Business on Tap: Mismanaged Draft is Profits Down the Drain

It’s an all-too-common sight: a bartender standing at the tap, pouring a glass of foam. On particularly busy nights or sometimes because of poor training, the foam is topped out, more is poured in, and the process is repeated until a full glass of beer is achieved. Each ounce of that foam is money lost for the bar.

No one can question the quality of the staff at The Avenue Pub in New Orleans. The bar is continuously ranked among the best craft-beer bars in the United States with a tap list that gets even the most hardened of beer geeks smiling. You can expect great local and national drafts on each visit, along with a dizzying array of imports that are rarely seen anywhere else in the country.

Owner Polly Watts started to notice that the profit margins weren’t what they used to be, and after a hard look at her books and the pouring and staff practices, she figured it was time to right the ship. The first step was to recognize that they had a problem. The second step was to figure out why.

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Last year, “I estimate that we lost $178,000 in foam, overpours, and not charging for beer,” she says. “I saw the number and just about had a heart attack.”

As competition among bar owners, especially craft-centric ones, becomes more pronounced due to the large number of breweries opening taprooms and regular bars and restaurants diversifying their options to appeal to craft consumers, the need to monitor every last penny is the key to survival.

“Part of this is embarrassing,” Watts admits. “This was something that we looked the other way on for a decade. But a lot has changed, including how many beers we bring in and the profit margins on those beers, so we needed to do something.”

When the pub opened, the beer landscape was much different. The bar could rely on “flagship” brands such as Sierra Nevada Pale Ale or Lagunitas IPA for healthy profit margins, thus offsetting the smaller amount it made on specialty beers and imports. A decade ago, those flagships accounted for 50 percent of sales; today it’s 20 percent. “It used to be that the mark-ups were such that you didn’t have to pay close attention to how much you lost. If you lost four or five pints in a keg, it didn’t matter,” Watts says. “Those days are gone.”

In the face of new competition, Watts turned to advertising and other methods to get new people through the door of the 24-hour bar just outside the city’s famed French Quarter. It worked, but a wider look at the business revealed that while sales were up, the net was not.

A closer examination showed there were issues with her draft-beer sales. Watts says for years she used services to weigh liquor served to ensure that sales were being registered properly versus the overall volume, but she had avoided doing the same with draft and packaged beer operations.

It took a little convincing at first. Watts says she was routinely approached by Barmetrix to weigh her kegs before, during, and after service to determine loss based on what was rung into the register. Watts resisted for a while, but when they offered her a deal she couldn’t refuse last summer, she started the practice—and long, sometimes hard, conversations with her staff.

Watts says there were a few challenges to overcome. The first was eliminating overpours—the bar uses 20-ounce glasses to pour pints of beer, with a mark at the 16-ounce line; the same is true for the 10-ounce pour that uses slightly larger glasses. Then there was the tendency for some beers to be exceptionally foamy. And finally—especially when it was busy in the bar (this is New Orleans after all)—the staff would sometimes forget to ring in orders.

“We were lulled into a sense that a little here or there didn’t matter, and the perception of what was being wasted was way, way off,” she says.

When they first implemented the practice, the bar weighed the kegs three times a day—at the beginning of each new shift, no small feat considering the fifty-five draft lines the bar boasts. It was more of a recalibration than new training for the bar staff, Watts says, to remind them to watch the fill line, alert management to exceptionally foamy beers, and take an order, then ring it in immediately rather than take several orders and try to remember all of them a few minutes later.

She found that the longtime staff members were actually the worst offenders. It was unintentional, she says, but over time, certain habits crept into service and stuck. However, when the pub started doing daily check-ins and the bartenders started to see just how off their numbers were, they were motivated to eliminate the waste.

“You have to have a staff that cares,” Watts says, “one that has pride not only about their own job but also about the health of the business. My staff has that.”

After a short period of allowing for overpours and some lost beer, the pub fully implemented a plan to get its draft-beer service down to zero waste. Watts offered incentives such as gift certificates to steak houses to keep it competitive and to keep everyone’s eyes on the ball. It worked. After a few months, the bar was serving more beer than it had been with virtually none being wasted.

The bar also made adjustments to service. Now, beers that take longer to pour, such as a foamy Czech Pilsner, are taken out of rotation during exceptionally busy periods. There were added—unexpected—benefits. Watts noticed that the practice of ringing in each sale in real-time actually led to fewer liquor sales being lost.

The bar is now doing weekly spot checks on kegs rather than weighing all of them daily, but there is still a motivation for the staff to keep waste at zero. In previous years, Watts closed the bar for a week or more and took the staff on beer educational trips to Europe. Last year, because of the lost revenue, she was unable to do so, but if the trends continue, she says, she plans to take the staff on the bourbon trail in Kentucky as a thank-you for a job well done.

“I think that my staff has pride in the accomplishment in what they’ve done, and it’s made a huge difference in our bottom line,” Watts says. “There is more competition than ever, and I know there are bars and taprooms that are doing a lot of business that isn’t yielding the profit they like. Rather than fighting for more customers, it’s possible that your existing customer base could result in fine numbers as long as you’re paying attention to loss. At least that’s what worked for us.”