Before Jon Taffer there was Phil Crosby.
In the 80’s and 90’s Phil traveled the world, showing business leaders how to make more profit. Including those in the service industry.
His book Quality is Free triggered a revolution.
Phil the guru demonstrated a business’ profitability was not just about how many customers it had, but also, how little waste it had. A business with many customers could fail with too much waste. Vice versa, efficient companies could survive with only a moderate customer base. Eliminating waste is key to profitability.
If there was ever an industry plagued by waste, it’s the bar industry. My experience suggests most bar owners unnecessarily lose between 30-42% of their liquor profits.
I was that bar owner. But for me, it was closer to 55% (notice I skipped the bold font). My ignorance cost the business over $20,000,000 in profits (again, not bolded). Please don’t tell my partners (my brothers).
Heck, I should have known better. I was schooled in the teachings of Quality is Free while working as a Technologist at 3M––my life before opening the Shark Club (Costa Mesa) in 1990, then Metropolis (Irvine) in 1992. My bad.
Why did I have so much waste? The same reason it happens almost everywhere: just too busy dealing with daily issues to step back and to do analysis on a part of the business I felt insufficiently knowledgeable.
Only after the business became inconsistent did I look harder at the bar numbers. I was shocked. The statistical skill-set I gained at 3M enabled me to quantify the level of my waste. It was sickening. What did I do about it? I went fishing. Specifically, brown trout fishing in the Sierras. Rejuvenated, I came back, and week-by-week, took back control of my bar. And increased liquor profits.
In 2011, I retired from the bar business and opened a consulting business. Only then, after working with dozens of bar owners, did I come to understand the extent to which wasteful practices are entrenched in our industry.
Over time I’ll discuss the generic wasteful practices commonly found in our industry, including research studies on waste inside bars. Most important, we’ll explore how to eliminate the waste and make more profit.