Where the Money Is: Bars and Taverns
Introduction
Bars and taverns can be strong prospects for marketers because their primary products frequently produce high gross margins, recurring transactions, and repeat customer visits.
The money is generally behind the bar.
Industry guidance places typical bar gross margins at approximately 70% to 80%, driven largely by the markup on alcoholic beverages. BinWise reports that average bar gross profit margins commonly fall within that range, although the amount an owner ultimately keeps is considerably lower after labor, rent, insurance, utilities, licensing, security, entertainment, and other operating expenses.
That difference is fundamental to understanding the category.
A bar may produce an attractive gross margin on each drink while still struggling to generate a healthy net profit. Marketers therefore need to understand more than how many customers enter the establishment. We need to know what they purchase, how much they spend, when they visit, and how often they return.
For marketers, the central question is:
Which products, customers, and occasions produce the establishment’s greatest gross profit?
That is where the marketing strategy should begin.
Beverage Margins and Bar and Tavern Marketing
Alcohol is typically the economic engine of a bar or tavern.
Liquor and cocktails often carry the strongest margins. A drink that sells for $10 or $12 may contain only a few dollars in ingredients. A business maintaining a 20% beverage cost retains an 80% gross margin before labor and operating expenses.
Actual margins vary according to the product, pour size, market, concept, pricing, inventory controls, and waste. However, the basic relationship remains the same: premium beverages can generate substantial gross profit from a relatively small amount of product.
That creates several marketable opportunities:
- Signature cocktails
- Premium spirit upgrades
- Seasonal drink menus
- Whiskey or tequila flights
- Local craft beer
- Wine features
- Limited-time drinks
- Cocktail-and-food combinations
- Premium zero-proof beverages
The strongest campaign will not simply advertise “great drinks.” Nearly every competitor can make that claim.
Marketers need to identify the beverage with the best combination of margin, customer appeal, visual presentation, and competitive distinction.
A signature cocktail may be more valuable to promote than a basic well drink because it differentiates the establishment while increasing the potential value of the transaction.
How Bar and Tavern Marketing Builds Beer Sales and Repeat Visits
Beer may not always produce the same percentage margin as premium cocktails, but it can generate dependable volume and frequent repeat visits.
It is often central to neighborhood taverns, sports bars, breweries, and casual gathering places. Draft beer can be particularly profitable when the operator properly controls keg costs, serving sizes, foam, waste, pricing, and unauthorized giveaways.
Beer also connects naturally to recurring customer occasions:
- Football Sundays
- Local team watch parties
- Pint nights
- Live music
- Pool or dart leagues
- Post-work gatherings
- Craft beer features
- Weekend social occasions
The marketing opportunity is not simply that the business sells beer. The opportunity is the occasion built around the beer.
Customers are choosing where to watch the game, meet coworkers, hear a local band, or spend time with friends. The beverage creates the transaction, but the occasion creates the visit.
Food Increases the Value of Each Customer
Food generally carries a lower gross margin than alcoholic beverages, but it can significantly increase the total value of a customer visit.
US Foods reports that food costs average approximately 28% to 32% of food revenue across many full-service and limited-service restaurants. The actual result depends on the concept, menu, ingredient costs, pricing, waste, and portion control.
Food can help a bar:
- Increase the average customer check
- Extend the length of a visit
- Encourage another beverage purchase
- Attract customers who are not primarily drinkers
- Develop lunch or dinner traffic
- Support group visits
- Compete for private events
- Create visually appealing marketing content
Popular tavern foods often include burgers, wings, pizza, tacos, nachos, sandwiches, fries, and shareable appetizers.
The marketer should ask:
“Which menu item gives you the best combination of margin, sales volume, preparation efficiency, and customer demand?”
A signature burger, wing night, pizza package, or shareable appetizer can provide a specific marketing hook. It gives customers a clearer reason to visit than a general claim about good food.
Bar and Tavern Marketing Can Increase Average Customer Spending
A full bar is not necessarily a profitable bar.
The financial value of customer traffic depends on what customers purchase, how long they stay, and whether they return. Twenty people ordering premium drinks and food may be worth more than forty people purchasing one discounted beer.
A bar can increase the value of a visit through:
- Premium beverage upgrades
- A second drink order
- Appetizer attachment
- Entrée purchases
- Flights and samplers
- Group packages
- Event admission
- Private-party bookings
- Return visits
This is why marketers should not measure success only through attendance.
The objective is to attract profitable customer behavior.
For example, trivia may increase the number of people in the building. Trivia combined with team appetizer packages and featured beverage options creates a more direct path to increased sales.
Using Bar and Tavern Marketing to Fill Underperforming Dayparts
Many bars are already busy on Friday and Saturday nights. Promoting an already crowded period may produce little incremental revenue and can even create service problems.
The more valuable marketing opportunity may be:
- Monday or Tuesday evening
- Wednesday after work
- Thursday entertainment
- Sunday sports viewing
- Afternoon happy hour
- Lunch
- Late-night food
- The period between lunch and dinner
Unused seating represents lost revenue because many operating costs continue whether the room is full or empty.
Before developing a campaign, marketers should determine:
- Which daypart has available capacity
- How many additional customers can be served
- The average value of each customer
- Which products should be promoted
- Which audience is most likely to respond
- What occasion could change customer behavior
The objective is not to discount a successful Saturday night. It is to create incremental, profitable traffic when the business has the capacity to serve it.
Entertainment Must Produce Spending, Not Just Attendance
Entertainment can turn an ordinary operating period into a scheduled customer occasion.
Common opportunities include:
- Live music
- Trivia
- Karaoke
- Comedy
- Open-mic nights
- Pool or dart tournaments
- Watch parties
- Holiday events
- Theme nights
Recurring events are particularly marketable because they can become habits.
“Trivia every Thursday at 7” is easier for customers to remember than an irregular series of unrelated promotions. It also gives marketers a consistent message that can be repeated through broadcast, digital, email, social media, and in-store promotion.
However, a crowded event is not automatically profitable. Entertainment can require performer fees, additional labor, security, equipment, licensing, promotion, and cleanup.
Marketers need to determine whether the event attracts customers who:
- Stay longer
- Purchase food
- Order multiple beverages
- Bring friends
- Return on other days
- Become regular patrons
The goal is not merely to fill the room. It is to create profitable attendance.
Private Events Can Produce High-Value Transactions
Private parties and group bookings are often underpromoted.
Potential occasions include:
- Birthdays
- Company gatherings
- Retirement celebrations
- Reunions
- Holiday parties
- Club meetings
- Wedding-related events
- Fundraisers
A private event may generate revenue through reserved-space fees, food packages, beverage minimums, entertainment, and group purchases.
One private booking can be worth substantially more than a series of individual customer visits.
Search marketing, paid social media, email, digital display, and dedicated website content can reach customers who are actively looking for a place to hold an event.
This allows the establishment to compete for entire groups, not just one customer at a time.
Zero-Proof Beverages Expand the Customer Base
Some consumers are drinking less alcohol without abandoning nightlife, restaurants, or social gatherings.
Industry research published by Numerator found that nonalcoholic beverage spending grew faster than alcoholic beverage spending, reflecting growing interest in new beverage occasions and premium alcohol-free options.
Bars and taverns can respond with:
- Premium mocktails
- Nonalcoholic beer
- Alcohol-free cocktails
- Specialty sodas
- Creative teas and refreshers
- Food-centered visits
- Entertainment-driven occasions
These products should not be treated as an afterthought. A well-developed zero-proof drink can carry an attractive margin while serving customers who might otherwise limit their purchase or avoid the establishment.
A customer who does not drink alcohol can still order food, bring friends, attend events, celebrate an occasion, and become a regular patron.
Marketers should position the establishment as a social destination, not merely a place to consume alcohol.
Common Bar and Tavern Marketing Mistakes
Promoting the Establishment Without Promoting an Occasion
Customers do not generally decide they need to visit a bar. They decide they want to watch a game, meet friends, eat dinner, hear music, celebrate, or relax after work.
Marketing should begin with the customer’s desired occasion.
Using Discounts as the Entire Strategy
Discounts can produce traffic while weakening the margin marketers are trying to leverage.
A low-price offer may attract customers who do not return without another discount. It can also reduce revenue from customers who would have paid the regular price.
Stronger promotions can add value through:
- Entertainment
- Bundled offers
- Limited-time products
- Loyalty rewards
- Contests
- Exclusive experiences
- Group packages
- Priority seating
Focusing Only on New Customers
Regular customers already understand the location, atmosphere, menu, service, and pricing. Giving them another reason to return may be more efficient than continually acquiring first-time visitors.
Email, text messaging, loyalty programs, retargeting, social content, and recurring promotions can help increase visit frequency.
Ignoring the Customer’s Digital Decision Process
Customers may check reviews, hours, menus, photographs, entertainment calendars, cover charges, and parking information before visiting.
Marketing that creates interest but directs customers to incomplete or outdated information can lose the sale before the customer arrives.
Bar and Tavern Marketing Discovery Questions
Before presenting a marketing plan, we should ask:
- What percentage of sales comes from liquor, beer, wine, food, and events?
- Which products produce the strongest gross margins?
- What is the establishment’s average beverage cost?
- What is the average customer check?
- Which days and times have unused capacity?
- Which events produce the strongest sales?
- Which food item generates the best return?
- Which type of customer spends the most?
- How frequently do regular customers return?
- Does the business offer private parties or group packages?
- Are discounts generating profit or merely attendance?
- How will the financial result of the campaign be measured?
These questions move the discussion away from generic promotion and toward a measurable business opportunity.
Good, Better, Best Bar and Tavern Marketing Strategies
Good: Build One Profitable Customer Occasion
Select one underperforming daypart and develop a consistent reason to visit.
The plan may include local media, paid social, email, text messaging, and accurate online event listings.
The objective is to generate profitable traffic during a period with unused capacity.
Better: Increase Traffic, Spending, and Frequency
Promote two or three recurring occasions using broadcast, streaming audio, paid social, search, retargeting, email, and loyalty tools.
Feature high-margin beverages and profitable food items as part of the occasion.
The objective is to increase customer count, average spending, and return frequency.
Best: Own a Profitable Market Position
Use television, radio, streaming video, paid social, search, geofencing, retargeting, database marketing, content, promotions, and signature events.
The establishment can build market ownership around a specific occasion, such as:
- Sports viewing
- Live music
- Premium cocktails
- Trivia
- Nightlife
- Food and drinks
- Group celebrations
The objective is to become the first establishment customers consider for that particular experience.
The Marketer Takeaway
The money in bars and taverns is primarily found in high-margin beverages, supported by food purchases, repeat visits, profitable events, private bookings, and stronger use of underperforming dayparts.
Marketers should begin by identifying:
- The highest-margin product
- The most valuable customer
- The most profitable occasion
- The weakest usable daypart
- The customer behavior that needs to change
The solution may include advertising, promotions, digital content, event development, customer retention, reputation management, database marketing, or a combination of these tools.
When the strategy is built around the establishment’s actual profit centers, marketing becomes more than awareness.
It becomes a tool for increasing profitable customer visits.
That is where the money is.
Industry Sources and Further Reading
- BinWise: Understanding Bar Profitability and Gross Margins
- US Foods: How to Calculate and Manage Food-Cost Percentage
- Restaurant365: Understanding Restaurant Food Costs
- Numerator: Beverage Trends Shaping Consumer Spending
- Associated Press: Growth in Nonalcoholic Beer and Mocktails
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