What is a good bar cost percentage?
Asked by: Lou Stamm Jr. | Last update: March 30, 2025Score: 4.4/5 (15 votes)
What should your beverage cost be? You might be asking yourself: What is a good liquor cost percentage? Generally, most bars and restaurants should strive for a pour cost between 18% and 24%. The average bar has a pour cost of 20%, indicating that every dollar of beverage sales generated costs the business 20 cents.
What is a good beverage cost percentage?
A good beverage cost is ~18-20%. 20% for beer, 14% for liquor, and 22% for wine. The average pour cost for bars across all beverage categories is ~18%, with target beverage costs typically baselined at 20%.
What percentage profit should a bar make?
As a rule of thumb, bar owners can expect their net profit margins to fall between 10-15%. Of course, that number isn't set in stone. Depending on the type of bar you operate, where your bar is located, and the alcohol your business serves, your profit margin could be significantly higher or lower.
What is the average markup in a bar?
The standard liquor markup in bars is around 400 to 500%. That's the highest of all types of alcohol. And that's the reason why high-volume nightclubs that sell a lot of shots are some of the most profitable in the hospitality industry. They also help cover a lot of the bar's overhead expenses.
What is the ideal markup percentage?
Most companies will set an average retail markup—also known as a “keystone”—of 50% or 60%, but it really depends on product and industry. Luxury goods have a much higher markup, while small kitchen appliances, for example, tend to have a lower markup. Your markup percentage may also vary as your business grows.
How to Calculate Bar & Food Cost Percentage for Your Restaurant
How to calculate bar drink prices?
- Liquor cost calculation: Bottle Price / Ounces in Bottle = Liquor Cost per Ounce.
- Pour and beverage cost calculation: Cost to Make the Drink / Price You Sell It for = Pour Cost. ...
- Drink price calculation: Liquor Cost / Pour Cost in Decimals = Drink Price.
Is 20% labor cost good?
An average of 20 to 35 percent of gross sales is considered a typical labor cost percentage. However, this largely depends on the industry,” says Aaron. To calculate the percentage, divide the labor cost by gross sales and multiply by 100.
How do you manage bar costs?
- Track your inventory to identify which products are selling and which are not. ...
- Reduce waste by training your staff to pour drinks accurately, using jiggers and measuring cups, and by using software to track your inventory and sales.
- Negotiate with suppliers to get better prices on products and services.
What is the formula for bar profit?
Start by tracking all the income your bar generates, including sales from drinks, food, and any additional services. Once you have that total, subtract all of your costs, such as labor, inventory, rent, utilities, and other operating expenses. This final number is your net profit.
What type of bar is most profitable?
Some of the most profitable bar ideas include sports bars, craft beer bars, wine bars, and cocktail bars.
How to increase sales in bar?
Create an atmosphere
One of the best ideas to improve bar sales is to change the environment. Outdoor seating, lighting, and more space at the bar are great ways to bring in new customers. Adding more space at the bar can make it easier for patrons to get to the bar to order.
How to calculate bar costing?
- Bar Inventory Cost = Cost Of Goods Sold / Total Sales. ...
- Step 1: Choose a Timeframe. ...
- Step 2: Take a Physical Inventory Count. ...
- Step 3: Calculate Your Cost of Goods Sold (COGS) ...
- Step 4: Determine Your Sales. ...
- Step 5: Calculate Your Inventory Cost.
How to lower bar cost?
- Set a target pour cost. ...
- Set a pour policy. ...
- Adopt a zero-tolerance policy on staff theft. ...
- Avoid waste. ...
- Get to grips with inventory management. ...
- Set a par level for each liquor. ...
- Buy in bulk to take advantage of volume discounts. ...
- Target promotions at new customers.
What is the cost of sales in a bar?
Your cost of goods sold, or COGS, are the direct costs related to producing items sold at the bar, such as liquor costs and food costs. COGS represent one part of your prime costs — with labor costs representing the other. Keeping your COGS under control has a direct impact on your bar's profits.
What are typical bar profit margins?
VAR or MSP Margins
The industry average for maintenance ranges from 10-25%, with 20% being the most common. Upgrade prices vary more.
What is a healthy COGS percentage?
A good average COGS ratio to aim for is between 30-35% — or about half of your restaurant prime costs. You can track your restaurant COGS and COGS ratio over time to identify trends and determine if you're truly controlling your total food costs.
What is the percentage of beverage cost?
What should your beverage cost be? You might be asking yourself: What is a good liquor cost percentage? Generally, most bars and restaurants should strive for a pour cost between 18% and 24%. The average bar has a pour cost of 20%, indicating that every dollar of beverage sales generated costs the business 20 cents.
What is a fair labor cost?
Labor cost percentages average 25% to 30% of company revenue. Percentages vary significantly by industry - companies providing services might have a labor cost percentage of 50 percent or more. Most production companies will try to keep their labor cost percentage under 30.
What is an acceptable labor cost percentage?
An acceptable average cost percentage is 25-35% of gross sales. This varies depending on the business, industry, and location. For example, a retail store in a small town may have labor percentages less than 25%, while the manufacturing sector may have labor percentages higher than 35%.
What is bar pricing?
Bar pricing is the process of assigning how much a customer will pay for any item on your drink and food menu. Charging the correct amount for every item on your bar menu can help you reach the goals you set in your bar business plan.
How many shots are in 750 ml?
A standard bottle of alcohol, or a fifth, has 750 milliliters, which will give you about 16 shots or 16 cocktails. One shot is typically an ounce and a half. A mini or nip has 50 milliliters, and will give you one shot. A quarter pint is 100 milliliters and will give you two shots.
What is the profit margin on alcohol in bars?
And that's mostly because of liquor cost. A beverage program with low pour cost is the beating heart of a profitable bar or restaurant. The average net profit margin for a bar is between 10 and 15%.