Where Do Cocktail Prices Come From?
J Thoendell stashed this in Food
n addition to bartending, Morgenthaler maintains a blog about his craft, and pricing strategy has been a recurring subject over the years. He's even released Microsoft Excel spreadsheets to his readers, many of whom are in the service industry, as instructional tools. The charts are basic versions of the ones he uses at Clyde Common to calculate pour cost and, by extension, sales prices for drinks.
Pour cost is pretty much what it sounds like: the cost a bar incurs by pouring a given cocktail. But pour cost is typically expressed as a percentage of the sale price of a drink rather than a raw number; so if it costs a bar $2 in goods to produce a drink that it sells for $10, the pour cost of that drink is 20 percent. "Some places need the pour cost to come in at 18 percent," Morgenthaler tells me, "others are fine with 25 percent. It all depends on the business operations." In other words, a bar might decide upon an acceptable range in which its pour costs must fall, given how other aspects of the business factor in, and then calculate the price of drinks based on that range. Between two drinks sold for the same price, the one with the higher pour cost earns the bar a smaller profit.
At what point does price come into consideration when a bar like Clyde Common—which is located adjacent to the Ace Hotel and has gained a reputation for quality and innovation—comes up with new drinks for its cocktail menu? Morgenthaler says, "When I'm developing a drink for the menu, my first concern is that it tastes delicious. So once I've got something I'm happy with, then I take it to the computer." Here he runs the numbers on what the drink's recipe would cost the bar in goods. "Sometimes it's fine as is, sometimes we've got to swap ingredients or adjust proportions to make it work, and occasionally we have to scrap the entire drink because it simply doesn't fall within our menu's price range."
That range usually includes some drinks that guests can buy for just $7, up to more elaborate ones costing as much as $12. At Clyde Common, offering a range is important, Morgenthaler says, in that it "ensures that we're opening ourselves up to as many guests as possible. We realize that not everyone is comfortable with $10 to $12 drinks, and we want to cater to everyone."
$7 to $12 is an oddly 2014 price range.
There's no good rule of thumb for pour cost in this article, unfortunately.
Seems prone to trial and error.