If you run a bar or night club, it can be difficult to decide whether to charge a cover. Many establishments give the cover to an outside promoter in exchange for generating customers to increase bar revenues. I am not a fan of this practice because it gets some of my bar and nightclub clients in bad situations. Some promoters are required to supply or pay for security guards. I find this doesn’t always result in licensed security staff or the optimal amount of security for the event. I also don’t like when the liquor license holder loses control over the type of customers visiting its establishment. There are, however, some responsible promoters who generate quality business for establishments.
So, looking at situations where there is no promoter involved, how do you make the decision whether to charge a cover? Here are some situations when you should charge a cover:
- You have a special event and a captive audience – outside entertainment is a prime example
- When there is a high demand and you need to limit how many people enter the establishment
It boils down to simple supply and demand. But there is another important revenue generator that can be used as an alternative to (or in addition to) a cover charge: increase your drink prices on these high-demand nights when you have a captive audience. This will help cover the additional costs for security, the entertainment and your servers/bartenders. There is no rule that your drinks have to be the same price every day of the week. Consider having two menus with different prices or investing in easy to change digital technology that can be changed on demand.