Thursday, June 16th, 2011
Contrary to what you may have heard, there’s more to my job than coming up with cool mezcal cocktails and bitching about having to write the schedule. At the end of the day, I’ve got to approach this career as a professional, with an eye on business. One of the more challenging parts of my job is designing a cocktail menu that is not only constantly fresh and on the cutting-edge, but also satisfies my two cruel taskmasters: our guests, and the guy who signs my paycheck.
My guests need to feel like they’re getting their money’s worth when they’re spending it at my bar. My restaurant needs to make a certain margin in order to pay purveyors, sign payroll, and maintain bills. The beauty of my job lies in that place in between, where guests are happy and the business is healthy. That place in between is where a successful bar lives.
There is some simple math involved with pricing a cocktail. At the core, all you need to do is figure out how much the drink costs to make, and multiply by your targeted pour cost (if you’re unsure what this is, ask your boss or bookkeeper; the industry standard usually lies somewhere between 18% and 24%). It’s that easy, but it can get a little tricky sometimes. And so…
Over the years I’ve developed a lot of spreadsheets to help make my job easier, and I’m going to share my simple cost calculator with you here today. All you need to plug into the formula are the following pieces of information: the cost and size of each bottle you’re pouring from, the cocktail recipe, and your target pour cost (all highlighted in yellow). The spreadsheet will calculate the rest.
Keep in mind that this is pricing at its most simple. The orchestration of a full cocktail menu can be a beautiful and complex thing, or it can be as simple as using the spreadsheet above. A simple list would have all of its drinks priced according to the formula I’ve given you. A complex list – like the one I currently curate – takes into account some other factors.
Let’s say, for argument’s sake, that you’ve got a two-drink cocktail menu, consisting of Drink A and Drink B.
Drink A is a complex cocktail that requires a little more attention from the bartender and uses some more obscure, expensive ingredients. It costs $10 but comes in at a 32% pour cost, but it’s designed appeal to a smaller segment of the customer base, and therefore you only sell ten of them a night. You make up for this with Drink B. Drink B costs $8 but comes in at a 17% pour cost. It’s appealing to a much larger audience, and therefore you sell 150 of them a night. Drink A is called a loss leader and it keeps your bar on the cutting edge, is there for the cocktail geeks, and helps stimulate the sale of Drink B by bringing in a constant flow of new guests to the bar. And the good news is that you can calculate all of these percentages with the spreadsheet I’m providing you.
I hope this spreadsheet helps and is of some help to at least a few of you out there. If there’s enough interest in this boring topic I’ll be happy to post some of my other formulas in the interest of being of service to my fellow bar managers everywhere.
As a last-minute addition, I’m including a metric version of this spreadsheet for our friends outside of the United States. I think I’ve converted everything successfully but if anyone notices any problems (yes, the default currency is in Euros but that shouldn’t have any bearing on the final numbers) please do let me know.