Sunday, July 13, 2008

A stroke of genius

Crazy he may be, but like many "mentally different" people, Crazy Chris is occasionally something of a savant, blessed with moments of insight and creativity denied to most of us, a begetter of ideas that could change the world.

Last night he persuaded the new manager at Room 101 to restore their much-missed midnight 'happy hour' - for five minutes.

It was a great success. Everyone in the place slung down two drinks in quick succession, got a huge buzz on..... and then felt like staying on for a few more as the prices returned to their regular level. The punters are happy. The bar owner is happy. Win-win.

And then it occurred to me...... if they did this every hour, on the hour, the place might be packed all day. We would never leave.

A scary thought. But a beautiful one.

One day, when I have my own bar, I'm going to give this a try.


The British Cowboy said...

Doing it every hour would be a nightmare for a bar. You would be left with a bar of people who slam one drink, buy the second at the end of the 5 minutes, milk it as long as possible, potentially buy at most one drink at full price, rinse, and repeat.

Froog said...

Well, maybe once every two hours, then.

With the kind of mark-up people operate on here, selling all their drinks at "half-price" wouldn't be that much of a problem - so long as it kept the volume of business up.

My other idea for a crowd-pulling bar gimmick would be to have EVERYTHING (well, all domestic beers and standard mixed drinks) priced at 10rmb (about $1.30) - kind of like a Pound Store (or a Dollar Store.... or do they still call them Five-and-Dimes?) for drinks.

There used to be a few places that did this (and even cheaper on some things), but they've all hiked their prices - I think due to some sort of misguided collective greed, or maybe even active price-fixing, rather than real economic necessity. The margin on most things would still be at least 60-70%, sometimes over 80%.

Froog said...

Yes, maybe not such good business in the States, Cowboy, but HERE.....

Having people buy three drinks an hour - at whatever price - would keep most bar owners delighted. The difficult thing is to draw punters in in the first place.

There is a ridiculous over-supply of bars here, and even the more "successful" ones are pretty near deserted half the time.

The British Cowboy said...

I don't know the economics there, but 60-70% margin won't work in the bar business unfortunately.

Generally speaking, unfortunately, things that are good for the punter tend to work badly for the bar. We all love a street of bars with happy hours running in sequence, but the bar is not keen when everyone piles out and goes to the next bar. And however much you might protest, I don't see you drinking more as a result of lower prices. It just seems out of character for you. I believe you will seek out the lowest possible price, and you might well prefer to be in a different bar, but your overall consumption won't really change that much. Hence you are wanting bar owners to bid against each other for your custom. And that probably isn't a successful business model for them.

By the way, I am incredibly hungover, and feeling cranky.

Froog said...

I disagree on all counts, o cranky one.

I don't really have any idea how much booze costs in the States these days, but.... intuitively, I wouldn't have thought most places would be making more than a 75% margin on most of their spirits.

And you can make a 20% margin work for you, if you're doing sufficient volume.

Some bar owners here try to differentiate themselves on the basis of something other than price, but they're most pretty lousy at it.

And I - like many people here - am severely budget-conscious: I differentiate between bars almost exclusively on the basis of price. If there were a bar that were significantly cheaper than anywhere else (and wasn't shit) large numbers of people would go to it, to the virtual exclusion of any of its rivals.

And yes, I think I would drink more too. I am inhibited by price. If I drank as much as I wanted, I'd pauper myself quite quickly. I generally go for the cheapest brand of beer; I mainly drink on happy hours; I ration my consumption of spirits; I seldom or never drink wine or cocktails; and I do try to drink a bit more slowly.

Oh yes, and I quite often get "warmed up" on shop-bought booze first.

One of the main reasons bars struggle so much to find business here (and the reason why so many of us customers are so cost-conscious) is that in typical restaurants a pint bottle of the perfectly quaffable local beer is between 60 and 80 cents. A lot of places also do draught beer for as little as 65 cents (in fact, you occasionally find places giving it away FREE). Restaurants like this also usually sell single-serving glasses (double-shots) of the local vodka-equivalent for about 35 cents. And corner stores sell little hip-flask bottles of the stuff for about the same.

If you want to drink in an uninhibited way, and get completely f***ing lashed, you go to a Chinese restaurant.

The cheapest beer you can usually get in a bar - a stubby bottle of crappy Tsingtao - is usually 2 or 3 bucks.

But honestly - I am absolutely sure that, in this market, if you dropped the price to around a buck fifty, you would get TEN OR TWENTY TIMES THE BUSINESS.

The British Cowboy said...

The last time I saw wholesale prices was a while ago. But the mark up on draft beer and well liquor is astonishing. That's because the business has so much overhead to cover - staffing, insurance, rent, heat/ac.

We used to purchase a bottle of well vodka for $8 or so. It was then sold at $2 a shot. Even including overpours, you would get 20 shots from a bottle at a bare minimum. That's a markup of $32, or 400%.

A half keg of Miller Lite is $75 or so. That is 124 pints. Selling at $3.50 a pint, the return is $434 (probably more because a glass is never full of 16 oz of beer). The markup here is $369 or nearly 500%.

Froog said...

Ah yes, not too different. I was talking about "profit margins", which, I think (maybe I'm mistaken), are conventionally stated as a percentage of revenue rather than a percentage of original cost. 400% mark-up = 80% margin.

Here you can get a bottle of Jack (retail) for a little over 20 bucks - much increased in recent years - and many other whiskies for barely half that. The cheapest bourbon is usually Grandad, which you can get for about 12.50. Gin and rum is less than 10 bucks. Many Russian vodkas are available for as little as 7 or 8 bucks a bottle.

You get 124 pints in a half-keg?? Wow, that's big! I thought British kegs were traditionally 55. I'm told you only get 40 in the ones here, but they are pretty titchy. But they only cost 12 bucks.

Other overheads here are negligible, compared to the States. Rents are being hiked a lot lately (thank you, Olympics!), but you used to be able to rent a nice corner bar type space, for only 2,000 or 3,000 USD a month. And staff will work basically all day every day for as little as 30 or 40 USD per week (although you may have to pay a little more if you want anyone any good).

I have been looking into the economics of this quite a bit lately - seriously interested in trying to find a place of my own one day soon.

I'd rather wait until all this Olympic craziness is out of the way.

An awful lot of new bars have opened this year, specifically with the Olympics in mind. I think a lot of them were planning to cover start-up costs and 6 or 12 months of rent during the 1 month around the Games. They were expecting hundreds of thousands of high-spending tourists to be here. No-one is coming. These bars are all pretty much fucked.

The British Cowboy said...

What most people think of as a keg is actually a half keg.

Froog said...

So a typical British keg is actually a quarter-keg??


The British Cowboy said...

A standard UK keg in a pub is 88 pints - 11 gallons or approximately 110 US pints. The 54 pint keg is supposedly reserved for European imports or craft beers.

Froog said...


So, the stuff I drink comes in that size. All clear to me now. Thank you, Cowboy.

The British Cowboy said...

It turns out my terminology was somewhat Americanized. The 88 pint container is indeed a keg not a half keg in the UK, but it is a half-barrel.