Cost Improvement – Tip for the Month – The Thumb Rule for Beverage costs

Shrijith Ravindran
CEO, Chiranjeev Restaurant and Foods Pvt Ltd.

Although every restaurant is unique; some standard thumb rules of industry costs could be a valuable starting point in evaluating how your restaurant is doing. Read on to know more.

Over the years of operating our restaurants, here are some of the beverage cost rules that we have found to be very effective and have been a valuable check point in improving our bottom lines. 

Alcoholic Beverage Costing
The cost of alcoholic beverages can be zeroed down to liquor, beer and wine costs which will vary based on various factors, such as the kind of restaurant or bar that you are operating. 

A typical alcoholic beverage cost should be as follows:

  • Hard Liquor cost: 20 – 24% percent (including the sale of cocktails)
  • Beer cost – 35% (this should be the combined cost of bottled, domestic and international beers, craft beers and draught beers)
  • Wine cost – 45% (includes domestic and international wines and wine-based cocktails)

All costs mentioned above are the ratio of individual cost divided by its individual sale and not the total sale.

Non Alcoholic Beverage Costing

  • Soft Drinks: 20% (assuming that the mixers served with alcohol are charged)
  • Iced Tea: 5 -10%

While all of the above costs will vary based on the kind of restaurant or bar you are operating, if the costs are significantly higher than those mentioned above, it would be advisable to inspect your control systems, pricing or even theft.

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