What is the beverage cost percentage for a pub?

This article was written by our expert who is surveying the industry and constantly updating the business plan for a pub.

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The Dojo Business Team

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What is your total beverage sales revenue for a weekly or monthly period?

Beverage sales revenue represents the total amount of money your pub generates from selling drinks during a specific timeframe.

For large UK pubs, average weekly beverage sales revenue sits around £27,100, while smaller establishments typically generate approximately £10,000 per week. In the United States, bars commonly report monthly beverage revenue near $27,500, though this figure varies significantly based on location, size, and customer base.

Your actual revenue depends on multiple factors including your pub's capacity, operating hours, pricing strategy, and local market conditions. Urban pubs with higher foot traffic and extended hours naturally generate higher revenue than smaller neighborhood establishments. Seasonal variations also play a role—summer months and holiday periods typically show increased beverage sales compared to slower winter periods.

Tracking this metric weekly or monthly allows you to identify trends, adjust staffing levels, and make informed purchasing decisions for your pub's beverage program.

What is your total cost of goods sold (COGS) for beverages in that period?

Beverage COGS represents the direct cost of all drinks you sold during a specific period, including beer, wine, and spirits.

For most pubs and bars, beverage COGS averages between 18% and 24% of total beverage sales revenue. Using the example of a bar generating $27,500 in monthly beverage revenue, the COGS would typically range from $4,950 to $6,600 per month.

This figure includes only the wholesale cost of beverages purchased from suppliers—it does not include labor, rent, utilities, or other operational expenses. To calculate your COGS accurately, you need to track your beginning inventory value, add all beverage purchases during the period, then subtract your ending inventory value.

Maintaining detailed records of invoices, deliveries, and inventory counts ensures your COGS calculation reflects your pub's actual beverage expenses.

You'll find detailed market insights in our pub business plan, updated every quarter.

How do you calculate your beverage cost percentage?

Beverage cost percentage is calculated by dividing your beverage COGS by your beverage sales revenue, then multiplying by 100.

The formula is straightforward: (Beverage COGS ÷ Beverage Sales Revenue) × 100 = Beverage Cost Percentage. For example, if your pub spent $5,500 on beverage inventory and generated $25,000 in beverage sales, your cost percentage would be 22%.

The industry-wide average for pubs falls between 18% and 24%, though certain beverage categories run higher. Wine programs often see cost percentages of 30% to 40% due to spoilage and variable demand patterns. Lower percentages indicate better profit margins, while higher percentages suggest potential issues with pricing, portioning, or inventory control.

Calculating this metric regularly—ideally weekly or bi-weekly—allows you to spot problems early and take corrective action before they significantly impact your pub's profitability.

What types of beverages does your pub sell, and how do their margins differ?

Different beverage categories in your pub generate vastly different profit margins based on their cost structures and pricing dynamics.

Draft beer typically delivers a gross margin of 76-80% with a pour cost around 24%, making it one of the most reliable profit drivers for pubs. Bottled beer performs similarly with margins of 75-76% and the same 24% pour cost, though bottle breakage and storage requirements can affect profitability.

Spirits deliver the highest margins at 80-85% gross profit with pour costs of just 18-20%, particularly when served in cocktails. Craft cocktails specifically run at 15-20% pour cost, generating $2 to $6+ profit per drink when properly executed.

Understanding these margin differences helps you optimize your pub's beverage menu and promotional strategy to maximize overall profitability while meeting customer preferences.

What is the average pour cost for each beverage category in your pub?

Pour cost benchmarks provide clear targets for each beverage category to help you price drinks appropriately and maintain profitability.

Draft beer and bottled beer both target a 24% pour cost, meaning for every dollar you charge customers, 24 cents covers the cost of the beer itself. Wine by the glass runs slightly higher at 25-28% pour cost due to spoilage considerations, while wine sold by the bottle achieves a lower 18-22% pour cost since there's no waste from opened bottles.

Spirits consistently deliver the best pour cost performance at 18-20%, which explains why many successful pubs emphasize their cocktail programs. These percentages assume proper portioning, appropriate pricing, and effective inventory controls throughout your pub's operations.

When your actual pour costs exceed these benchmarks, it signals problems with pricing strategy, portion control, or excessive waste that require immediate attention.

What is the variance between your theoretical cost and actual cost?

The variance between theoretical cost and actual cost reveals how much product you're losing to spillage, over-pouring, theft, or waste.

Theoretical cost represents what your beverage COGS should be based on your recipes, standard portions, and recorded sales—essentially, perfect execution with zero loss. Actual cost reflects what you truly spent on beverages according to your physical inventory counts. Most bars experience a 3-5% difference between these two figures, driven by unavoidable operational realities in a busy pub environment.

A variance under 3% indicates excellent control systems and well-trained staff in your pub. Variances exceeding 5% point to serious control issues that demand immediate investigation—this could mean bartenders are over-pouring, theft is occurring, or your draft beer lines require maintenance.

Calculating this variance weekly allows you to identify problems quickly and implement corrective measures before losses compound into significant financial impact for your pub.

This is one of the strategies explained in our pub business plan.

What is your shrinkage percentage due to spillage, waste, theft, or over-pouring?

Shrinkage represents the percentage of beverage inventory that disappears without generating revenue for your pub.

Industry data shows that typical shrinkage amounts to 3-5% of total beverage inventory value, though best-in-class pubs with tight controls keep losses under 3%. This loss occurs through multiple channels: bartenders accidentally spilling drinks, over-pouring to appear generous, staff consuming inventory without payment, or customers receiving drinks that were never rung into your system.

Draft beer contributes significantly to shrinkage due to foam waste, line cleaning requirements, and temperature fluctuations affecting pour quality. Spirits face higher theft risk due to their value and ease of concealment. Wine by the glass programs experience shrinkage when opened bottles oxidize before being fully sold.

Implementing measured pour spouts, conducting regular inventory counts, installing security cameras, and training staff on proper techniques reduces shrinkage substantially. Every percentage point of shrinkage you eliminate directly improves your pub's bottom line profitability.

How do supplier pricing, discounts, and purchasing agreements affect your beverage costs?

Strategic supplier relationships significantly impact your pub's beverage cost percentage by reducing per-unit acquisition costs.

Bulk purchasing agreements with distributors often lower your beverage costs by several percentage points, particularly for high-volume products like draft beer and well spirits. A pub purchasing 10 kegs monthly might pay $120 per keg, while a commitment to 30 kegs could reduce the price to $105—an immediate 12.5% cost reduction on that product line.

Seasonal promotions, distributor incentives, and early payment discounts provide additional opportunities to lower your COGS. Many suppliers offer promotional pricing on new products they want to introduce to your market, giving you margin advantages if those items gain traction with customers.

Building relationships with multiple suppliers prevents over-reliance on a single distributor and creates negotiating leverage. However, working with too many suppliers complicates inventory management and may prevent you from reaching volume thresholds for discount pricing.

The most profitable pubs balance supplier diversity with strategic partnerships that deliver consistent pricing advantages on their highest-volume beverage categories.

How does portion control affect your overall beverage cost percentage?

Portion control is the most powerful operational tool for maintaining your pub's target beverage cost percentage.

Even minor over-pours compound quickly across hundreds of drinks served weekly—a bartender pouring 1.75 oz instead of 1.5 oz for spirits effectively gives away 16% more product with each drink. Over a month serving 500 cocktails, this translates to 83 free drinks served to customers without generating revenue, potentially raising your beverage cost percentage by 2-3% or more.

Implementing measured pour spouts, jiggers for cocktails, and calibrated glassware for beer eliminates guesswork and ensures consistency. Draft beer systems with portion control technology prevent bartenders from overfilling pints, capturing revenue that would otherwise flow down the drain as foam waste.

Training staff on proper techniques reinforces these systems—bartenders who understand the financial impact of over-pouring become partners in maintaining profitability rather than obstacles to overcome. Regular testing of pour accuracy through mystery shopping or spot checks maintains accountability.

The investment in portion control equipment pays for itself rapidly through reduced waste and improved margins across your entire beverage program.

We cover this exact topic in the pub business plan.

How do your beverage selling prices compare to industry benchmarks?

Pricing your beverages competitively while achieving target cost percentages requires understanding both your local market and industry standards.

Draft beer in US markets typically sells for $5-$7 per pint, while UK pubs charge £4-£5 per pint, with variations based on beer type and location. Wine by the glass runs $9-$12 in most markets, generally priced at roughly double the wholesale cost per glass. Spirits and cocktails command $8-$15 for standard drinks, with premium and craft cocktails reaching $18 or higher in upscale establishments.

Your pub's pricing must reflect your target clientele, competitive environment, and positioning strategy. A neighborhood pub in a working-class area cannot charge the same prices as an upscale gastropub in a trendy urban district, even though both need to achieve similar cost percentages.

Pubs with generous pours or excessive promotional discounts often see their cost percentages rise above targets despite seemingly appropriate menu prices. The combination of proper pricing and strict portioning delivers optimal results for your pub's profitability.

How frequently should you conduct inventory counts to control beverage costs?

Regular inventory counting is the foundation of effective beverage cost control in your pub.

• Weekly inventory counts provide the most effective control for high-volume pubs, catching shrinkage and pricing issues before they accumulate into significant losses. This frequency allows immediate corrective action when variances appear.
• Bi-weekly counts offer a practical middle ground for medium-sized pubs, balancing the administrative burden against the need for timely data. This interval still maintains reasonable visibility into inventory movement patterns.
• Monthly counts represent the minimum acceptable frequency, though this extended period allows substantial losses to accumulate undetected. Pubs relying solely on monthly counts often discover problems too late to prevent significant financial impact.
• Perpetual inventory systems using POS integration provide real-time theoretical inventory levels, allowing you to compare against physical counts at any time. These systems dramatically improve control when combined with regular physical verification.
• Category-specific counting focuses intensive attention on high-value items like premium spirits while accepting less frequent counts for lower-value products like draft beer. This approach concentrates effort where theft and loss risks are greatest.

The most successful pubs implement weekly counts for spirits, bi-weekly for beer and wine, with full comprehensive inventories conducted monthly to ensure nothing slips through the gaps in your tracking system.

What is your target beverage cost percentage compared to actual performance?

Establishing clear targets for each beverage category allows you to measure your pub's performance and identify areas requiring improvement.

Industry targets specify 18-20% for spirits, 24-28% for beer, and 30-40% for wine programs. Best-performing pubs consistently hit or slightly undercut these benchmarks through disciplined inventory management, strategic pricing, and effective portion control. Your blended overall beverage cost percentage should fall within the 18-24% range when all categories are combined.

Venues with lax controls, outdated pricing, or excessive shrinkage regularly see actual performance exceed these targets—sometimes by 5-10 percentage points or more. This performance gap directly reduces your profitability, potentially eliminating the entire profit margin on your beverage program if left unaddressed.

Comparing your actual results against these targets monthly reveals whether your pub's operational systems are working effectively. Consistent underperformance demands immediate action: revising prices, tightening portion control, addressing theft, or renegotiating supplier agreements to bring costs back in line with profitability requirements.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

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