For our purposes, the actual beverage cost percentage isn’t that important. The number itself is relevant to the overall concept. Some bars and restaurants will naturally run a higher cost and make up the difference elsewhere. For most, 20% is average. Personally, I always liked to see mine hover around 18%.
Here are six way to keep your beverage costs low:
Inventory & Inventory Variance
A good beverage cost starts with understanding your product. More importantly, the movement of that product. And it all starts with ordering and inventory.
Variance is the difference between what you actually have in-house and what your records show. The further apart these numbers are the greater variance you have. A deviation in inventory-to-actual product will throw off your costs. To keep your variance low, update your inventory sheets regularly, take your time counting product, and do your inventory counts on the same day each week. Sunday works best for most establishments as it’s the last calendar day of the week.
Keg Lines & Taps
Your draft system is a cash cow when used properly. The margins on draft beer, especially crafts and imports, are definitely in favor of the house. Keeping a clean and properly working keg system is an absolute must. Here’s a few tips:
- Clean your beer lines at least once a month. Most manufactures will tell you once every two weeks for optimal cleanliness. The point is: get it done. Dirty beer lines lead to yeast build up, bacteria, and mold. None of which you want and neither do your guests.
- Leaks are a major concern with draft systems. That’s money going down the drain (pun intended). If you see a leak, fix it, or have it fixed, immediately. Don’t wait!
- Properly training bartenders to pour beer will save you a lot of money in the long run. An employee who wastes product while pouring beer will have a direct impact on your beverage costs. As you know, kegs aren’t cheap. Here’s a great tutorial for newbies.
At some point, every bar or restaurant manager will have to face the ugly truth; that great bartender might be stealing from you. Even with tight inventory controls and cameras watching their every move, bartenders still find ways to give booze away for free. Whether it is the pursuit of big tips or to make sure their friends have a blast on your dime, here are a few things to look for:
- Floating checks- This is when bartenders use the same check for multiple tabs. Typically, this only works if the guest pays with cash. Keep an eye on ticket times. If an employee has a Bud Light open from four hours ago, that’s a bad sign.
- Calling out prices instead of presenting a check. Watch out for bartenders who deliver “verbal checks” to customers instead of an actual printout. If the guest pays with cash, it’s very easy for the bartender to not ring in the items and pocket the difference.
- Giving away keg beer for free. Inventory-wise kegs are notoriously hard to track. Make sure your bartenders are headed back to the POS to ring in drafts after they’ve been poured.
- The top shelf pour for a well price trick. This is when a bartender pours top shelf booze but rings up a well drink. This one is usually reserved for big-tipping regulars and friends.
- Bringing in their own bottles. This one is extreme but it happens more often than you’d think. A bartender brings in a bottle of a popular liquor, they keep the cash, and your inventory remains the same.
Liquor Pour Systems
This one goes right along with employee shrink. One of the fastest ways to increase your beverage cost is to let bartenders “free pour.” Bar guests love a heavy-handed bartender, owners do not. Make sure your employees are using a jigger (or other pour device) when pouring liquor drinks. Over pouring guests is a no-no on multiple levels. It leads to intoxicated patrons, high liquor costs, and a lack of consistency in cocktails.
Keep it simple. Keep it standard. Use a pouring device.
Balance is the secret to a lot of things, drink prices are no different. If they're too expensive guests won’t (usually) buy, and if they're too cheap you’ll lose money on the back-end. The price of your drinks is very important so be cautious before you set them in stone. Here are a few factors to consider:
- The competition- What prices are your competitors offering? This is something you need to consider. If Bar A down the street is similar to you in concept and clientele, it’s probably a good idea to go a little lower. But just slightly.
- Knowing your pour costs- If liter bottle A is $20 and yields 22 drinks (assuming your standard pour is 1.5oz), that means your pour cost is $0.90. Knowing your pour costs is critical to pricing out drink menus. When pricing, don’t forget to include the price of mixes, garnishes, and other drink ingredients that accompany cocktails. Those small amounts add up over time. Here’s a drink price calculator to save you some time.
- Mixing it up- Adding a few high-priced drinks to your cocktail menu can actually be a good thing. It’s okay if they rarely get ordered. As long as your lower cost money-makers are selling, expensive drinks elevate the type of clientele you’re bringing in and drive top-line revenue.
Always make it a point to befriend your distributors. Even if you have six of them, take the time to get to know them. Always make a valid attempt at making their lives easier. Always be polite, professional, and easy to work with. Distributors get deals on products all the time and they’re more likely to “help you out” if they like you. Happy distributors mean great deals, and great deals mean a lower beverage cost.