Pour cost is the cost of a drink’s ingredients divided by its sale price. It’s a powerful metric for understanding the profitability of your bar and identifying inefficiencies in your business. This allows you to adopt the strategies to improve it—whether that’s reducing product costs, effective drink pricing, or minimizing product loss.
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We found that the typical bars, have total average pour costs of around 18–24%. The median bar sits at a pour cost of just above 20%. That is, the “average” bar has a pour cost of 20%. When broken down, median pour costs are 24% for beer, 15% for spirits, and 28% for wine. The lowest 25% of pour costs are at or below 20% for beer, 14% for spirits, and 22% for wine.
We’ve shown you how to calculate (and interpret) pour costs. And we’ve discussed ways to improve the profitability of your beverage program. But how do you know if there’s substantial room to improve that profitability? What pour costs should you be targeting?
A handful of professionals and experiences bar managers have argued that bar industry pour costs should hover in the 18-24% range; others cite 20% as a useful target. These estimates are problematic for two reasons.
The first is that a business’ total pour cost depends on the balance of product categories that it sells. For example, spirits and cocktails almost always sell at lower pour costs than wines do. If you run a wine-heavy bar, then your cumulative expected pour cost may differ from industry standards.
The second issue with these targets is that they’re based on individuals’ anecdotal industry experiences. Very few data-driven analyses of pour costs exist. And while some observers say that an individual bar’s historical metrics are the only reliable benchmark for an “ideal” pour cost, it’s hard to argue that a bar’s operations are efficient when its comparable peers are achieving much higher profit margins.
We took an empirical look at our customers’ profitability data to find what pour costs bars and restaurants are achieving in reality. We then drilled down by product category and business size to get better-tailored estimates for your bar. Let’s take a look at what we found.
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