Alcohol can be an expensive commodity, so if you're in the restaurant or bar business you need to manage it carefully. Your pour cost percentage, or beverage cost of sales, tells you how efficiently you generate revenue with your liquor sales. To figure it out you'll need to know your alcohol costs and revenues.
Crunching the Numbers
To calculate your pour cost percentage, simply divide the cost of the alcohol you used in a period by your alcohol sales over the same period. For example, if your cost for the alcohol sold in a month was $5,000 and you had $20,000 in alcohol sales, then you would divide $5,000 by $20,000, giving you a pour cost of 0.25, or 25 percent.
What It Means
Your pour cost percentage tells you how much it costs you to generate revenue. For example, a pour cost percentage of 25 percent means that you need to spend 25 cents on alcohol for every dollar of sales. The lower your pour cost percentage, the greater your revenue is relative to your costs. For instance, if your pour cost is just 10 percent, compared to 25 percent, it would mean you only spend 10 cents for each dollar of revenue. You can decrease your pour cost percentage by increasing prices, selling liquors with higher profit margins and decreasing alcohol waste.
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