Trying To Understand Bar Economics

As a business person who loves to ponder the economics of various business models I find that I am either at a total loss for how the economics of bars/go-go’s in Thailand work or there seems to be a huge potential for someone who wishes to shake up the market.  Hopefully, someone who reads this can help enlighten me.  Maybe the boys from the Big Mango Bar might want to comment.  🙂

First off, let’s look at some of the key factors most people complain about with an entertainment venue (in no particular order):

1.  Quality of the girls (both looks and attitude)

2.  Friendliness of the staff

3.  Prices of drinks

4.  Bill padding or other tricks being played on the customers

This all seems pretty simple.

The quality of the girls is probably the most complex because the bar has to recruit girls and keep an eye on whether or not they’re good or bad for the business.  So the bar owner needs to have a policy in place so that any punter who isn’t happy should get a refund on his bar fine.  Believe me, you’ll find out who your troublesome girls are real fast if guys feel like they can go back and get a refund. 

Now I know some people are going to worry about guys who abuse this system and I offer that it’s very easy to catch anybody who is a serial abuser.  The other side of the coin here is that the punter may come back to collect his refund and remain a customer whereas without such a system he might just piss off angry about the experience and never return to the bar.  I know there are several bars I refuse to go into after a bad experience or two.  So while you might be paying out 500 baht in a refund (which you could partially if not fully recover from the girl), if the guy comes in a few more nights and ends up dropping 3000 – 4000 baht over the next week while he’s on holiday then the bar is up compared to if he just left and never returned.

Friendliness of the staff usually comes down to an overall attitude.  Teach the girls how to treat customers well.  Teach them how to ask for a lady drink.  Teach them when it’s appropriate, when it’s not appropriate, and how not to take advantage of a customer.  Have someone reviewing the tabs and looking for guys who are buying lots of lady drinks and figure out if they’re getting scammed.  Too many drinks being bought for the fat, ugly waitress tells you other girls are pressuring the guys to buying drinks too hard.  Look for the girls who are being bought many, many drinks and keep an eye on them to make sure they’re not working the system by pulling stunts like the "buy me a drink and then immediately piss off to go dance." 

In terms of prices that’s going to be up to you but I would recommend publishing the prices in plain view so the customers can see what the drinks cost.  There are no "surprises" when the customer gets his tab. 

Likewise train the staff to walk the customer through each tab.  When she brings over the drinks she should show him exactly what he’s paid for so there are no disputes at the end of the evening.  When the customer goes to pay they should take the money, show it to the customer, and repeat to him exactly how much he’s given them. 

This all just seems like basic business sense.  Why isn’t there any bar focusing on the customer experience other than bigger sound systems and flashier lights? 

But even if we get away from the basic elements, I don’t understand why nobody does a better job at marketing or building a brand for themselves.  The internet is such a wonderful tool.  Why is nobody making good use of it?  Few if any bars have websites.  Why are there no mailing lists alerting me of events or special nights? 

The few bars that have set up websites usually throw up lots of pictures of girls but I’m not sure that’s very effective.  The only guys that seem to be bucking the trend (and hopefully will be well rewarded) are the Big Mango guys.  They have their website/blog which is very popular and from the sounds of things when they re-opened this week they were packed with people who knew them mostly from their website. 

People can go look at pictures of bar girls anywhere.  A good website for a bar should be engaging.  It should be updated frequently and should make people feel invested in the bar; like they are part of a community.  It should be a place for them to keep tabs on what’s going on in their favorite bar while they are back in Farangland. 

Similarly, a bar should cultivate its regular crowd with things like special drink rates for club members or frequent bar-finers (buy 10 get 1 free).  Instead of cursing the tight bastards keep the bar packed with them during the low season with drink specials, themed nights, etc. 

I’m not unrealistic.  I know that running a successful bar is difficult.  I have friends who have tried back in Farangland and have failed.  The margins are thin and all it takes is a little bad management to sink you but most of what I’m talking about here isn’t that expensive.  I’m not talking about media buying campaigns or going crazy and giving all your profits away to undercut the competition.  This is simply about providing a quality product at a competitive price and doing this all in manner which actually lowers your customer acquisition costs.

I just don’t see anybody going out there and really working it hard to make a successful bar.  Most places figure that if they get a spot in Nana, Cowboy, or Patpong (or nearby) they can live off of the foot traffic.  True you have some unique ideas like Tilac mixing coyote dancers in with the go-go dancers, Long Gun’s cabaret-ish shows, and Baccarat’s glass ceiling but none of that is really innovative. 

So anybody who knows more about the industry than I do, please shine a light on this for me because it has me completely confused. 

3 thoughts on “Trying To Understand Bar Economics

  • June 8, 2008 at 2:21 pm
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    I think u hit most of it really.

    The girl thing is a mess. Since everyone thinks it it easy to get, keep and maintain nice looking girls. If it was easy then every bar would have hotties. So it is not easy and a tough business to hand your hat on since it means the moment u dont have the girls u have no business.

    Service is key. Good drinks. U did not mention how many bars are out there that serve bad pours, fake drinks and so on. So real pours are huge.

    Not ripping people off.

    Thinking about the music.

    Good pool tables.

    Good air.

    Website, email lists and trying to interact with customers is huge. Hard to do well and we are still learning but a huge part of things.

    This list could go on and on. It is a tough business and one that u learn over time. Someday will write bangkok bar 101 but I keep re writing the first paragraph all the time.

    nice post!

  • June 8, 2008 at 7:14 pm
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    Smitty,

    Thanks for the insight. I didn’t mean to downplay the get, keep, and maintain nice looking girls part. I would imagine that is a specialty all in itself which is why I sort of glossed over it and tried to keep the focus on the mechanics of running a good bar.

    I did miss the bad pours. I quit drinking mixed drinks in Thailand unless I buy my own bottle so that one has slipped my mind 🙂

    Again, great to have an actual bar owner give his views. I think you guys are the rare exception and really, really hope it pays off for you. Of course, my motivations are somewhat self-centered as if you guys do well with that business model then maybe other bars will follow 🙂

    Bill

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