If food and beverages are your main money makers, competitive pricing is imperative. You want to make the price appealing to customers so that they are enticed to give your products a try. In addition to attractive price points, you can take advantage of happy hours and special events to get more customers. That being said, it is important to keep your bottom line in mind. You don’t want to price your food and beverages at a point where you are not making money. There are a few things to consider when creating a price structure.

Labour Costs

The costs of labour can be quite considerable depending on your business. It should be looked at as a percentage of your revenue. A percentage of the money you make should be spent on paying your employees. The trick is to properly forecast how much you will be making each day so that you can plan accordingly. For restaurants, the average you will spend on labour is 30% while bars can be as low as 18-24%. You should track sales to properly estimate how much you will be making every business day and schedule employees accordingly.

Beverage Costs

Beverage and food costs should be looked at separately to better plan ahead. Again, determining what you spend on beverages should depend on your beverage revenue. Typically, you should spend 21% of your beverage sales on your beverage costs. Finding this percentage can help you better determine a price. Beverage costs should also be separated into 5 categories. You should spend the following:

  • 17% on liquor
  • 23-25% on bottled beer
  • 21-22 on draft beer
  • 30% on wine
  • 6-8% on soft drinks

Food Costs

Regardless of the type of establishment you run and the type of food you serve, the costs of food are usually much higher than your beverage costs. From your overall sales revenue, you should spend between 29-32% on food costs.

Production and Recipe guidelines

To properly manage costs, you should have specific guidelines for cooks and bartenders. Strict recipes will not only keep your food and beverages consistent, but you’ll be able to determine how much ingredients you’ll need to buy for each serving. Ultimately, this creates manageable cost. You should create recipes, guidelines, measurements, and quantities for bartenders and cooks.

Waste

While most don’t realize it, waste adds up fast. To dramatically reduce waste, staff should be trained on how to handle the food and beverages. For example, bartenders need to be trained on how to pour drinks and use tap systems to prevent over pouring.

Theft

Theft is something that isn’t easy to forecast. Unfortunately, bar and kitchen theft is incredibly common. To reduce theft, you need to be constantly aware of inventory and monitor employee activities. Proper training and enforcement will help to keep theft under control.

To better price your food and beverages, you need to understand the costs involved. By successfully forecasting and keeping a record of sales each business day, you’ll have the knowledge to price food and beverages competitively while still making positive revenue. You’ll be able to make customers feel like they are getting a deal without sacrificing additional revenue.