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AS THE ADAGE
goes, “When a man with money meets a man with experience, the man with the experience ends up with the money and the man with the money ends up with the experience.”Fact is making mistakes is an inevitable consequence of gaining experience. Some things can only be learned at the school of hard knocks. For us fallible types, success can be defined as keeping mistakes to a minimum and the learning curve short and shallow.
That having been said, in every business there is a special class of mistakes that should be avoided like the plague. Leaving the place unlocked at night is an example. Bouncing payroll checks and stiffing vendors are critical errors in any line of work.
The list of capital crimes in the on-premise business encompasses every aspect of the operation—from serving boring drinks and mangling your relationship with the staff to being an inhospitable host and running an inexcusably loose ship. In an effort to shorten and shallow out the learning curve, here are the 10 critical errors beverage operators make (the first set of critical errors ran in the January/February issue of the BarProfits newsletter —RP)
6. ALCOHOL DISORIENTATION — Increasingly more people are socializing without alcohol. More than a passing fad, it is now part of the dynamics of our industry. There are numerous explanations why—including stricter DWI laws, health concerns, caloric content and personal preference.
Fortunately for those of us in the on-premise industry, we’re in the entertainment business not the alcohol business. In addition to increased consumer demand, another reason to market alcohol-free products is that they command profit margins equal to or greater than their alcohol counterparts. Another incentive is their sale incurs no third-party liability and precipitates no service-related problems.
Long gone are the old stigmas and stereotypes surrounding alcohol-free beverages and the people who order them. From a management standpoint, alcohol-free marketing makes great sense.
7. WEAK LINKS — Your business is only as strong and vital as 
your weakest employees and what they don’t know can hurt you. Despite the importance of ensuring frontline employees are well trained, the irony is that few things are easier to put off than staff training. If a mind is a terrible thing to waste, imagine the terrible cost of squandering the intellectual capacity of your entire staff.
Simply put, training is a dollars and cents issue. If bartenders and servers are insufficiently trained, every aspect of the operation suffers. Consider the ramifications of servers who aren’t familiar with the menu, bartenders who don’t know about the products on the back bar, or who aren’t comfortable cutting someone off. This just begins to scratch the surface of the things your staff needs to know.
The most advantageous course is to institute a continuous training program. Typically bars and restaurants concentrate on training employees only before they initially open for business. But why leave it at that? With turnover and the natural effects of time, you can anticipate that the benefits of the initial training will decrease dramatically. Bartenders often get complacent and begin taking liberties with portioning or deviate from stated procedures. Inevitably these breaches exact a toll.
8. NO SUDS CONTROL — Draft beer is a cornerstone of the on-premise industry. To a large degree, its enduring popularity can be attributed to being pure, fresh and unadulterated, barreled in its natural state exactly as the brew master intended. Draft tap handles act like homing beacons. They immediately command the attention of beer drinkers entering a bar or restaurant and confirm that they’re in an establishment that takes beer seriously.
According to recent figures compiled by the Beverage Information Group, beer accounted for nearly half of all beverage alcohol sold on-premise in 2008—35 percent of those sales coming straight from the spigot. Growing consumer demand for draft beer has boosted its sales 17.6 percent over the last 5 years.
In a perfect world, every ounce of draft beer you purchased would be dispensed and sold. However, industry figures reveal that operators lose roughly 23 percent of the draft beer they purchase due to over-pouring, giveaways and theft, which equates to nearly 1 out of every 4 kegs. Factor in the lost potential revenue that draft beer would have generated and you’re looking at a significant hit. It’s difficult to remain successful under those circumstances.
9. NOT MONITORING LABOR COSTS — Payroll is the largest reoccurring expense after cost of goods sold, which makes ensuring those dollars are being invested wisely of paramount importance.
Start the process by considering how effectively you use the bar staff. One chronic problem is not scheduling enough people to handle expectedly busy shifts. Aside from subjecting employees to undue stress and exacerbating employee turnover, running with a skeleton crew when it’s busy will undoubtedly cost you sales, cost the bartenders gratuities, and cost the clientele the level of hospitable service they have come to expect. Understaffing is expensive, far exceeding any savings in payroll.
Another concern is “riding the clock,” which refers to employees purposely 
taking longer to break down the bar and perform their closing duties, thereby increasing their payroll.
Labor cost percentage measures the relationship between payroll expense and gross sales. It’s a means of determining how effectively your payroll dollars are being invested. To determine a shift’s labor cost percentage, the payroll for the employees working the shift must first be totaled. It is advisable to compare the number of hours your employees actually clocked-in with the number of hours they were scheduled. The process will improve your ability to forecast scheduling requirements and afford you an opportunity to investigate any discrepancies.
10. ILL-DEVISED PLAYBOOK — Buy a new car and they give you an owner’s manual. Get drafted into the NBA and you’re handed a playbook. Get hired as a bartender or food server though and all you’ll likely get are a few training shifts and a printout of house policies. In today’s litigious society that’s far from adequate.
The fact is that being an employer is fraught with legal liability. Make a mistake and you could find yourself on the wrong end of a civil lawsuit or in front of the National Labor Relations Board, where nine out of ten employees leave victorious. Suits for wrongful discharge, sexual harassment and racial discrimination are among the most prevalent employment-related litigation with judgments averaging in the six-figure range.
The first line of legal defense is a comprehensive, well-structured employee handbook, one that clearly defines the employees’ job descriptions, areas of responsibilities, and all of the operation’s policies and procedures. Without it, legally holding employees accountable for their actions is practically impossible.
Drafting an employee handbook is similar to creating an employment contract, which is how the courts typically view these documents. And like a contract, employees are typically asked to sign a statement that they have received the handbook, read it thoroughly and agree to abide by all of its provisions.
While an employee handbook need not be filled with legalese, it does need to deal with each item in a thorough and comprehensive manner.