How To Price Drinks In Your Restaurant or Bar

In this blog we are going to show you the process of how to price drinks in your restaurant or bar.

If you’re looking for information on how to price drinks in a restaurant or bar, you’ve come to the right place.

Check out our wonderful resources below:

• Alcohol pricing. A guide to using pour cost to set profitable prices on cocktails and liquors.
• Wine price. A walk through wine bottle markup and how to profitably price your bottles.
• How to price wine by the glass. A wine by the glass program can be a massive moneymaker. Here’s how to price one.
• Beer pricing for bars. Bottles, drafts, and craft beer pricing.

Once you’re familiar with using a liquor cost calculator, then it’s off to the races.

Strategies for How to Price Drinks In a Restaurant Menu

Food cost and gross profit margin are internal factors. You must also consider external factors like your competition and your clientele. And finally, trying your hand at menu engineering always helps.

Here’s how to determine selling price for restaurant:

Competitor Pricing

You have to look at nearby competitors with similar concepts and menus. While you may calculate the perfect price based on your food cost … your competitor may have a lower food cost. Their pricing may put pressure on you to lower your price to remain competitive. Don’t make the mistake of thinking your bar or restaurant exists in a vacuum.

To make sure you’re getting the best deals possible from suppliers, use a perpetual inventory management system like we use at F&B Serve. You can send product orders directly to suppliers, track cost history, and make sure you’re always getting the best deal possible.

Demand Pricing

You may have a menu item that’s flying out of the kitchen. While that’s encouraging, it may also be a sign that the price is too low. Often, from a profit standpoint, you can make up for what you lose in volume with an increase in margin.

The only way to know is to experiment with and iterate on your pricing strategy. And if you’re using a QR Code menu, like http://cheqout.com you don’t have to worry about paper costs.

Psychological Pricing

There’s a story in Robert Cialdini’s influential marketing book Influence that illustrates an aspect of psychological well.

A jeweler couldn’t get rid of a certain type of necklace. She kept discounting them and discounting them. Nothing. Then one day she went out of town and left a memo to her staff to price the necklaces as 2-for-1. The staff member misunderstood the memo and doubled each necklace’s price. They sold out of necklaces.

Higher prices can communicate higher quality, and vice versa. If you have the right kind of bar or restaurant concept, you can get away with higher prices. People actually expect it and may be suspicious of lower prices. Delivering on quality expectations is an important part of how to improve customer satisfaction in restaurants.

Menu Engineering

Menu engineering is the science of making your most popular menu items your most profitable and vice versa. It involves the consideration of menu layout, formatting, and prices.

The goal of all menu engineering is twofold:

• It lowers the food or liquor costs of your top-selling menu items or most popular cocktails (using a standardized recipe helps).
• It makes profitable, low-cost menu items more visible and appealing (using bar and restaurant marketing tactics like Should Your Bar Run A Happy Hour?? and bar promotion ideas). Just make sure you know what is happy hour and the best happy hour times.

This is typically done through in-depth analysis of costs, bar profit margin, sales patterns, and menu psychology. With historical sales data and pour cost reports available at the click of a button, bars and restaurants across the country rely on http://fandbserve.com for their menu engineering. Generally the chef and management will work together on this, but even the line cooks can help. You can include this in your line cook job description to make sure you hire people who are interest in menu engineering.

To be honest, bars and restaurants across the country should rely on F&B Serve for all facets of their menu pricing strategies on how to price drinks.

All menu pricing is data-driven. If you’re not using a beverage inventory service like http://fandbserve.com, your menu pricing isn’t specifically engineered for profit. And that may be why your restaurant balance sheet suffers. Don’t become part of the bar and restaurant failures. Use http://fandbserve.com