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The Smart Way to Properly Price Your Drink Specials

Written by

Adam Johnston

Give me a bottle of bourbon and half a chicken, and I’ll conquer the world! My job is to make sure that everyone else does their job, which has to be the easiest job in the world considering the brilliant, hard-working people we have in our Flock. My ultimate goal is to run a company that people are proud to work for. I’m an avid statesman, adventurer, Burner, Broadway aficionado, athlete, and I wear my Cole Haans as often as my cowboy boots. It’s a wonderful life.All Posts

From BarBusinessOwner.com

Many bars offer theme specific drinks as well as theme specific drink pricing when running promotions.
In your promotion planning you should spend some time deciding what type of drink specials and discounts you will be offering.
Decide on drink pricing
Unfortunately, many bar owners have no clue how many more drinks are needed to be sold in order for the drink specials to make sound business sense.
In most instances, you want to run reduced price drink specials on items you have the highest margin on. By doing this, you don’t have to sell as many additional drinks to offset your price discounts.
For sake of an example, let’s use some common gross profit margin industry averages (of course your bar’s gross profit margin may be different):
-Liquor: 81%
-Frozen drinks: 80%
-Keg beer: 70%
-Bottled beer: 65%
-Wine: 35%
Let’s say you run a half price promotion. You’ll need to sell:
-Liquor: 161% more to offset the price discount
-Frozen drinks: 166% more
-Keg beer: 250% more
-Bottled beer: 333% more
-Wine: you lose money because the industry average gross profit margin is 35%
To make your drink special the most profitable, you should focus on liquor based drinks and keg beer.
If you decide to run drink specials on bottled beer and wine, then you need to run a much smaller price discount.
As you can see, not knowing the effects of price discounting can impact you bottom line profits significantly, especially if the same mistake is repeated over and over.
Take some time and use the below calculator to “run the numbers” on your most common drink specials and calculate how this is affecting your profits.
If you find the numbers unacceptable in any scenario, then take action and make adjustments to maximize your profits.