How do you price your beverages to account for waste and spoilage?

2 Ideal Selling Price

Once you know your beverage cost percentage, you can use it to determine your ideal selling price for each drink. The ideal selling price is the amount you need to charge to achieve your desired profit margin. The formula for ideal selling price is:

Ideal Selling Price = Beverage Cost / (1 - Beverage Cost Percentage)

For example, if your beverage cost is $1.50 and your beverage cost percentage is 25%, your ideal selling price is:

Ideal Selling Price = $1.50 / (1 - 0.25)

Ideal Selling Price = $2

This means that you need to charge at least $2 for each drink to make a 75% profit margin.

3 Waste and Spoilage

Waste and spoilage are losses that can occur due to spillage, breakage, overpouring, theft, expiration, and evaporation. These losses can increase beverage cost and reduce profit margin. To account for waste and spoilage, you need to compare your expected usage with your actual usage. The difference between the two is the variance, calculated by subtracting actual usage from expected usage. For example, if you expect to use 100 bottles of wine in a month but you actually use 110 bottles, your variance is -10, which indicates that you have wasted or spoiled 10 bottles of wine. To reduce waste and spoilage, you should implement best practices such as training staff on pouring techniques and portion control, using measuring tools such as jiggers and scales, storing beverages in appropriate conditions, rotating stock using the FIFO method, and conducting regular audits and reconciliations. When pricing beverages to account for waste and spoilage, you need to consider target market, competitors, and value proposition so that prices are attractive and competitive. Ultimately, your pricing strategy should reflect business goals and customer expectations.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?