I partially disagree about pricing cocktails using a 20% method. At least it's not my end-all in case someone here is learning how to price. I prefer to make X dollars per serving of alcohol. For example, if I'm selling a Kentucky mule that costs me $2.50 to make, and it contains one serving of alcohol, I may charge $7.50 for the cocktail and make $5 per serving alcohol. If I make an Alaska cocktail for $3.50, I may charge $10.50 for the ~two servings of alcohol, putting the total price at $14. Additionally, I am happy to tack on or remove 5-20% of the cost based on how long the drink takes to make (including washing of glassware, etc), how many servings are being served at once (serving you two servings at once saves me time), and the likelihood of you ordering another drink. So with a Kentucky Mule, the drink is quick and easy to make and uses very little glassware. Additionally, it's an "easy" drink, so you'll probably order a second one. For these reasons, I don't mind charging slightly less (say $7, but even cheaper during happy hour). With an Alaska, since I'm serving you two servings of alcohol, I might also discount the price (to, say, $12-13). Closing the gap between the expensive and inexpensive drinks also pushes customers to try new things rather than the cheapest thing. A neat glass of whiskey had the lowest profit margin for me because it's ludicrously easy to make.
I know it's not the most sexiest subject in bar-tending but thank you for making this video to show off one of the most important aspects of our business, costing out cocktails!
As in any business, the profit is what keeps the doors open. That's a nice tool you've created to show where the simplest form of profit comes from. In the business I'm in we work at under 10% profit... your business ar 80%.. wow those margins are very strong.
+A Bar Above plus overpour and spillage. Nobody cann tell me that if 33 ounces of Whiskey are in a bottle, they can make 11 cocktails that each need 3 ounces. On the last cocktail the barkeeper will notice that he doesn´t have 3 ounces left in the bottle.
I'll never run a bar but fun to know now that after doing the math my personal recipe for margaritas would cost me 30 bucks a pop at a restaurant lol now I can say I make 30 dollar cocktails lol
Another technical aspect that confuses me in the bartending world is inventory. I would love to see a video from you about theoretical inventory and actual inventory and reason why there are differences. Sometimes, as a bartender for a national chain restaurant, someone will ask for a drink that is not in our system and we are instructed to charge the amount for the highest shelf alcohol used. So say a godfather, I would charge for the whisk(e)y but not the amaretto as well.
Costing cocktails is super important and I am astounded that people don't even take this into consideration when they are in the industry. I'm glad you're helping bring this topic into the light. My question revolves around the menu price. As noted in your video, at a 20% cost, the menu price of the cocktail you did here is $16+. Outside of New York, nobody charges $16+ for an Alaska cocktail. Usually you'll see it at $10. What am I missing here?
One of the reasons I chose this recipe was I didn't want this post to turn into a "that's not how I make my margarita" post. That being said, most modern restaurant and bar cocktails do not use 3 oz of gin in their recipes. They tend to be around 1-2 oz of base spirit.
A Bar Above Even using only 2oz of gin at a 20% cost produces a menu price of $13+. I'd never pay $13 for an Alaska cocktail. Do most people set their menu prices first then work backwards to figure out how big of a drink to make or what specific ingredients to use? Do you just up your pour cost to 25% to make the menu price work? I just love the business of cocktails.
Better Cocktails at Home There is a lot of strategies to be able to accept a higher Cost of goods sold (COGS) on some drinks. It's really a balancing act. Usually I would only have a cocktail on the menu that had a high COGS, if I could offset it with a much more popular cocktail, who's margins can make up the difference. For example, a long time ago I created a cocktail that was infused with multiple ingredients, house made syrups, and all the cocktail bells and whistles which ran a 9-10% COGS, resulting in a very high profit margin. It was the most popular cocktail on our menu, and I used those profits to help offset some of the cost on the rest of the menu.
+Better Cocktails at Home often you have high sales volume cocktails with very low cost of product (like a caiphirinha) which are super cheap to make. These usually balance out the cocktails with the more expensive ingredients that one has on the Menu to give variety. Of course if everybody started to drink just Alaskan Cocktails, management would have to do something. A bartender in one of Germanys best cocktails Bars once told me, that they make basically no money on a Prince of Wales unless they would charge a ridicolous amount of money, but they have it on the menu because they want variety and thats why people come to them.
( I don’t work or run a bar I just drink ) That’s way to high of a price after tips that’s $20. going by that it would be safe to assume that they will buy one drink then leave if you price this at $9 that’s roughly a 170% markup if you buy 3 that’s $30 with 18% gratuity that’s more than doable plus if you have a restaurant attached there is another source of revenue for instance if you buy 2 Alaska cocktails at $9 and you buy a burger and fries at $11 with 18% gratuity that’s $35 with my numbers you probably got a repeat customer who had a great affordable night out on the town ( again I do not work or run a bar I just drink and have a basic understanding on how things should be run)
I agree with you. This is just an example of how to price a cocktail and I would never put this cocktail on my menu at this price, but it does show you how to do it. There is a whole strategy on how to price your cocktail menu to make more money on some cocktails to pay for the expensive ingredients on another, and that's where pricing strategy and menu development really get fun :)
That's how you'd cost a drink like that anywhere. It's not really viable otherwise when you factor in hidden costs such as freight, labour, etc if this is your primary source of income. 20% cost is pretty standard.
I partially disagree about pricing cocktails using a 20% method. At least it's not my end-all in case someone here is learning how to price. I prefer to make X dollars per serving of alcohol. For example, if I'm selling a Kentucky mule that costs me $2.50 to make, and it contains one serving of alcohol, I may charge $7.50 for the cocktail and make $5 per serving alcohol. If I make an Alaska cocktail for $3.50, I may charge $10.50 for the ~two servings of alcohol, putting the total price at $14. Additionally, I am happy to tack on or remove 5-20% of the cost based on how long the drink takes to make (including washing of glassware, etc), how many servings are being served at once (serving you two servings at once saves me time), and the likelihood of you ordering another drink. So with a Kentucky Mule, the drink is quick and easy to make and uses very little glassware. Additionally, it's an "easy" drink, so you'll probably order a second one. For these reasons, I don't mind charging slightly less (say $7, but even cheaper during happy hour). With an Alaska, since I'm serving you two servings of alcohol, I might also discount the price (to, say, $12-13). Closing the gap between the expensive and inexpensive drinks also pushes customers to try new things rather than the cheapest thing. A neat glass of whiskey had the lowest profit margin for me because it's ludicrously easy to make.
Great Comment Andrew and agree that percentage is not the end all be all of costing a drink. There is a lot of decisions you have to make when you price out an entire cocktail program and this is where the fun is.
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don't forget about pricing out garnishes too!
I partially disagree about pricing cocktails using a 20% method. At least it's not my end-all in case someone here is learning how to price.
I prefer to make X dollars per serving of alcohol. For example, if I'm selling a Kentucky mule that costs me $2.50 to make, and it contains one serving of alcohol, I may charge $7.50 for the cocktail and make $5 per serving alcohol. If I make an Alaska cocktail for $3.50, I may charge $10.50 for the ~two servings of alcohol, putting the total price at $14.
Additionally, I am happy to tack on or remove 5-20% of the cost based on how long the drink takes to make (including washing of glassware, etc), how many servings are being served at once (serving you two servings at once saves me time), and the likelihood of you ordering another drink.
So with a Kentucky Mule, the drink is quick and easy to make and uses very little glassware. Additionally, it's an "easy" drink, so you'll probably order a second one. For these reasons, I don't mind charging slightly less (say $7, but even cheaper during happy hour).
With an Alaska, since I'm serving you two servings of alcohol, I might also discount the price (to, say, $12-13). Closing the gap between the expensive and inexpensive drinks also pushes customers to try new things rather than the cheapest thing.
A neat glass of whiskey had the lowest profit margin for me because it's ludicrously easy to make.
This is a great video. Very useful advice for bar managers!
I know it's not the most sexiest subject in bar-tending but thank you for making this video to show off one of the most important aspects of our business, costing out cocktails!
Thanks Logan,
I agree, not much sex appeal, but so necessary in building our knowledge of the business. Thanks for the comment
Cost of goods. Makes sense.
Joey Brouse yeah, essentially the remaining 80% of the mark up is "profit" that goes to pay other costs like labor, rent...etc
As in any business, the profit is what keeps the doors open. That's a nice tool you've created to show where the simplest form of profit comes from. In the business I'm in we work at under 10% profit... your business ar 80%.. wow those margins are very strong.
+A Bar Above plus overpour and spillage.
Nobody cann tell me that if 33 ounces of Whiskey are in a bottle, they can make 11 cocktails that each need 3 ounces.
On the last cocktail the barkeeper will notice that he doesn´t have 3 ounces left in the bottle.
Great info, thanks a lot!!!
thanks for sharing the knowledge. but I'd help a lot if you improve the sound quality. is so hard to understand what you say
I'll never run a bar but fun to know now that after doing the math my personal recipe for margaritas would cost me 30 bucks a pop at a restaurant lol now I can say I make 30 dollar cocktails lol
Another technical aspect that confuses me in the bartending world is inventory. I would love to see a video from you about theoretical inventory and actual inventory and reason why there are differences. Sometimes, as a bartender for a national chain restaurant, someone will ask for a drink that is not in our system and we are instructed to charge the amount for the highest shelf alcohol used. So say a godfather, I would charge for the whisk(e)y but not the amaretto as well.
Sounds like a great idea:) Probably see something like this soon...
Costing cocktails is super important and I am astounded that people don't even take this into consideration when they are in the industry. I'm glad you're helping bring this topic into the light. My question revolves around the menu price. As noted in your video, at a 20% cost, the menu price of the cocktail you did here is $16+. Outside of New York, nobody charges $16+ for an Alaska cocktail. Usually you'll see it at $10. What am I missing here?
One of the reasons I chose this recipe was I didn't want this post to turn into a "that's not how I make my margarita" post. That being said, most modern restaurant and bar cocktails do not use 3 oz of gin in their recipes. They tend to be around 1-2 oz of base spirit.
A Bar Above Even using only 2oz of gin at a 20% cost produces a menu price of $13+. I'd never pay $13 for an Alaska cocktail. Do most people set their menu prices first then work backwards to figure out how big of a drink to make or what specific ingredients to use? Do you just up your pour cost to 25% to make the menu price work? I just love the business of cocktails.
Better Cocktails at Home There is a lot of strategies to be able to accept a higher Cost of goods sold (COGS) on some drinks. It's really a balancing act. Usually I would only have a cocktail on the menu that had a high COGS, if I could offset it with a much more popular cocktail, who's margins can make up the difference.
For example, a long time ago I created a cocktail that was infused with multiple ingredients, house made syrups, and all the cocktail bells and whistles which ran a 9-10% COGS, resulting in a very high profit margin. It was the most popular cocktail on our menu, and I used those profits to help offset some of the cost on the rest of the menu.
+Better Cocktails at Home often you have high sales volume cocktails with very low cost of product (like a caiphirinha) which are super cheap to make.
These usually balance out the cocktails with the more expensive ingredients that one has on the Menu to give variety.
Of course if everybody started to drink just Alaskan Cocktails, management would have to do something.
A bartender in one of Germanys best cocktails Bars once told me, that they make basically no money on a Prince of Wales unless they would charge a ridicolous amount of money, but they have it on the menu because they want variety and thats why people come to them.
3 oz is allot of booze, how about just a $2.00 upcharge on top of tanqueray. Roughly $13.00 at a kinda more expensive bar..
What about garnish and even the glass and heck even the straw..
It’s a small amount every drink but the amount per day per year it stacks up..
Please make a video about liquer cost also
Hi Amit,
We will be writing up an article on this so keep posted on our website...www.abarabove.com
From Drinkboy (aka Robert Hess on Small Screen) th-cam.com/video/ifCoHSf-0JM/w-d-xo.html
Thanks Small Screen, love your channel.
Right back atchya!
1:00
( I don’t work or run a bar I just drink ) That’s way to high of a price after tips that’s $20. going by that it would be safe to assume that they will buy one drink then leave if you price this at $9 that’s roughly a 170% markup if you buy 3 that’s $30 with 18% gratuity that’s more than doable plus if you have a restaurant attached there is another source of revenue for instance if you buy 2 Alaska cocktails at $9 and you buy a burger and fries at $11 with 18% gratuity that’s $35 with my numbers you probably got a repeat customer who had a great affordable night out on the town ( again I do not work or run a bar I just drink and have a basic understanding on how things should be run)
I agree with you. This is just an example of how to price a cocktail and I would never put this cocktail on my menu at this price, but it does show you how to do it. There is a whole strategy on how to price your cocktail menu to make more money on some cocktails to pay for the expensive ingredients on another, and that's where pricing strategy and menu development really get fun :)
The specs shoukd be 2.5. .5
That is a 500% markup. wtf.
That's how you'd cost a drink like that anywhere. It's not really viable otherwise when you factor in hidden costs such as freight, labour, etc if this is your primary source of income. 20% cost is pretty standard.
WHO pays 17 Bugs for an Alaska Cocktail? The best Bars in America dont Charge that much?
LOL agreed, I just used this as an example, not what I would actually charge.
You're missing the point! It's Called an example.
I partially disagree about pricing cocktails using a 20% method. At least it's not my end-all in case someone here is learning how to price.
I prefer to make X dollars per serving of alcohol. For example, if I'm selling a Kentucky mule that costs me $2.50 to make, and it contains one serving of alcohol, I may charge $7.50 for the cocktail and make $5 per serving alcohol. If I make an Alaska cocktail for $3.50, I may charge $10.50 for the ~two servings of alcohol, putting the total price at $14.
Additionally, I am happy to tack on or remove 5-20% of the cost based on how long the drink takes to make (including washing of glassware, etc), how many servings are being served at once (serving you two servings at once saves me time), and the likelihood of you ordering another drink.
So with a Kentucky Mule, the drink is quick and easy to make and uses very little glassware. Additionally, it's an "easy" drink, so you'll probably order a second one. For these reasons, I don't mind charging slightly less (say $7, but even cheaper during happy hour).
With an Alaska, since I'm serving you two servings of alcohol, I might also discount the price (to, say, $12-13). Closing the gap between the expensive and inexpensive drinks also pushes customers to try new things rather than the cheapest thing.
A neat glass of whiskey had the lowest profit margin for me because it's ludicrously easy to make.
Great Comment Andrew and agree that percentage is not the end all be all of costing a drink. There is a lot of decisions you have to make when you price out an entire cocktail program and this is where the fun is.