Every year, restaurant owners face the recurring expense of alcohol licensing fees, yet many struggle with properly incorporating these costs into their pricing strategy. Your license doesn't pay for itself through a single cocktail or wine glass. Instead, it's recovered gradually through every alcoholic beverage you sell during the license period.
What does an alcohol license cost?
The costs for an alcohol license vary by municipality and type of license. For a full restaurant you often pay between €500 and €2.000 per year. This seems like a lot, but spread across all the drinks you sell it's manageable.
💡 Example:
Restaurant with 80 covers per day, 6 days per week:
- Alcohol license: €1.200 per year
- Average 1.5 alcoholic drinks per guest
- Total per year: 80 × 6 × 52 × 1.5 = 37.440 drinks
Cost per drink: €1.200 ÷ 37.440 = €0.032 (3 cents)
How do you calculate the cost per drink?
You divide the license costs across all alcoholic drinks you expect to sell in a year. This gives you an amount per drink that you can include in your cost price.
Formula: License cost per drink = Annual license costs ÷ Expected alcohol sales per year
💡 Example calculation:
Bistro with alcohol license of €800 per year:
- 50 covers per day on average
- 5 days per week open
- 1.2 alcoholic drinks per guest
Calculation: 50 × 5 × 52 × 1.2 = 15.600 drinks per year
License cost per drink: €800 ÷ 15.600 = €0.051 (5 cents)
Where do you add these costs?
You add the license costs to your other fixed costs, not to the ingredient costs of each drink separately. It's an overhead that you distribute across your entire alcohol sales. Most kitchen managers discover too late that tracking these overhead costs separately prevents confusion during inventory counts and cost analysis.
- Do NOT add the costs to each bottle of wine you purchase
- DO account for the amount per drink in your total cost price
- Use it as part of your overhead calculation
- Update annually if license costs change
⚠️ Note:
Only count alcoholic drinks. Soft drinks, coffee and water don't require an alcohol license, so you don't need to distribute these costs across them.
Impact on your profit margin
For most restaurants, license costs represent a tiny fraction of total drink sales. At an average wine price of €6.00 per glass, 5 cents in license costs amounts to less than 1% of your selling price.
💡 Example impact:
Glass of wine at €6.00 (incl. 21% VAT):
- Selling price excl. VAT: €4.96
- Wine purchase price: €1.20
- License costs: €0.05
- Total costs: €1.25
Pour cost: (€1.25 ÷ €4.96) × 100 = 25.2%
Administration and accounting
For your accounting, the alcohol license is a business expense that you deduct over the entire year. You don't need to track how much license costs are in each drink - you only do that for your own cost price calculation.
- Book the license as a business expense in the year you pay it
- Use the amount per drink only internally for pricing
- Update your calculation if you sell more or fewer drinks than expected
Food cost calculators can help you include these overhead costs in your pricing calculations, so you always know what each drink truly costs you.
How do you account for license costs in your cost price? (step by step)
Calculate your expected alcohol sales per year
Add up how many alcoholic drinks you expect to sell: number of covers × days per week × 52 weeks × average number of drinks per guest. Only count beer, wine and spirits.
Divide your annual license costs by this number
Take the total cost of your alcohol license for a year and divide it by the number of drinks from step 1. This gives you the license cost per drink.
Add this amount to your other costs per drink
Add the license cost per drink to your purchase price and other overhead. Use this total to calculate your selling price and pour cost.
✨ Pro tip
Review your actual drink sales every 6 months against your initial projections. If you're serving 20% more cocktails than expected, you can reduce your per-drink license allocation and improve your margins.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I need to include license costs in the cost price of each bottle of wine?
No, calculate per drink you serve, not per bottle you purchase. One bottle of wine yields multiple glasses, so distribute the license costs across all glasses you pour from that bottle.
What if I sell more or fewer drinks than expected?
Update your calculation each year based on your actual sales. If you sell much more, the license cost per drink becomes lower. With fewer sales, it becomes higher.
Do license costs also apply to non-alcoholic drinks?
No, only to alcoholic drinks. Soft drinks, coffee, tea and water don't require an alcohol license, so you don't need to add these costs to them.
Are license costs tax deductible?
Yes, alcohol licenses are business expenses that you can fully deduct. Keep all invoices and correspondence with the municipality for your records.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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