Monday, December 18, 2006

Innumeracy (part 1)

Two things will send a pub broke in a very short time, and often do.

1) "Mates rates" on grog
2) Lack of diligence on the wage cost.

It is very easy for bar wages to jump from 16% of turnover to 25% of turnover.

At least three times I have ended (or severly hampered) the career of an experienced bar manager.

On each occassion a newly hired or newly promoted bar manager was going to "skin cats" by significantly increasing the bar turnover of the Wayside Tavern.

On each occassion the only achievement of the "cat skinner" was to jump the bar wages to 25% + of gross turnover.

None of them heeded the subsequent "no coffee" discussion in my office about how the bar is not to be awash with staff.

Each of them was mystified when their position was terminated without notice (but with corresponding BLACK spot on their CV) within a few weeks.

Quite possibly they will each go to their grave believing Mine Host to be a fool. For they believed they were "making money" for their employer. How could they get this idea, when revenue was static, but costs had nearly doubled?

1 comment:

Francis Xavier Holden said...

steve love your financial literacy stories.

A good bar manager might in fact decrease turnover but increase profits by decreasing costs per $1 profit. Theoretically possible but I'm guessing you've tried that.