Calculating pour cost percentage is one of the most effective ways to increase your bar profits since that’s the gross margin your business makes on what you sell. Furthermore, it also reveals potential inefficiencies like over-pouring, spillage, undocumented comps, poorly-priced menu items, and even theft. Pour cost can be calculated by dividing the item’s inventory usage with the cost of goods sold (COGS):
Pour Cost = (Inventory Usage ÷ COGS) x 100
Take a look at our previous blog post where we show you how to calculate your bar’s pour cost with detailed examples.
What Pour Cost Do Food and Beverage Directors Expect?
Most food and beverage directors expect an average pour cost of, max, 20%, while the average pour cost in the industry is between 18% and 24%. Though the actual number will depend greatly on each bar’s pricing and what drinks guests tend to order. In general, you should strive to have your liquor pour cost at 15%, beer pricing for bars is a bit different and should fall roughly between 20 to 24%, 14 to 15% for spirits, and 20 to 25% for wine.And that all depends on your sales mix, meaning what percentage of your total sales come from liquor, beer, wine, and what brands, bottle sizes, etc. your bar uses.
To get the most accurate calculations always account for the shot or container size. You should consider standard wine and liquor pours or which glass that your draft beer will be served in when calculating your pour cost. Also, compare your actual pour cost with your potential pour cost. In determining whether your pour cost is too high, the biggest question is always what to compare it to. We recommend that you compare your actual percentage to the potential number, which can be determined by dividing the product’s cost by its selling price.
For example, if BinWise Signature Beer costs $2 per bottle and is sold for $5, then the potential cost percentage is:
( $2 ÷ $5 ) x 100 = 40%
This number is usually different from the pour cost percentage, which is the actual costs incurred (based on the invoices from the distributor) divided by the actual sales generated (based on your bar's POS system or the cash register).It is extremely important to always keep track of your bar and all your products’ pour costs because the number determines your bar’s profitability. It helps you identify potential inefficiencies that are causing profit loss to your business and allows you to develop suitable strategies to improve in time.
With BinWise Pro, these numbers are automatically generated and ready for whenever you need to review them. Book a demo to learn more about how BinWise Pro can help you take inventory accurately, calculate your pars and variance, and alert you when your pour costs are too high or too low.