What are the most profitable drinks in the bar industry? Today we’ll discuss which drinks are the most profitable and how you can supercharge your profits.
Every bar owner has visions of making lots of money, right? If you’re among this aspiring group, the old familiar phrase ‘Whatya’ have?’ should be replaced by ‘Can I show you our menu?’ This edition of the Design Buzz Productive Bar Design series discusses the most profitable drinks and how menus and craft cocktails can improve your profits.
HOW MUCH DO DRINKS COST AND WHICH ARE THE MOST PROFITABLE?
If your goal as a bar owner is to maximize profits, what would you rather sell: a bottle of beer, a draft beer, a well shot or a top-shelf cocktail? To answer this question, I’m going to reference my good friend and industry expert, Chuck Deibel, from his column “Last Call” in the Ohio Beverage Monthly. Let’s take a close look at the profit structure (after factoring cost) of each:
- The profit of a bottle of beer ranges from $1.30 to $2.20, among domestic and import beers.
- A pint of draft beer yields profits ranging from $1.75 to $2.75, depending on the product mix.
- Profits from well shots average between $2.40 to $3.00.
- Typical mixed drinks, such as vodka and tonic, screwdrivers, etc., using well liquor, generate an average of $2.30 to $3.40, across the entire product mix.
Now let’s look at the profit margin of a slightly upscale drink menu:
- Lemon drop – $4.57
- Long island ice tea – $5.22
- Grey Goose martini – $4.15
- Cosmopolitan – $6.42
- Margarita (on the rocks with well tequila) – $4.65
- Shot of Grey Goose (at a selling price of $5.00 for a 1.5 oz pour) – $3.15
THE VALUE OF DRINK MENUS AND UPSELLING FOR BAR OWNERS
The day a bar owner creates a drink menu, he/she begins the process known as upselling. To better understand the impact of upselling, let’s look at the profitability of selling 2,000 drinks to 1,000 people from each of the above categories:
- 2,000 beers would generate an average profit of $4,000.
- 2,000 shots of well liquor at an average profit of $2.70 would generate an average profit of $5,400.
- 2,000 shots of top-shelf liquor at an average profit of $3.40 would generate an average profit of $6,800.
- 2,000 mixed drinks at an average profit of $4.38 yields an average profit of $8,762.
Note that the above numbers represent gross profit and have already factored-out the costs of each product. From the above examples, you can see:
- In general, selling shots (well and top-shelf) yields about $6,000 profit, which is 50% greater than that of beer.
- Up-selling drinks with premium liquor yields nearly twice the profit of beer.
It’s clear that upselling to shots and premium liquor is far more profitable than selling beer.
WHAT ARE CRAFT COCKTAILS AND HOW THEY CAN IMPROVE YOUR BAR’S PROFITS
The craft cocktail is one that combines unique liquors with those that are well known. While most local bars don’t have a broad selection of spirits, those that feature craft cocktails make it a point of showcasing the unique. When combined with fresh ingredients, such as juices, mixers and syrups (all made on-premise) craft cocktails create an experience that will have your clientele raving. Craft cocktails sell for $2 – $3 more per drink and enable the bar owner to further expand his/her profits through upselling. As you can quickly see from the above discussion, upselling is extremely profitable because the value added is pure profit. This is exactly what McDonald’s accomplished when it invented “Super-Sizing.” In summary, remember that you need an array of unique spirits and fresh ingredients your competition doesn’t have if you are going to successfully sell craft cocktails.
HOW A DRINK MENU CAN HELP YOUR BAR ACHIEVE MAXIMUM PROFITS
If you’re serious about increasing your bar’s profits, you should have a drink menu. There are many benefits of having a drink menu:
- Drink menus tend to do your selling for you; this is especially beneficial to up-selling.
- Your wait staff and bartenders will be able to speak more knowledgably and sell more effectively.
- Your bartenders will be able to work more efficiently, as they will be making a greater quantity of the same drinks; this will be especially true if you are offering signature cocktails.
You can hardly watch an episode of Bar Rescue these days that doesn’t feature Jon Taffer espousing the values of both the drink menu and craft cocktails. Folks, it’s all about setting yourself apart from your competition. Offering a unique customer experience, doing it professionally and doing it better than your competitors is, and always will be, the recipe for success in the bar and nightclub business.
HOW YOU CAN HAVE YOUR OWN CRAFT COCKTAIL DRINK MENU FOR YOUR BAR OR NIGHTCLUB
I recently spoke recently with my friend Hassett Gravois, of MixologyConnoisseur.com. Hassett’s passion is craft cocktails and she develops craft cocktail recipes and menus for bar and nightclub owners. Hassett has created a few sample craft cocktail recipes which can be downloaded below. You will notice that Hassett included suggested Las Vegas pricing for these drinks, since that’s where she resides. The “Downtown” prices would probably correlate to most urban markets while “Strip” prices would correlate to large market cities such as New York, Chicago and LA.
Hassett is very personable and would be very helpful to anyone in need of a craft cocktail menu. Her contact information can be found on this download.
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