‘Bar Rescuer’ Jon Taffer Shares His Hospitality Business Secrets

Owning a small business is the American dream. And for millions, that fantasy comes in the form of a restaurant or bar. Although there are far more restaurants (960,000 in 2011, according to the National Restaurant Association) than bars (45,074 in 2008, according to the Census Bureau) both rank high on the entrepreneurial aspiration scale.

The old TV hit, Cheers made bar ownership seem easy, fun and, well, sexy. That’s not exactly reality; in fact, the failure rate in this industry is fairly high. But Jon Taffer, award-winning bar/restaurant owner (he got his start in 1991, opening two food and beverage concepts in the Mall of America) and turn-around consultant is determined to change that — and we can all watch him do it. Bar Rescue, his new reality TV show, debuts Sunday, July 17th on Spike TV.

Taffer is excited about his new show, hoping to do for bars what “Emeril [Lagasse] and Gordon [Ramsey] did for restaurants — revive consumer interest.” To help both existing and aspiring bar owners Taffer says he’s created a show packed with “lots of how-to information.” I talked to Taffer about the show, why bars fail, and what makes a concept successful.

Some of his advice is counter-intuitive. Taffer insists a bar or restaurant’s success is not about the food or drinks they serve. “We serve reactions,” he asserted, “whoever creates the biggest reaction wins.” Taffer considers bar ownership “a noble cause” because we “provide smiles.”

Of course, that’s not all there is to it. A lot of folks go into the bar or restaurant business because they think it’s fun. But Taffer warned, “This is a really hard business, you work 16-18 hours a day. Too many people [open bars] out of personal ego. You’re building a business, not a monument to yourself.”

Competition is fierce, but Taffer said you can win customer loyalty by following his trademarked “reaction management” system GROWS (Guest Reaction Opportunity Windows). Remember TV’s Cheers was the bar where “everyone knows your name?” That’s actually a component of GROWS, training the bar’s staff to repeat the name of returning customers, to be interactive and compliment a patron’s new shoes or hair style. Success is not about prices, either. “No one leaves a great bar, and talks about the low prices. Don’t be cheaper,” Taffer urged, “be better.” (Obviously you don’t have to own a bar to benefit from this advice.)

Mistakes are common, though, which explains the high failure rate. The biggest error?  No shocker here, it’s not having enough money. But Taffer advises those who fail the first time to try again. “After making rookie mistakes,” he said, “your odds of success are 500 times greater.”

It’s not just a lack of funds that trip up rookie bar owners, Taffer explained, it’s misunderstanding the business model. “Bars are not retail, you have to manage by the moment. You need firm reporting and internal accounting systems.” Taffer claimed he “can walk into a bar, look at one page of the financials, and know everything about that business in five minutes.”

On Bar Rescue Taffer will unveil part of his turn-around playbook. He’s wrapped entire bars and restaurants in white sheets, hung a “top secret” sign on the front, and watched the buzz build. And he’s used “positive picketers,” people milling around a restaurant with signs declaring, “The food is too good.”

Like all entrepreneurs, bar owners have to keep up with customer demand and expectations. When it comes to popular concepts, Taffer noted, “the pendulum swings back and forth.” The once-popular dance (hip-hop) clubs have given way to smaller, more intimate bars. Citing a Cuban bar in Philadelphia, he said “infused concepts” are particularly hot right now. These “tie food, beverage and ambience” together to create a special mood.

Taffer maintains that consumers “expect more” from bars these days. And he attributes that to… Starbucks. The coffee giant, he said, is essentially “a bar for teens. It’s where they first experience social interaction. When they become adults, they’re more open to intimate drinking environments.”

Maybe that’s one reason Taffer predicts a healthy future for the bar industry.  The graduating college class of 2012 is the largest in history, and Taffer expects them to be headed to the bars as they enter the workforce.

If you’re intrigued, opening a “typical” bar will cost you about $120,000, or much more in the center of a big city. Despite all the hard work, and potential risks, Taffer said “When [a bar] works, the pleasure derived from this business is like none other. You watch people enjoying themselves, as the sounds of ‘ka-ching, ka-ching’ ring in your head.”