 (Last week your editor and a bunch of his friends toured several member on-sales in Greater Minnesota. Price was never a consideration on whether we stayed. However, poor drink quality (including flat soda and impurities in the glass) and disengaged employees were the only reasons we failed to purchase additional drinks.) By BarBusinessOwners.com It's a fact of life in the bar business that some bars view discounting as the best way to operate. On top of discounted pricing, today you find some competitors engaging in 50% off deals through websites like Groupon and LivingSocial. One thing is for sure - if you try to match their discounting and you will quickly become unprofitable. So how should you respond? First, you have to understand that it's next to impossible to discount your way to profitability. While it's tempting to counter the competition's discounting with discounts of your own, you have to hold firm to a policy of very few, if any, discounts and instead emphasis areas of your bar where you can successfully compete without losing money. This means you need to accentuate any and every way your bar has a competitive advantage versus your competition. Most customers don't go to bars to simply find the lowest prices. Instead, they go to bars that offer an ambience they like that's also a fun place to hang out. While price is important, it can be successfully challenged if what you offer is sufficiently attractive where customers don't mind paying more in order to experience your bar.
How to Respond to Heavy Discounts
When faced with a competitor who primarily engages in discounting, your bar needs to focus on the following:
Fun and Exciting Customers want to hang out where the atmosphere is fun and exciting. Anything you can do to raise the level of excitement in your bar will be the most effective way to combat discounts. Surveys of bar customers show that the number one reason one bar is favored over another is due to it being the place to be because it's a more interesting and fun place to hang out.
Friendly to Females In most bars, the rule is that if you want to attract the men, find a way to get the women first. Do this and the men will follow. Your Staff is More Welcoming People like to go to places where they are appreciated. This is more than being friendly to your customers. It means your manager, bartender, and servers using your customers' names, thanking them for coming in, and asking them to return. The better your staff is able to connect with your customers, the more welcomed they feel and the greater chance they will return in the future. More training is usually required in order to get staff to "buy in" to being more welcoming to your customers. Keeping friendliness to your customers top of mind will create more consistency in how this is delivered.
Employee Morale is High Make a list of everything that is impacting employee morale negatively and then set out to fix these areas one by one. Negativity will severely hamper your bar from being seen as a friendly place for your customers to spend time. Areas to focus on include negative employees, underlying issues that need addressing, employee disputes, uncertainly about schedules or job responsibilities, etc. The sooner you fix any existing problems affecting morale, the quicker your bar will be viewed as having a welcoming and friendly staff all the time.
Your Drinks Are Served Properly Make sure that your draft beer is poured properly, bottled beer is served at the right temperature, your mixed drinks include the appropriate alcohol amount, garnishes and done properly, etc. Customers are willing to pay more if they are receiving what they expect. Your competitors engaging in drastic discounts are extremely likely to be cutting corners to try to offset their discounts. You have a competitive advantage here as long as you serve your drinks full strength, at the right temperature, and with the right presentation. Your Bar is Extremely Clean Many things give your bar a reputation for being clean. These include spotless rest rooms, a clean bar area, clean tables, booths, and bar stools, clean uniforms, a clean parking lot, clean windows, clean doors. Having a clean bar is very appealing to your customers, especially your female customers, and is an inexpensive way to gain a competitive advantage over your competition. Community Involvement Many customers prefer to support businesses that give back to their community. The more ways you can establish your bar as a community minded business, the better. This ranges from holding charity fundraising events in your bar, sponsoring local sports teams, donating meeting space in your bar in off hours, etc. Community involvement gives you an firm advantage over competitors who don't place any emphasis in this area. Once customers like your bar, and like how involved you are in the community, they likely will not even visit your competitors, making their discounting a non-issue.
Your Bar Focuses on Repeat Customers A final way to negate the effect of your competitors discounting is to put repeat customer strategies in place so that your existing customers return to you again and again. Summary
As you can see, there are numerous low-cost steps you can take to make your bar more attractive to your customers and a more exciting and fun place to hang out. You must resist the temptation to counter discounts with discounts of your own. Matching discounts will only result in the low price competitor reducing prices even further. Instead, differentiate your bar from your competition so that you stand out as better in many different areas that customers value. Remember, customers will spend more if they feel they are getting more.
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