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What’s the Average Pour Cost in the Bar Industry?

Stephen Ngo May 27, 2016

What Does the Data Say About Average Bar Industry Pour Costs?

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.

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 industry figures 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.

Drink Price and Pour Cost Calculator

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.

Key for Average Pour Cost charts

The Key

Below, you’ll see graphs that show the average pour costs of small, medium and large-sized BevSpot bars. The blocks represent where their pour costs sit on the spectrum, separated by the middle 50% (dark blocks) and the top and bottom 25% (light blocks). The white line represents the median pour cost percentage, and where the dark blocks begin is the “target” pour cost percentage—where you want to be, based on the industry average.

Average Pour Costs by Category

Within our customers, we found that the middle range of bars (for the nerds, bars in the interquartile range) 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. If a bar specializes in a category, managers should use these as category-level targets.

Of course, we know that the size of a bar changes the operational realities of managing its beverage program, and that one of these size-dependent factors may be pour cost. So, we’ve segmented our data by each bar’s annual sales to see how much the pour cost distribution changes as a result.

See how you can track category-level pour cost right in BevSpot!

Average Pour Costs for Small Bars

We find that the median pour costs for smaller beverage programs—ones that generate less than $500,000 in annual sales—are 26% for beer, 17% for spirits and cocktails, 27% for wine, and 22% for the bar in general.

Of these programs, the 25% most profitable have achieved pour costs at or below 22% for beer, 17% for spirits and cocktails, 23% for wine, and 19% for the bar in general.

Remember: On $500,000 in sales, every 1% reduction in your pour cost is an extra $5,000 back in your pocket, every year!

Average Pour Costs for Mid-Size Bars

For more medium-sized beverage programs—ones with between $500,000 and $1 million in annual drink sales—median pour costs are about 25% for beer, 16% for spirits and cocktails, 29% for wine, and 24% for the whole beverage program.

The lowest 25% of pour costs for these bars are at or below 21% for beer, 13% for spirits and cocktails, 27% for wine, and 21% for the whole beverage program.

Like us, you’re probably surprised to see wine pour costs for these establishments at such high levels. When we dug in, we found that many bars with higher values for such metrics were usually beer and spirit-heavy businesses that maintained very small wine selections. Such bars skewed the wine pour cost distribution upwards, but weren’t much affected by their poor profitability in this category. So, these numbers shouldn’t be considered representative of wine-heavy beverage programs of the same size.

Average Pour Costs for Large Bars

For the larger bars in our data set—ones that generated more than $1 million in annual beverage sales—median pour costs are at about 24% for beer, 19% for spirits and cocktails, 27% for wine, and 20% for the whole beverage program.

The lowest 25% of pour costs for these businesses are at or below 22% for beer, 18% for spirits and cocktails, 26% for wine, and 20% for the whole beverage program.

This data provides some really valuable insights into how bars and restaurants around the country operate. For more insights into the beverage industry, subscribe to our blog below to follow the results—we release new data regularly.

Need some more personal advice on how you could improve your bar? Schedule a chat with one of our product specialists, and find out how BevSpot can help you.

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