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?

Able to Draw Breath? You've Got the Job! (Part 2)

Option: 1) Pay the same wages as the mining industry.

Those who believe in "the market sets the price" would jump to this conclusion.

Mine Host realises that he has to work with market forces, (supply& demand, competitive bidding, blah blah blah)

However, to pay such wages Mine Host would have to drastically increase prices. Would the market pay triple the price for liquor? Particularly take-away beer & rum?

The answer to the above question settles the matter.

Would increasing the wages attract a greater number of job applicants? Some people will not work in a pub no matter what. Anecdotes abound of employers who cannot lure fresh graduates with salaries of $100,000+ and a house/car package.

Would increasing the wages attract applicants who have an aptitude for pub work? Quite possibly some of them would, although Mine Host is loathe to pay mining-size wages to greenhorns while they learn, with no guarantee the greenhorn will stick around to be worth the money they were paid to train.