the number of people that it normally should, start cutting people, send them home, keep that labor in line. Track your real time sales. If you have a POS system and can do it a lot of times with events though, you're going to have...

cash registers and things, right? We have to go a little old school sometimes with events because you might have a remote bar that only you can run on cash. So go around, make sure you're watching that sales in real time so that you can adjust how your labor is working, how you're viewing that event as you go through it. And as always, make sure you document any waste you have. Primarily document waste during events so that when you have the next event, you don't have to worry about it as much. It's already

understood what waste can happen, and then you can mitigate that before the event starts rather than having that in real time. But the only way to know about waste and to mitigate waste in the future is to document waste in real time during events as they're going on. Now, remember, successful events are not about hoping for the best. They are about careful planning, smart staffing and disciplined cost control. Follow these guidelines and ensure your next

event adds to your bottom line instead of draining it.