How to Determine Pricing For Your Liquor, Beer & Wine

Let’s be clear about something right from the get-go: determining pricing for your beer, liquor and wine is not to be taken lightly.

When it comes to bar and restaurant management, it still amazes me how often I come across bar owners and managers—supposed leaders—who treat their business as they would an outdoor cat they kept as a pet: Absentmindedly. Casually. Something to be fed once per day, with a quick pat on the head and then forgotten about, because it will basically just take care of itself.

This, of course, simply cannot be. The business you run is more related to a newborn baby that needs constant care and feeding if it is to grow up healthy and productive.

That’s my melodramatic way to slap you through the screen you are reading this on to wake you up, to urge you to pay attention. To implore you to put a magnifying glass on the small details and systems you have in place: your bar inventory, recipe costing, ordering & invoicing, dead-stock, financials, marketing, etc. These small details add up to huge dividends in the long run.

One of those small details involves pricing all of your liquor, beer and wine inventory properly, to find that sweet spot between squeezing maximum profit from each bottle, while still providing a fair price to your guests so they will come back again and again.

The point here is to maximize your bar profits and lower your pour cost percentage.

Unfortunately, many of you (because I have seen it firsthand on a repeated basis) simply price your products on a whim, off the top of your head. This could be hurting you more than you know, so in order to systemize (if you don’t know, I love systemizing bars and restaurants) your pricing, I’m going to give the formula for pricing all of your products based on a desired pour cost percentage.

If you’re not quite sure what your desired pour cost percentage should be for each category, click here to read Bar & Restaurant Industry Standards: Find Out Where You Stand.

With that said, off we go. If reading makes you sleepy, you can watch the video here.

HOW TO PRICE YOUR BAR INVENTORY PRODUCTS

So what information do we need exactly to price our beer, liquor and wine products? Well, they all work similarly, but with slight adjustments. In general, the information we need to determine pricing is 1) Wholesale Container Cost, 2) Portion Size, and 3) The Desired Cost %.

In addition, any product you order by the case, you will need to divide the wholesale case price by the number of containers in that case so you can achieve the individual wholesale price of the container.

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Here is how to price each category: Bottled Beer, Draft Beer, Liquor and Wine

BOTTLED BEER

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As you can see in parenthesis there, it says “or anything sold as a whole unit”. What that means is you don’t need to determine a portion size for your bottled beer or anything you sell as a whole unit, because that portion is simply “1”.

The bottled beer pricing formula is:

Wholesale Bottle Price ÷ Desired Cost %.

So using our example from above, we know that a bottle of Corona costs you $1.11.

Let’s say that your desired cost percentage on bottled beer is 22%.

Simply divide $1.11 into 0.22 and you get $5.05 for the retail price of that one bottle of beer, which you may want to round to $5.00 to make it easy for your guests and bartenders.

DRAFT BEER

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Draft beer is definitely the most difficult to price because we have to figure out how many oz. in a gallon first. Luckily, your faithful servant (me) has that for you right here so you don’t have to go look it up.

In addition, if you have multiple glass and pitcher sizes, you’ll need to use this formula to price each one out.

The steps for pricing draft beer are:

STEP 1: Determine how many pours/keg

STEP 2: Determine the retail value of keg

STEP 3: Divide keg retail value by pours/keg

Let’s look at an example for pricing a 16 oz. draft beer at a desired pour cost percentage of 25%.

DETERMINING HOW MANY POURS PER KEG

1 Gallon = 128 oz.

15.5 Gallon x 128 oz. = 1,984 oz.

1,984 oz. ÷ 16 oz. Glass = 124 pints per keg

Does that make sense? Here is a screenshot of the four most popular keg sizes from the Bar Patrol Video Library and the guide on How to Count and Weigh Your Beer Kegs.

In this example I have the ounces circled because that’s all you really need to know in order to price your draft beer. Simply take the oz. in the keg and divide it by your glass size, as we did above.

PRICING A 16 oz. GLASS

Here’s how we now determine how to price a 16 oz. glass, assuming the keg cost you $119.

Keg Cost = $119

Desired Cost % = 20%

$119 ÷ 0.25 = $476 (Retail Price for Entire Keg)

$476 ÷ 124 pints = $3.84 per pint (round up to $4)

*Remember, If you have different sized glasses, you’ll need to do the same process for each.

LIQUOR

Pricing liquor will be very similar to pricing draft beer in which we follow the same three steps:

STEP 1: Determine how many pours/bottle

STEP 2: Determine retail value of the bottle

STEP 3: Divide bottle retail value by pours/bottle

For this, it’s helpful to know how many oz. in the two most popular bottles.

1 Liter Bottle = 33.81 oz.

750 ml Bottle = 25.36 oz.

Here’s the metrics we’ll use for our example:

Shot Size = 1.5 oz.

Desired liquor cost = 17%

Cost of 1 Liter bottle of Jack Daniels = $24.46.

Like I mentioned, liquor is just like draft beer, but the container is simply much smaller. Once again, you need to know how many oz. are in each container and then divide by your portion size to figure out how many portions (or shots) you’re getting out of a bottle. Here’s how to figure out how many shots are in a bottle based on 1.5 oz. pours.

1 Liter Bottle = 33.81 oz. ÷ 1.5 oz. = 22.5 shots per bottle

Now we do math:

$24.46 ÷ 0.17 = $143.88 (retail price of bottle)

$143.88 ÷ 22.5 shots = $6.39 (rounded up to 6.50 or $7.00)

WINE

Now for wine, you would go through the same process as the previous two. Take the oz. in the bottle (usually 750 ml, so 25.36 oz.) and divide by portion size to get the number of pours per bottle, but I have a method that makes pricing wine super simple. Simple, that is, if you have the same assumptions as me, otherwise you’ll have to go through the same process I just showed you twice.

Here are my assumptions: Wine cost % standards can vary widely, from 22% – 35%. I like my target number to be 25% which is why this works out perfectly. Most wine bottles are 750ml which contains 25.36 oz. If you pour 6 oz. portions, it’s almost exactly 4 glasses of wine per bottle.

Because of that, if you price your wine by the glass the exact same price that you paid wholesale for the bottle, it works out nicely to 25%. In other words, if the wholesale price of the bottle = $11, then the retail price of the glass = $11. Check it out.

One bottle of wine costs $11 wholesale.

$11 ÷ 0.25 = $44 (retail price for the entire bottle)

$44 ÷ 4 glasses per bottle = $11 (retail price per glass)

See how nice and neat that is? However, like I said, if you don’t pour 6 oz. or you have a different target for your pour cost percentage, you’ll need to go through the same process as you did for liquor.

That’s it. How you like them apples?

No more que sera, sera attitude—whatever will be, will be—when it comes to pricing and systemizing your bar. If you want real results, you need to take real action the right way. Don’t just hope it works out.

Ok, that concludes my preachy scolding for the day. I appreciate you being here.

I’ll see you next time.

Cheers,

Dave

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