Taking a Dive: Turning the dingy local standby into a value-driven concept

By Doug Radkey

It feels like the dive bar has become trendy once again throughout Canada. But can you really create a dive bar, or is it a food and beverage concept that evolves over (a particularly hard) time? It’s customary to walk into a traditional dive bar and wonder throughout your visit how this business is even staying open. The thing is, every dive bar starts out just like any other business: brand new. So how can one just create one?

What if you add just one, counterintuitive word in-front of it, like premium?

We talk a lot about guest experience, Millennials, Gen-Zers and concepts that are trying to be value leaders within the food and beverage industry. One brand, the Warehouse Group, excels at managing all of the above, having mastered the rollout of the premium dive bar since opening its first in Vancouver’s entertainment district in 2001. The Warehouse Group now counts 19 locations across Canada, and it has become well known for its simple but unique, affordable food options, and its consistent $5.95 menu items across all of its locations.

In a time of increasing food, drink and labour costs, and skyrocketing rents, everyone must be asking the same question: how is this possible?

In its words, Warehouse restaurants provide “tasty food, refreshing drinks, energetic staff, and electric atmosphere.” With its signature brand, El Furniture Warehouse, the company has positioned itself for further growth via sustainable operating opportunities and by striving for dive bar perfection in four key areas.

Hyper-Local Targeting

Capturing the approval of each generation all at once is quite difficult, if not impossible, for most restaurants and bars. The Warehouse Group understands this and built a business model around targeting hyper-local Millennials (born 1980-1995), and the now growing and increasingly drinking-age Generation Z demographic (born after 1996).

Eating smaller meals throughout the day is now the norm for Millennials. This group likes to snack, and appetizer-like meals and smaller portions are often the way to Millennials’ loyalty. The Warehouse Group, with its $5.95 menu, hits this out of the park. Plus, both Millennials and Gen-Zers are extremely active on social media. They spend money eating and drinking somewhere that offers unique foods and beverages that will rack up likes, follows and engagements on social media. The Warehouse Group meets them there, as well; it counts tens of thousands of followers across its restaurants on Instagram, meeting the all-important expectation that it’ll be active on social media too.

It’s easy to see that, with some feasible research and effective location assessments, restaurant and bar owners can develop a business model around a couple of targeted generations, adapt to different locales and embrace both scalability and sustainability.

Value Leaders

When planning out a restaurant or bar, the core branding exercise is about fundamentally understanding what you want your concept to be known for. As mentioned, the Warehouse Group wanted to position itself as the brand that offers unique food options at a consistent, affordable $5.95 per item. This pricing strategy is on point with much of the available quick-service value menu options we see advertised today, albeit with more unique items. But how do they do it?

The key is portion control. Warehouse understands who its target customers are and that they prefer snacking or eating smaller meals. With strict kitchen and bar portion control methods, Warehouse is in a position to offer menu items under $6 while still managing its food and liquor costs. It doesn’t need large, elaborate mains to make up a meal or to show its value proposition. For example, they don’t do the traditional, large portion of shareable nachos found at most bars. At Warehouse, customers get nachos for one, with all of the same, flavourful toppings. This strategy, along with the group’s 30 or so other food options, positions Warehouse to meet its vision.

Menu Mix

Coinciding with being value leaders, Warehouse has engineered its menu to prioritize the brand’s desired food and beverage objectives: quality product at a modest price. The strategy sharpens how the Warehouse brand communicates its value to its guests while also driving its business goals.

Warehouse’s menus are strategically balanced to accommodate the varying item-to-item profit, which is crucial given its commitment to food prices starting and finishing at $5.95. There’s flexibility in the seemingly rigid system, though. Some options have add-ons, like the nachos’ braised beef, which lets guests add premium ingredients without deviating from the flat rate or upending the carefully calculated food cost.

To further help make up the difference in the lower food prices, Warehouse’s beverage menus offer classic and premium cocktails that are both hand-crafted and visually appealing, with many options around $12 to $13 per drink. A beverage strategy like this can be a brand differentiator, and the Warehouse Group is reaping the rewards.

A good menu strategy should start with visionary goals and be followed by tactical business decisions that correspond to performance. The Warehouse Group has managed to negotiate that difficult process.

Consistent Atmosphere

What are the most common mistakes that are made in the bar design? The answer: a design that lacks the many elements that drive the required energy needed to be successful. It’s plain and simple: no one wants to visit a boring bar.

When you fill a restaurant or dive bar with Millennials who are seeking a good time, cheap food, unique beverages and an electric atmosphere, you’re developing a recipe for success. It’s no secret that keeping guests in a venue for as long as possible creates more revenue generating opportunities, even if the menu is value priced. By providing a variety of interactive experiences and maximizing each restaurant’s square footage, the Warehouse Group provides the energy needed to attract guests, amplify its brand messaging and generate revenue, from daypart to evening.

Good Times, Not Hard Times

The Warehouse Group clearly understands the importance of linking targeted demographics with the right menu mix and atmosphere to build a sense of community, and also of incorporating that menu mix into its brand identity. These are just a few of the foundations required to build a successful food and beverage brand, and Warehouse gets it. They perfected the dive bar that doesn’t need the hard time.

 

Doug Radkey is the principal owner of Key Restaurant Group, a global restaurant/bar start-up development agency based in Ontario. Being in the food and beverage industry for over 17 years has allowed him to become a leading voice in the development of feasibility studies, unique concepts, business plans, marketing plans, memorable menus, guest experiences, and financial management systems. Continue the conversation with Doug on Twitter @KeyRestaurants, on Facebook @DougRadkey, on Linkedin, or by visiting keyrestaurantgroup.com.

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