The major mistake publicans make is around pricing and discounting. Using discounting as a competitive strategy is only tenable if all the activities of the business are organised to create the margin for price reductions. If a pub wants to discount then there should be a solid competitive reason for doing so and it should be part of a targeted strategy. For example, the pub that wants to target the 18 – 23 year-old student market must ensure that all of their activities are focused on delivering price value to the customer. Therefore, decisions around product, purchasing, storage, systems and technology as well as recruitment, rosters, decor, music etc must have the target group in mind and be organised effectively to create the efficiencies that will allow price reductions. Also, the pub must accept they are not catering to the 45 year old-professionals who drink single malts and Creme de Menthe. Of course, these people may occasionally drop in but they are not the target group. Remember, anyone can discount but know that it can be copied, undercut, repeated and if it’s not underpinned by a coherent, targeted strategy then business failure is virtually guaranteed.
The second mistake that I see is around recruitment. Many pubs base their hiring on who is available and experienced. In theory, this makes a certain amount of sense but unless the staff are aligned to your competitive strategy then you will likely begin to see recurring problems down the line. Many pubs are the same, offering the same products and the same general experience. However by applying true commitment to the customer experience pubs can position themselves strongly in the marketplace.
If the owner of a car dealership couldn’t tell you exactly how much she was making per car or indeed how many cars were in her showroom I’d imagine you would be surprised. Well, unfortunately, many publicans can’t answer that question about their stock. This is a common issue and one more to do with focus rather than anything else. The industry in this country has traditionally concentrated on clientele, atmosphere and product all of which has contributed to making Ireland one of the world’s leading pub cultures. We are rightly celebrated around the world for the excellence of our bars and it’s a shame that so many end up struggling as a result of poor stock management. I view stock as both your asset and your risk. Too much of it takes up space and too little means your customers will buy it from someone else. There is the also day to day management of the margins, accounting for spillages, loans and everything in between. I have seen pubs with strong sales, loyal customers and excellent reputations go out of business due to a systematic failure to manage their stock rigorously.
2016 is a huge opportunity for our industry to push on successfully. We have the technology. We have the experience. We have the tradition and we have the best pubs in the world. So, let’s think about our strategy, our people and our stock and let’s make this our best year ever. Slainte!
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