58 hours of revenues: The steep cost of incidents for bars, nightclubs
Investing in safety, peace of mind and ID scanners: Forensic ID verification solutions have emerged as the most efficient way to safeguard businesses and bottom lines. Sometimes for less than 2 hours of revenues.
Introduction
At the heart of every thriving bar and nightclub is the unspoken hero of safety. While optimism is the lifeblood of hospitality, the reality of potential risks necessitates a strategy that prepares for the unexpected.
So, what is the cost of a lack of safety? Did you know that a single safety incident could potentially cost your establishment the equivalent of a week's revenue?
And can a venue take proactive steps to safeguard its patrons, staff, and business?
Unpacking the direct financial toll
Imagine a great night of revelry for patrons and a profitable evening for the business being ruined by a single violent act of a bad actor who just didn’t know how to behave.
A bar brawl in Pittsburgh resulted in a staff member being stabbed and taken to the hospital, while the venue lost revenue due to the shutdown for clean-up and restoration.
A Restaurant Confessional series post on Vice talks about how a Manchester venue in the UK went from earning £50,000 a night to less than £10,000 on most nights after a massive bar brawl that resulted in patrons and staff being injured, besides extensive property damage. They even had to surrender their liquor licence.
Now, some would argue, you have insurance. But does that cover hospital costs for your staff and legal liabilities among other things?
And what about the considerable time spent chasing insurance claims and the steep rise in insurance premiums?
Bills soon spiral out of control: hospital bills could surge to $10,000 or more; damaged furniture might cost $5,000 to replace; vanished inventory, perhaps $2,000 to replace; and a damaged TV could set you back another $1,000.
At the lower end of estimates, you are looking at a staggering $10,000 from a single event.
A week's work for a moment's crisis
Let's put these figures in perspective against your venue's pulse – its revenue.
If you're clocking in $500,000 annually across a 56-hour week, you're making roughly $171.65 per hour.
To recoup approximately $10,000 in direct costs, you'd need to dedicate about 58 hours of operation. That's an entire week's revenue sacrificed to recover from the direct costs of one safety lapse.
The hidden costs: Indirect and intangible
Yet, there's a deeper financial undertow – the indirect costs.
Legal fees and fines resulting from incidents can average between $15,000 to $30,000.
A Milwaukee tavern had to pay a $1.9 million settlement for negligence after a customer was paralyzed in a bar fight with another patron. The argument that it was another patron who was responsible for the injury did not stick in the court of law.
Operational disruptions and hiring temporary staff can incur costs of $10,000 to $20,000.
Wages paid during work stoppages and administrative time spent on handling incidents may add up to $5,000 to $10,000 each.
Depending on the severity of the incident, the total indirect costs can reach upwards of $65,000, significantly straining a business’s finances.
When the dust settles, you could be facing an overall financial fallout of $75,000 per incident. For the local bar and nightclub, this isn't just a dent; it's a dire strain on resources.
The ripple effect of reputation
We haven’t even gotten into the lost revenue due to reputational damage like the bar in Manchester found out.
In the nightlife arena, reputation is king. The ripple effect of reputational damage, while elusive in its quantification, can erode customer trust and slice into long-term revenue streams.
What is/are the solution/s?
You could take a multi-layered approach, with more security personnel and enhanced surveillance.
In many cases though, given the costs involved and its lack of efficacy, it isn’t sustainable.
You could, of course, regularly train your staff in conflict resolution and emergency response.
However, that focuses on damage control after the incident.
As a responsible business owner, you want to focus on prevention and create deterrence.
In the face of these challenges, ID verification has emerged as perhaps the only solution that balances the scales of practicality and investment.
Mitigating risks with ID verification
Identity verification is a strategic pivot from mere regulatory adherence to fostering a trusted, secure environment. By validating the authenticity of IDs with precision, venues can drastically diminish the risk of costly incidents.
Forensic ID verification solutions, like Patronscan, spot fake IDs, flag expired identification documents, and even stop minor access to age-gated products and services.
The biggest impact ID verification solutions have is in creating deterrence.
And the small number of incidents when they do happen, Patronscan also creates accountability.
Our Shared Flag Network allows establishments to flag troublemakers on a private (internal) or a public (industry-wide) network.
Notes of information about their transgressions are displayed when these patrons head to other establishments and produce their IDs at the entrance.
Venues can place internal flags for a period of up to 5 years, while a Public (industry-wide) flag can be for a period of up to 1 year.
Our customers are free to make admission decisions based on the flag information.
Often, our customers and even law enforcement, as part of official investigations, were able to spot troublemakers in the scan history.
Adopting advanced ID verification technology is a strategic move, not a mere line-item expense.
It's about protecting the financial and reputational backbone of your venue.
Our customers have seen a drop of up to 95% in incidents at their establishments after bringing in Patronscan, translating to savings on both direct and indirect costs while fortifying their reputation.
Potential insurance benefits
Moreover, the pre-emptive nature of such measures could lead to reduced insurance premiums.
Insurance providers, recognizing the value of advanced ID verification in risk mitigation, may offer lower premiums to venues implementing these systems, providing a tangible return on investment.
For instance, SHOP Insurance offers discounts on insurance premiums for venues that have Patronscan.
Balancing practicality and costs
In a sector driven by experience and efficiency, decisions on safety investments must weigh practicality and costs.
Many safety enhancements demand resources and continual investment.
Yet, ID verification stands out for its cost-effective, operational alignment and preventive assurance, making products like Patronscan’s Elite 2.0 an essential component of a venue's safety strategy.
And all of this for less than 2 hours of revenue per month.
Conclusion
The conversation around venue safety is complex and multifaceted, but the message is clear: investing in proactive safety measures like ID verification isn't merely a choice; it's an imperative for the conscientious venue operator.
It's a commitment to preserving not just the financial ledger but the very essence of a venue's success – its sense of security and community trust.
Don't let the cost of a safety lapse become your venue's reality.
Reach out to discover how our ID verification solutions can become the cornerstone of your comprehensive safety strategy, and together, we'll ensure the music plays on safely in your establishment.
Sources:
https://www.warshafsky.com/Settlement/BarFightNegligence
https://www.vice.com/en/article/j5qvby/how-to-survive-a-bar-brawl
