topic Re: Gross Profit On Liquor Sales in Restaurant Operations

Gross Profit On Liquor Sales

Duck1809 — Wed, 19 Oct 2022 20:07:25 GMT

Hi all - Just was wondering what a typical bar should have in gross profit on liquor sales. I have a bar with no food. Just beer and liquor sales.

Thanks,

Bryan from The Ducktail Lounge.

Re: Gross Profit On Liquor Sales

wildfox — Wed, 19 Oct 2022 20:50:33 GMT

We've been aiming for 15%, though it seems like some of the more "well" liquors that makes it super cheap. And then some of the higher end stuff would be crazy at 15%... but maybe keep it there and if they buy it they buy it.

To piggy back off your question, I've been going back and forth about the margins on Draft beer vs Canned beer. We've been trying to have a robust canned beer program, but they all end up being decently expensive per can, so if we use the same margins calculator for Draft vs Canned, the cans are decently more expensive. In my mind, I justify a slightly higher food cost for the canned beer (call it 25%) to keep the price reasonable that people would pay it, but also that cans have less waste and less plumbing/resources (co2), so it's fine to mark it up less?

Re: Gross Profit On Liquor Sales

adamj — Wed, 19 Oct 2022 21:30:12 GMT

Hello Iowa!

The average gross profit margin for a bar is between 70 and 80%. Mostly because of liquor cost . A beverage program with low pour cost is the beating heart of a profitable bar or restaurant.

The average net profit margin for a bar is between 10 and 15%. The gross profit margin is the difference between total restaurant sales revenue and COGS.

This number depends on the type of bar you’re running, though.

Re: Gross Profit On Liquor Sales

rcmck — Wed, 19 Oct 2022 23:47:12 GMT

Second the lower margin on cans, they would cost way too much and not sell, okus there is less loss, no pour off, no c02, no lines to clean, other than the occasional person who orders one and "doesn't like it".

Re: Gross Profit On Liquor Sales

FarmerTJC — Fri, 04 Nov 2022 22:20:14 GMT

One of my restaurants, Farm Bar will do about $2.2MM in sales. 40% of sales are liquor, beer and wine. Our COGs for LBW is typically less than 20%. It's more for wine, less for liquor, beer in the middle. If you are asking about net operating income (EBITDA), that depends on many other factors beyond COGs (occupancy costs, labor, food sales, operating costs, etc.)

Best Practices

Re: Gross Profit On Liquor Sales

Freshcoastbar — Sat, 25 Mar 2023 01:27:38 GMT

Hi Bryon!

I am hoping you can help a fellow bar (liquor/beer) owner out! We are in Wisconsin, so not competition. We open next friday and I am struggling with developing our menu. Do you list every single alcohol? TIA!

-Annie

Re: Gross Profit On Liquor Sales

FarmerTJC — Sun, 26 Mar 2023 16:59:10 GMT

We don't. Depends on the type of concept you are, but for us that's overkill. Farm Bar does about 40% of sales as Liquor, Beer and Wine. We do list the drafts, ciders and wines by the glass and we list the ingredients in the specialty cocktails.

Re: Gross Profit On Liquor Sales

FarmerTJC — Sun, 26 Mar 2023 17:02:20 GMT

At Farm Bar, our beer cost is in the low 20s; wine cost in the high 20s -low 30s, liquor cost is quite low because of the cocktails, between 18% and 22%.

Re: Gross Profit On Liquor Sales

Duck1809 — Mon, 27 Mar 2023 18:47:15 GMT

Hi Annie - We don't list every single alcohol. It would too difficult as it changes often. We do have some wine menus but that is even hard to keep upto date. We had a liquor vendor do some nice menus for specific drinks. You can always ask them for assistance on designing the menu. I decided to do my own design work on Canva so I don't have to wait to make an update. Bryan

Re: Gross Profit On Liquor Sales

CReids — Mon, 27 Mar 2023 21:06:33 GMT

We run into the same situation with 16oz 4 packs where at margin, we'd be looking at $25+ which makes no sense for any kind of volume, regardless of the beer. We price 10%-15% lower for those, but make up the difference on selling singles where you can get a "draft" price at $7 or $8.