Those profit margins are horrible. Is the city/area dilluted with bars, thus
highly competitive? Is the local economy horrible? In either case, opening
another bar is even riskier than normal - and it's a risky business to begin
with.
Also, when calculating your retail prices, a good method to use is "Costing".
I've seen liquorcost range from 20-30%, and I've worked in one bar that
consistently had around 18% liquorcost, depending on the sales mix. So, for
an example, if you had $100 in liquor sales, your actual cost of goods sold
should land between $20 - $30. Many bars will use this method to calculate a
rough base price, and then round up, or create a tiered pricing system for
their liquors that falls somewhere near this range.
So, using the numbers you gave, let's figure out this guy's liquorcost:
Cost = $43.50 Retail = $4.00 x 14 (being very liberal, assuming an average
1.75 oz pour) = $56. $43.50/$56 = 78% cost
I can't see how this guy stays in business, unless he's extremely high volume,
or is subsidized by a state lottery system (many bars in Oregon make nearly
all of their profit from the video crack machines). The $12.50 he makes in
profit will get eaten up by the mixer, ice, supply & labor costs, not to
mention fixed costs such as his lease, insurance etc.
Using this system will also be very helpful in doing a weekly inventory. Draft
beer costs typically are around the 25% cost range, Bottle beer and wine
higher at around 30%. Obviously these goals are all market driven, and can be
higher and or lower based on a myriad of factors.
--
Cheers! - Josh @ BarSim
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http://www.barsim.com
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BarSim (tm) - The Ultimate Bartending Simulation
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All About Bartending - The Blog http://allaboutbartending.blogspot.com/