Data can be a powerful tool in a bar manager’s toolkit. In our previous analyses of bar profitability, we looked into the data of our users’ overall profitability metrics. What we discovered was that the typical pour cost of a BevSpot user was about 15% for spirits & cocktails. What this translates to is that, before paying wages and rent, the median BevSpot establishment is getting an 85% gross profit margin on its Moscow Mule.
The Cost Data
If that number seems off to you, your instincts are close to the truth. When we delved a little deeper into the data, it revealed that the 15% aggregate pour cost does measure general profitability for individual establishments, but it also represents an average of all the various drinks being sold by those bars. As most will know from experience, costs and pricing can vary widely between drinks, especially cocktails: the profit margin on a bar’s Negroni recipe almost certainly won’t be the same as that of its Old Fashioned.
Cocktail Sales Data and Approach
We took a look at sales data from nine major metro areas across the United States to see which popular cocktails are the most and least profitable for bars. We then organized our results by International Bartenders Association cocktail category. Here’s what we found for 28 classics.
Firstly, keep in mind that a bar’s pour cost—also known as its cost percentage, or liquor cost of goods sold—is equal to its product usage divided by its sales, or one minus its gross profit margin (we’ve provided a handy explainer for calculating pour costs). A 15% pour cost means that 15% of a drink’s price goes to paying for the drink itself; the other 85% goes to employee wages, rent and other operating expenses. A higher pour cost makes a drink more relatively expensive for the bar, while a lower pour cost makes a drink relatively more profitable.
Of the nine cocktails covered in this IBA category, the Manhattan is the most costly for your bartender to serve; the Tom Collins, the most profitable. As a group, these cocktails have an average pour cost of 16.8%. The relatively high pour costs of the Manhattan, Sazerac, and Negroni push the average up. When you exclude those drinks, the average of the group is 14.4%.
Download the report to see our breakdown of 28 popular cocktails’ pour costs.