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 Message 12967 of 22774 in Behind the Bar
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Subject: Re: Drink Prices
From: Josh
Posted: Thu May 4. 2006, 12:00 UTC
Followup to: "Re: Drink Prices"  by Spellbinder  (Thu May 4. 2006, 06:44 UTC)
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 liquor cost range from 20-30%, and I've worked in one bar that 
consistently had around 18% liquor cost, 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 liquor cost:

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/


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