• Steve The Barman
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How to Cost out Cocktails

Steve the Barman says “You’ll hear this phrase a lot from me, but let it sink in. Cash Convertors! I love that phrase. And I’ve been using it in relation to Cocktails for a very long time.

What does it mean? Quite simply, Cocktails that have great profit margins, that sell at high volumes all year round in most bars!

The prime example of this is the Woo Woo. Some Bartenders think it's beneath them to make and serve them. They prefer more elaborate 8-10 ingredients and their own infusions. Now there’s nothing wrong with that. In fact, that should be encouraged. But never lose sight of the fact that a Woo Woo will make you way more money at the end of the year! The same goes for other Cocktails like Pina Colada, Mojito, Sex on the Beach and Strawberry Daqs! Frozen of Course. They are your “Cash Convertors”.

So your Cocktail Menu is all about Balance. Give the Customers want they want. But also allow room for your Bartenders to show off their skills. However, all of these Cocktails have to be costed out. You can’t put a £5 Cost Price Cocktail on the menu and sell it for £8. That’s just terrible Business sense.


How do you cost out a Cocktail?

Many Bars use Spreadsheets. Some use Apps. Some use a good old notepad and Calculator. Whichever method you use, you need to know your cost prices. And you must know how much goes into each cocktail.

Let’s take your base Spirit. A 70cl bottle gives you 28x 25ml Shots. 14x 50ml Doubles. Or 46x (and a bit) 15ml measures. So, say your bottle of JJ Whitley Raspberry Vodka Costs you £15, that’s 54p for a 25ml (Rounding up), £1.07 for a Double, or 33p for 15ml.

Now you have to do that for every Ingredient including Spirits, Liqueurs, Syrups, Purees, Mixers…AND Fruit, Garnishes and Ice. Ice is obviously a hard one to quantify unless you buy it in, but you can nominate 5-10p per Cocktail. It’s important to include Ice in Costs as an Ice machine uses Water, Electricity and Cleaning Products!


How to add a Woo Woo to a Cocktail Menu

Let's cost out a standard Woo Woo

(This is just an example, your Prices will differ)

  • 25ml Vodka = £15 a bottle / 28 Shots = 54p
  • 25ml Peach Liqueur = £12 a bottle / 28 shots = 43p
  • 75ml Cranberry Juice = £1.50 a litre / 40 Shots = 4p x 3 Shots to make 75ml = 12p
  • 2 Wedges of Lime = 30p / 6 wedges = 5p a wedge = 10p a Cocktail
  • Ice = 10p
  • Woo Woo Total Cost = £1.19

You can play about with measurements. For example, Steve says “when I serve a Woo Woo, I serve a 50ml Double of Vodka which would take this example to £1.73 Cost Price”.

  • Selling Price = £7.50
  • Profit = £6.31 per drink
  • Gross Profit = 84%

Now that looks quite healthy compared to your average pint of Amstel! Just imagine if you served Steve's version, which costs just 54p more, BUT, charged £1 more, £8.50. That's another 46p Profit! 


High GP vs Low GP Cocktails

All you have to do now is repeat this for every single Cocktail you plan on Selling and look at whether they make financial sense. Ideally, you’re looking at Cocktails at the very least 70% GP. It is forgivable to have maybe 1-2 Cocktails on a Menu at 50%, but they have to provide a WOW and must be balanced with those high 80% Cash Converters. Your 50% items would generally be your Bartenders showing off their skills. Statement pieces. “This is what we can do!”. But if you can push these to 60%+ by upping the Selling Price, that would be the much better option.

Once you have your 20-30 Cocktails costed out, now it's time to find the balance. Get rid of the ones that cost too much and get rid of the ones you know deep down won’t be as popular. And leave yourself with 10-15 Cocktails that make the cut.

Of course, sometimes, you may not know this until after a month, but this is you have to be agile. You want your whole list to generate mid to high 70% in GP. If you can hit 80% plus. Job done.


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