Drink Pricing| Menu Design| Industry & Culture

4 Easy Steps to Keep Your Bar Menu Profitable

By Trevor Bernatchez

Drink menu pricing is an essential tool for running a profitable bar program. Here are 4 easy tips for managing a successful drink menu. 

BSII - Bar Menu Pricing


In our most recent edition of BevSpot Industry Insights, Sr. Manager of Customer Education 
Trevor Bernatchez, outlines four easy steps to improve your bar menu profitability.

Read on to learn more, or watch the whole video (10mins) above.



4 Easy Steps to Keep Your Bar Menu Profitable:

We all know that running a bar program is an incredibly demanding and challenging job. Most bars and restaurants only have an average profit margin of 6%, and 60% of them go out of business in their first 3 years!

One of the most important elements of any bar program is menu pricing since it’s how you ensure you’re satisfying the needs of your guests while also generating a consistent profit for your business that helps keep the lights on.

The challenge is that fluctuating ingredient costs, which could be changing daily, weekly, or monthly, make it very difficult to stay on-top of menu prices and ensure you are maintaining the profitability you need to be successful.

Generally, it’s difficult to raise menu prices based on cost increases because your guests may not be willing to pay higher prices, and you don’t want to constantly print new bar menus if you can avoid it.

In this post, we’re going to briefly touch on how to quickly check some of your top selling products to make sure that current menu prices are generating the profits you need for your business. If they aren’t, we’re going to cover some simple changes you can make to drive greater profits immediately with these steps:

 

  • Step One: Focus your attention on just your top 5-10 selling beverage items as that is where the largest opportunity lies - If you don’t know this information off of the top of your head (which you probably do) then you can check your point-of-sale system to see what your top-selling items were in the last 30 days or so.

 

  • Step Two: Update your ingredient costs with the most recent vendor invoices. This is critical because it will show what your current menu item profitability is versus what you originally priced it at. Use these newly updated costs to calculate the new COGS for each of these top-selling items.

 

  • Step Three: Experiment with opportunities to either substitute less-expensive ingredients, re-price, or feature differently on the menu. If you’re finding that you are hitting your pricing threshold for the new price here, this is also a great time to start experimenting with different ingredients to bring the overall cost of this drink down while simultaneously increasing the profits.

  • Step Four: Based on any changes you’ve made, calculate your new expected profits to see how performance compares to this drink’s previous profit margin. Even one small change on one drink can bring in thousands more in profits over the course of the year!

 

If there aren’t any pricing changes or substitutions that you can make based on what you know about your guests, or any other limitations, then use this new knowledge about menu pricing to train your staff to best position the business for success by featuring your most profitable menu items.

Want to learn more about BevSpot or the topics discussed in this post?

 

 


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