How to Price Drinks In Your Restaurant
Figuring out how much to charge for drinks can feel like a guessing game. Price them too low and you’re giving away profit. Price them too high and you risk scaring off customers.
The truth is, there’s a simple way to take the guesswork out of it.
Once you know your numbers, drink pricing becomes a routine part of running your bar or restaurant, not a headache.
Read on as we walk through on how to price drinks in your restaurant, so it becomes a consistent profit centre for your restaurant.
Start With What Each Drink Really Costs
Every good pricing decision starts with knowing your costs.
Take one drink on your menu and break it down by ingredient: the liquor, the mixers, the garnishes. Basically, everything that goes into one serving. Add that up and you’ve got your cost per drink.
From there, decide on your target pour cost. This is just a fancy way of saying the percentage of the selling price you’re willing to spend on ingredients. Many bars aim for about 18–24%. In other words, for every dollar you make on a drink, only 18–24 cents should go to what’s in the glass.
Here’s the easy formula:
Selling Price = Cost per drink ÷ Target Pour Cost (in decimal)
If a cocktail costs you $2 to make and you’re shooting for a 20% pour cost, the math is:
$2 ÷ 0.20 = $10 selling price
Different Drinks, Different Targets
Not every category has the same sweet spot. Liquor-based cocktails often land in the high tens to low twenties for pour cost. Beer and wine usually run higher. The key is to treat each category separately instead of applying one blanket percentage across your entire menu.
Below are some industry averages for pour costs of different drinks.
- Liquor – 15%
- Wine – 30-40%
- Draft beer – 20%
- Bottled Beer – 25%
These averages can serve as a starting point, but it’s important to consider other factors that are unique to your restaurant, such as concept, labor costs, and menu price of food.
Pricing Methods You Can Use
There are a few ways you can approach pricing:
- Cost-plus (pour cost): The most reliable. Calculate your cost per drink, pick a target pour cost, and you’ve got your price.
- Markup multiples: Common for bottled beer and wine. A lot of places simply multiply their purchase price by 2.5 or 3.
- Market-aware pricing: For house beers or soft drinks, think about what your guests expect to pay. You can price some items a little lower to drive volume and balance it out with premium items that carry a higher margin.
Let’s say you’re pricing a margarita:
- Tequila: $1.00 per serving
- Triple sec: $0.30
- Lime and syrup: $0.20
- Total cost: $1.50
Target pour cost: 20% (0.20)
Price = $1.50 ÷ 0.20 = $7.50
You can round that to $7.50 or $7.95, depending on your menu style.
Let’s try out the different pricing methods using the example of bottle beer. Let’s say the wholesale cost per bottle is $1.50.
Method 1: Pour-cost style pricing at 25%
Price = $1.50 ÷ 0.25 = $6.00
Method 2: Multiple markup of 3X
Price: 1.50 × 3 = $4.50
Choose the method that fits your restaurant and guest expectations.
Keep an Eye on Your Numbers
Pricing only works if your costs stay current. Supplier prices change. Overpours happen.
Make it a habit to:
- Standardize recipes and portions. Invest in jiggers and measured pourers; they pay for themselves.
- Review invoices regularly and update your cost sheets.
Do a quick beverage cost report every month. Compare what you should have sold based on your recipes to what actually left the shelves. Investigate big gaps quickly.
Pro-Tip: Design Your Menu to Protect Your Margin
Menu layout matters. Put your high-margin drinks where they’re easy to see. Create a few price tiers so guests can self-select what fits their budget.
Very importantly, don’t forget nonalcoholic or low-alcohol options. They’re growing in popularity and can bring in healthy margins when done well.
What’s Next?
There you have it, a practical guide to pricing drinks on your menu.
What you want to do next is to cost out your top-selling drinks, set prices that meet your targets, and keep checking in monthly. Then start making small improvements; these can make a big difference to your bottom line over time.
Need a hand crunching the numbers?
At U-Nique Accounting, we help restaurants and bars, like yours, set profitable prices and keep the numbers on track month after month. If you’d like a quick pricing check-up on your beverage menu, get in touch with us today.
Simply use the calendar below to schedule a quick call.
Until next time!
By MATT CIANCIARULO
