How to Calculate Your Bar's Pour Cost

How to Calculate Your Bar's Pour Cost

Here is a guide on how to calculate your bar's pour cost and the most effective ways to reduce it.

Part 1: How to Calculate Your Bar's Pour Cost

There are two primary ways to calculate pour cost, depending on whether you are looking for the overall bar performance or the profitability of a single drink.

1. Overall Bar Pour Cost (Actual Pour Cost)

This formula tells you the actual percentage of revenue you spent on inventory for a specific period (e.g., weekly or monthly). This is used to track variance (or shrinkage).4

Pour Cost Formula - Beginning Inventory + Purchases - Ending Inventory \ Total Bar Sales x 100

Definitions:

Beginning Inventory = The wholesale dollar value of all liquor, beer, and wine on hand at the start of the period

Purchases = The wholesale dollar value of all new liquor, beer, and wine purchases during the period.

Ending Inventory = The wholesale dollar value of all liquor, beer, and wine on hand at the end of the period.

Total Bar Sales = The total revenue generated from all liquor, beer, and wine sales during the period (from your POS).

I see many operators make the mistake of just subtracting the monthly cost from Revenue to arrive at Pour Cost, this is incorrect and would not give you an accurate number. This method does take into account existing inventory.

I also see many operators include garnishes, juices, mixers and sodas in this calculation. An accurate liquor pour cost should only include the liquor, beer and wine inventory.

Target Benchmark: Most successful bars aim for an overall pour cost between 18% to 24%. (Liquor is typically lower at 15%, beer at 22%, and wine is often higher at 30%).

2. Individual Drink Pour Cost (Ideal Pour Cost)

This formula tells you the percentage of a single drink's price that goes toward its ingredients. This is used for menu pricing and recipe standardization.

Individual Pour Cost = Cost to Make the Drink \ Drink's Menu Price x 100

Example:

• A classic cocktail costs $2.00 in ingredients (liquor, mixer, garnish).

• You sell the cocktail for $10.00.

• Pour Cost = $2.00 / $10.00 x 100 = 20%

See part 2- How to Reduce Your Bar's Pour Cost