This area recently had an explosion of bars with massive tap selections. From 16 to 30 to 40 an even two bars competing for the most in the state at 64. Should you be looking at adding more beer taps to remain competitive?
First, let’s look at the benefits of tap beer. Generally, tap beer is more profitable than bottled beer. Additionally, it’s fresher and typically tastes better. Beer connoisseurs tend to seek out places that have a good tap selection. That said a good beer selection doesn’t have to be a massive beer selection.
Look at Your Sales
When you’re deciding whether or not to add more taps you need to take a look at your customer base. What is your ratio of beer to liquor to wine to non-alcoholic beverages. Your beer sales should be typically be more than your other beverage sales combined other than and maybe even including soda if you’re considering a large increase in your taps.
Adding taps is typically a very expensive endeavor. Not only do you need to install new tap lines, but you’ll need to additionally have the cooler space or add the cooler space for your extra kegs. An eight-tap system can easily be over $10,000. While this is a significant cost, it can be a great investment if you are already selling a lot of bottled beer as you can now make much more off of selling tap beer. Additionally, you may be able to attract new customers with your increased selection. However, two further costs to keep in mind is the additional cost of cleaning the extra beer lines every two weeks as well as the additional electricity cost of running the extra cooler space.
Recent Additions In The Fox Cities
If you’re looking at the three bars in the area that recently added a massive amount of taps (more than 30), only one remains. While this may reflect a poor decision, it’s not entirely fair. The one of the three restaurants/bars that made it was a national franchise known for it’s selection of over 500 beers on tap or in bottles. Of the other two, one was underfunded with a rotation of managers and the other had an owner known for seedy personal and business practices. Therefore, a massive amount of taps isn’t initially indicative of a poor business decision. One downtown bar installed 30 taps upon open a few years ago and has seen a steady business since then. Many other bars in the area added to the their tap selection in recent years with positive and profitable results.
Objectively, I think the average tower is probably good within the range of 8 to 12 taps. Sports bars may need a little bit more while supper clubs or restaurants without strong bar sales can have a bit fewer. Smaller event spaces may operate out of either a kegerator or may have no taps at all.
As someone that tends to seek out rare beers and a good variety of beers, I appreciate a diverse tap selection more than I appreciate a large quantity of taps. Especially in bars that carry more than 30 taps, I have a large concern over the quality of the beer in the kegs. Oftentimes these types of beer can sit in the keg for months upon months. I particularly think of good but not great beers on tap. In bars with a massive selection, for a beer that is merely good there is nearly always a better option on tap which leaves the good beer sitting way too long and becoming a bad beer. The situation forces you to put beer on sale reducing the benefit in margin of having tap beer over bottle beer.
In general, you do not want to have any keg longer then a month without flipping it out. After that, the quality starts to reduce quickly and your backup inventory can get out of hand. Additionally, if this tap is not a national brand or a popular local favorite, it can become even less desirable to regulars that are looking for a new choice.
On The Fence?
If you’re still on the fence, take a look at your most popular selling bottled beer. Are you selling several cases a month? What would your difference in margin be if you sold it by the pint as tap beer? Extrapolate this cost over a year, 3 year, and 5 year period. Are you able to pay off the cost of a new tap installation in a relatively short period of time in order to start receiving the financial benefit? It doesn’t pay to spend several thousand dollars installing a new tap system only to make an extra $500 a year.
Doing The Opposite?
Conversely, you could compete back against the massive tap system by going in the opposite direction and having just one tap, but making it the best beer that you can get in the city. In this way, you create almost an exclusivity that brings new beer seekers to your bar. If you go this route, make sure you have a good selection of fallback bottle beer.
Well it may be tempting to want to add a bunch of new taps to your bar, be sure you evaluate your clientele and do a full cost analysis to determine if you will actually make money off of the venture. Otherwise, you’re doing it just because everyone else is, which is rarely a good decision.