Why going the 100% ownership route is probably the right fit for you

While installing an ATM that is leased to you by a third party is definitely the quickest and easiest option initially, I recommend purchasing your own machine for a number of reasons.

First, any of the profits generated from the ATM are 100% yours.

Second: You can stock the ATM with the cash generated from your sales (after recording them for tax purposes of course) so that you don’t have to pay standard bank cash deposit fees. (Note, you will be responsible for maintaining and re-stocking your ATM.)

Third: While purchasing an ATM outright can cost anywhere from $1000 to $10,000 dollars, they typically pay themselves off by the end of the first year, and become cash flow positive for your business, adding to your bottom line for years to come.  According to Business News Daily, you can expect to make $2-3 per transaction. 

Small Biz Trends interviewed National Cash Systems (an ATM seller) and found that their customer’s ATM’s are used about 300 times per month. With a $3 transaction fee, that’s roughly $900 per month or $10,800 per year. The Washington Hospitality Association says, “One of the best ways to circumvent the fees levied by restaurant ATMs is to purchase your own. When you do this, instead of being charged fees by restaurant ATMs, you will be collecting fees for their use. Sure, it may be only a few dollars at a time, but if you figure that 100 or so people will use your restaurant ATMs each week, you will end up collecting hundreds of dollars every week. In a short period of time, restaurant ATMs pay for themselves and quickly start earning you a significant profit.”

 Where to source your own ATM

There are a number of companies selling ATM’s as either 100% ownership, leased, or various commission plans. Rapid Cash, National Link, First National, and Cardtronics are all solid options with thousands of customers in Canada and the US. 

What can do to build rapport with your customers?

If you eliminate free drinks as an incentive, what are you left with?

Good old-fashioned customer service.

From the moment a customer walks into your independent bar or restaurant, they want to feel known, special, and at-home. One of the best ways to do this is by having your hosts and hostesses well informed of the names of regular patrons when they are on-boarded, and as a team, maintaining a record of regulars.

This can be done electronically by asking them for their name and phone number at the entrance and then immediately inputting their information into the system. That way, when a server comes over to the patron’s table, they can greet them by name.

A low-tech alternative would be to put masking tape on the back of the bar in front of each patron so that your staff can remember.

Have an on-site bartender solely for the purpose of building your regular clientele. Sounds crazy right? If you’re an averaged size independent restaurant or bar, you likely have two bartenders on staff. One serving patrons at the bar, and another preparing drinks for tables.

Bartenders are a huge asset to your business and they have an enormous impact on your customers’ experience. When a customer has a rough day at work, and they come into your location to blow off some steam, they’ll really feel a difference when they’re welcomed by name, and when their favourite drink is prepared without having to ask.

If you want to take this even further, keep track of how many drinks they usually order. It’s the little things that add up when building loyalty.

Chris Tunstall from A Bar Above has a great strategy for making your customers feel special: introducing them to each other.

“At some point you will have quite a few regulars, and you are going to know a decent amount about each one of them. At this point I like to find bridges between them and introduce them to each other. For example if Stacy is one of my regulars and Steve sits within a couple of seats of her, I will try to remember common information about each of them and use that as a conversation starter.”

 Liquor.com interviewed Laura Newman, a bartender and the owner at Queen’s Park in Birmingham, Alabama. She pointed out that “buying” regulars with freebies doesn’t work as well as presence, inside information and kindness.

“A lot of the time, we can start preparing a regular’s order as soon as they walk in the bar,” she says. “Knowing the small touches and special things that they prefer, and always doing those things without being asked, plays a huge part in maintaining regulars. We like to involve our regulars in the ‘behind the scenes’ part of QP as much as possible. For example, our regulars serve as taste testers for new menu cocktails before they go live, and we give our regulars updates on upcoming trips or staff bonding activities and solicit their advice/suggestions.”

Create policies for your bartenders and monitor them.

Ryan Gromfin over at therestaurantboss.com says that one of the biggest problems he sees is his clients using too little ice, and too much mixer, ultimately leading to drinks tasting “watered-down”.

He even goes so far as to recommend you pack down the glass full of ice up to the rim. This is especially true for liquor primary establishments like bars and nightclubs. In the case of nightclubs, drinks are their only source of revenue besides cover charge, meaning their businesses success rests almost entirely on the margins of their drink menu.

So the question is, if the amount of ice you use in your drinks has such a large impact on your businesses profitability, why doesn’t everyone monitor it? Why doesn’t every bar or restaurant have strict policies and procedures regarding their drink menu?

While sometimes they don’t know what they don’t know,  more often than not, they usually do. Most owners are well aware of the importance of their drinks composition and have specifically outlined the ideal ingredient ratios. So what’s the problem?

The reality is, just because rules and procedures are in place, doesn’t mean they are followed. Most bartenders have a lot of drink orders to fill at any one time, and they don’t want to waste time on seemingly menial tasks. Ask any bartender how much they like refilling the ice box and you’ll quickly see what I’m talking about. Going into the back and replacing the ice is a pain in the ass.

So, put yourself in the shoes of a bartender for a monent:

You have a long list of drink orders you’re keeping track of, patrons are vying for your attention, asking for bills, placing orders, and you’re just trying to keep up. 

You know that everytime you need to go out back into storage, you get further behind. How do you solve this problem? Easy, you just use less ice. If you cut down the ice you’re supposed to use in a drink, you make less trips out back, and have more time to focus on what you enjoy most, serving your customers.

What we have here is a good old fashioned agency problem, a conflict of interest. To a bartender, a little ice probably doesn’t seem like a big deal. But for the owner of a small bar or restaurant it is.

It’s a really big deal.

The trick then, is to ensure your bartenders understand the critical importance your drink composition has on the profitability of your business and the success of your team.

You’ll also probably want to think about how you can implement some rigor and structure into how your staff are trained in preparing drinks, and provide “cheat sheets” with liquor to ice ratios for your menu. 

No empty dishwashers or glasswashers

Do you have a rotary glass washing machine in your location? If so, you might be surprised to learn you could potentially be overpaying to run it without realizing.

If you go into the back of a bar, you’ll probably see one of these running. What most people don’t realize however, is just how much the chemical costs for one of these things can be.

Typical machine detergents cost between $80-$100 per bottle and they’re used as long as your machine is running. It drives me nuts when I see these left on all day long, especially when they’re empty.

By having a quick conversation with your staff, and creating a policy of  keeping the rotary washers off unless being used, you can add more to your bottom line.

Only have a regular washer? No problem. You can still save money by ensuring your staff are only running a cycle when it’s full to save on energy, water, and chemicals. 

How do you implement culture?

Ok, after we’ve hired and onboarded our independent restaurant or bar staff, how do we ensure the culture we want to create lasts? The answer is systems, rules, and processes. It’s all about transparency, communication, and accountability. First, you need to define your cultural values. Once that’s finished, you need to map your values to key activities in your business. This will clearly define how your staff ought to act in the variety of situations that will come up in their day-to-day work and give them a framework to look to when dealing with unexpected situations that don’t yet have a guide. How should a staff member react to an upset customer? What about conflicts between coworkers? How can your staff ask for help when they need it? How do you monitor and promote growth? All of these questions can and should be addressed in your cultural framework. Peter De Bruyn of the BCRFA says it’s all about clearly defined roles and expectations. “Depending on the size of the kitchen, people’s roles may change daily, and as long as it is clear what that role is, then they have a greater chance of being successful.”

Lawrence Herzog of Chef Connexion has a few practical and systematic steps you can take to create a positive culture:

First, “formalize the dialogue with practices like regular short check-ins, and encourage honest feedback throughout the team.”

Second, “identify and knock down any barriers.” This could include a brief weekly check-in where each staff member has an opportunity to talk about any places where they feel stuck.

Third, “share responsibility, provide support when something works (and when it doesn’t) and encourage innovation.” People want to feel valued, and they want to feel like their work makes a difference. Providing some open time during weekly meetings, or at the very least creating a suggestion box can go a long way in validating your team’s ability to express themselves.

Jeff Stone writes in Modern Restaurant Management: “establishing a core culture team of star employees who live and breathe your culture – and have them be the constant reminder to their peers.” You could also have one dedicated culture advocate on each shift in your restaurant or bar to monitor how well your team adheres to your values. They can also be responsible for monitoring and rewarding positive behaviours staff have taken that exemplify what you are trying to promote. “You can establish a simple reward program where each week or month, one employee gets a small reward for exemplifying your values.  This can be as simple as a free meal on their next shift, parking close to the door for the week, or a $5 dollar gift card for coffee.  In addition, free recognition should also be given daily, even if it is just a shout-out to an employee “caught in the act” of living the culture.  “Great teamwork for running those salads Alex”, or “Great customer service on table seven Laura” goes a long way in reiterating your values and boosting morale – and it’s free!

Are you low cost and high volume?

Sometimes, young people just want a no-frills place to get drunk with their friends on the cheap. This is where dive bars and pubs shine. These locations might even be where many young people go before or after visiting one of the aforementioned bar styles. Low cost establishments, your patrons care more about specials, and they may go out of their way to go to your location for a particular special.

For example, Colony bar in Vancouver offers $3 beers on Tuesdays, and they’re usually packed because of it. The trick with these promotions is making them so ridiculously attractive that people can barely believe it. Young people are especially keen on these promotions because they’re willing to forgo pretty much anything for an affordable reason to go out. The goal is then to offer them higher margin drinks and food once they get their foot in the door, and promoting those heavily. This can be an extremely effective strategy when done effectively.

For price-sensitive customers, Posist also recommends incorporating a loyalty program. For high-volume locations targeting a growing customer base that visits your bar frequently but does not spend much, they recommend running a visit-based loyalty rewards program.