what is a good beverage cost percentage

Regular coffee - 15 percent to 20 percent (assumes 8-ounce cup, some cream, sugar and about one free refill). Prime cost factors in total cost of goods sold (food plus beverages) plus total labor costs. But even if a bar’s cost percentages come close to these arbitrary targets, they may still be too high. You can see that the average food costs for the month shown where around 30%. Soft drinks, juices, coffees, and other non-alcoholic beverage sales are included in food cost calculations. If you want to go by industry averages, shrinkage hovers around 20%. Food cost percentage is calculated by taking the cost of good sold and dividing that by the revenue or sales generated from that finished dish. Food cost percentage indicates what proportion of your revenue is spent on buying food and beverage supplies for your restaurant. If you want to go by industry averages, shrinkage hovers around 20%. Food Cost $96,678.00 Beverage Cost 12,188.00 Variable labor Cost (40%) 32,503.60 Total Variable Cost 141,369.60 50. This applies to the non-alcoholic beverage costs discussed below as well. Remember, we’re dealing with food. Total food cost percentage examines the cost of all food supplies at your restaurant and total revenue over a certain period of time. On that basis, most operators are happy if their liquor pour cost is around 15%, draft beer in the neighborhood of 20%, bottled beer close to 25% and wine between 30% - 40%. As a general rule, your combined CoGS and labor costs should not exceed 65% of your gross revenue – but if your business is in an expensive market, you … ‍Liquor cost, beer cost… To make this example easy, let's go back to the straight pour of Maker's Mark: If the house is seeking a 22 percent pour cost, it takes the total price of ingredients (in this case, $2.50) and divides it by the desired pour cost percentage (.22) to get the bar patron's cost. How to Calculate Your Liquor Costs Cost of goods sold is the amount of money you’ve spent on ingredients and inventory in a given time period – we’ll show you how to calculate that, too. Total costs = 2.25 * 1.10 (10% buffer) = 2.48. Your 20 percent cost is an 80 percent margin. Since loss directly increases your pour costs, you should consider anticipated shrinkage in your pricing to create a cushion. But no product is ever as profitable as you think it will be. Beverage costs that are above industry averages can negatively impact your profitability. Bar consumables— 4 percent to 5 percent as a percentage of total bar sales. If you were to have sold wine bottle 2 however, you would have blown your bonus and would have hit a 40% wine cost, but … Liquor is about 15%, draft beer about 20%, bottled beer around 25%, and wine can be upwards of 30-40%. Soft drinks (post-mix) - 10 percent to 15 percent (another rule of thumb for soft drinks is to expect post-mix soda to cost about a penny an ounce for the syrup and CO2). What should food cost be – average food cost for a restaurant. However, we’ve found that many operators are now breaking out non-alcoholic beverage sales and costs and report on them separately as “Soft Beverages.”. Ideally, when your beverage cost goes above 21 percent of your beverage sales, indicates that something is wrong. Food & Beverage Cost of Goods Sold Percentage (%) Food and beverage costs are usually expressed in percentage of sales (revenue) when evaluating performance or setting up goals in a budget since sales and cost dollar amounts fluctuate significantly. Generally, the higher the price per bottle, the higher the cost percentage). Contact Us Today. kyalo on December 30, 2010 at 10:11 pm said: More of the beverage cost. Ideally, when your beverage cost goes above 21 percent of your beverage sales, indicates that something is wrong. FINAL POINT: While every restaurant is different, if your costs are running significantly higher than the averages above, it might be smart to investigate your pricing, beverage controls and the possibility of theft. There may be other issues going on in your business to decrease your profit margins. Typically, food and beverage cost of sales run higher for private clubs, between 35% and 42% of food and beverage revenue, while merchandise cost of sales typically average 75% of merchandise revenue. The average pour cost that most bar operators strive for is generally between 18% and 24%. The average pour cost for a bar is between 18% and 24%. Liquor cost is 37.5%. Controlling the cost involved with creating a drink. Alcoholic beverage costs: Liquor, beer and wine costs will vary among restaurants due to a number of factors but here are typical costs in percentages: NOTE – All percentages above are the ratio of each item’s cost divided by its sales, not total sales or total beverage sales. Therefore, the hotel beverage cost ratio has declined from 20.7 percent in 2010 to 19.2 percent in 2016. How to Calculate Your Liquor Costs Cost … You may also want to add a 10% buffer to the costs to account for mistakes or waste. How to calculate restaurant labor cost percentage. This means, to achieve the industry average of 20% pour cost, you should actually be pricing your drink program at an average pour cost of 16.67% to make up for expected variance. A beverage program's gross profit margin is the inverse of their beverage costs. Read on to figure out how the food cost calculator works! In an ideal bar management situation, the amount of product you sell during a given period of time and the amount of product you use during that same period would line up exactly. Your email address will not be published. ‍It's what percentage of the drink's sale price you're eating to create the drink. © 2021 Meritage Technologies. The industry average for total beverage programs is between 18-24%. The following breakdown is a good guideline for industry standard averages: • For high end bars and bars in premium locations, the average is around 20% with the typical range being 18-23% • In the middle are neighborhood bars which tend to run liquor costs with an average of perhaps 23% and a … If you were to sell wine bottle 1 you would certainly make your 35% goal, and the establishment would make a profit of $19.50 ($30-$10.50). A beverage program's gross profit margin is the inverse of their beverage costs. This means, to achieve the industry average of 20% pour cost, you should actually be pricing your drink program at an average pour cost of 16.67% to make up for expected variance. Let’s say the BevSpot Bar spends $1.00 on every beer. Acceptable ratios are largely determined by your regional market and business model, and can vary from concept to concept. Similar to public golf courses, cost of sales as a percentage of revenues are some of the more readily available metrics. Having a liquor cost at 37.5% is significantly high. Most bars seek to maintain a pour cost between 18 percent and 24 percent. Calculate the pour cost or beverage cost. Connect Bevspot to all the tools you use. Read on to figure out how the food cost calculator works! Your pour cost is how much inventory you’re using—in dollars—divided by how much of that inventory you’re selling. Soft drinks (post-mix) – 10 percent to 15 percent (another rule of thumb for soft drinks is to expect post-mix soda to cost a little more than a penny an ounce for the syrup and CO2). These growth rates are significantly less than the increases in revenue. This means, to achieve the industry average of 20% pour cost, you should actually be pricing your drink program at an average pour cost of 16.67% to make up for expected variance. Food cost percentage = (11,000 + 7,000) – 15,000 / 8,000. A few ways to Calculate your liquor costs Alcoholic beverage company profit margins generally. Is a MUST now days to maintain profitability averages, shrinkage hovers around 20 % range and.. Will give you an edge on the average pour costs, a typical ( combined ) beverage cost has! Are above industry averages, shrinkage hovers around 20 % if a bar is between 18 % and percent. % range and under arbitrary targets, they may still be too high EBITDA margin came in maximize business... 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