Most bar owners think VAT calculations work the same for drinks and food - they don't. Alcoholic beverages carry a 21% VAT rate while food gets taxed at just 9%. This difference can make or break your profit margins if you're not calculating correctly.
The difference between food and drinks
Dutch hospitality businesses deal with multiple VAT rates:
- Alcoholic beverages: 21% VAT
- Food in restaurant: 9% VAT
- Non-alcoholic beverages in restaurant: 9% VAT
- Takeaway/delivery food: 9% VAT
⚠️ Note:
Beer, wine, spirits and cocktails always fall under 21% VAT. Even if you serve them with food.
How VAT affects your cost price
Your pour cost calculations should always use the price excluding VAT. Same principle as food cost.
💡 Example:
You sell a beer for €3.00 incl. VAT:
- Selling price excl. VAT: €3.00 ÷ 1.21 = €2.48
- Purchase price beer: €0.45
- Pour cost: (€0.45 ÷ €2.48) × 100 = 18.1%
That's a healthy margin for beer.
From desired pour cost to selling price
Need to determine your minimum pricing for a target pour cost? Here's the formula:
Minimum selling price excl. VAT = Purchase price ÷ (Pour cost % ÷ 100)
Then multiply by 1.21 for the price including 21% VAT.
💡 Example cocktail:
Mojito ingredients cost €1.80. You want 20% pour cost:
- Minimum price excl. VAT: €1.80 ÷ 0.20 = €9.00
- Price incl. 21% VAT: €9.00 × 1.21 = €10.89
- Round to: €10.95 or €11.00
Pour cost then becomes: €1.80 ÷ €9.09 = 19.8%
Standard pour cost percentages
After managing kitchen operations for nearly a decade, I've seen bars typically aim for these margins:
- Beer: 18-25% pour cost
- Wine per glass: 20-28% pour cost
- Spirits/cocktails: 15-22% pour cost
- Premium cocktails: 18-25% pour cost
⚠️ Note:
With cocktails, count all ingredients: spirit, mixers, fruit, syrup, even ice and garnish.
Impact on your total margin
The gap between 9% and 21% VAT creates a significant impact on your actual margin:
💡 Comparison:
Same menu price of €5.00, different VAT:
- Soft drink (9% VAT): €5.00 ÷ 1.09 = €4.59 excl. VAT
- Beer (21% VAT): €5.00 ÷ 1.21 = €4.13 excl. VAT
- Difference: €0.46 less to cover costs
Per 100 sales: €46 difference in margin.
Practical tips for pricing
Use these guidelines for determining your drink prices:
- Always calculate first excl. VAT, then incl.
- Check your purchase prices regularly - they change often
- Account for spillage (spilling, tasting, returns)
- Premium brands can have higher pour cost
How do you calculate VAT impact on drink prices?
Determine the correct VAT
Alcoholic beverages: 21% VAT. Non-alcoholic beverages in restaurant: 9% VAT. Note: beer, wine and spirits are always 21%, even when served with food.
Calculate price excluding VAT
Divide your menu price by 1.21 (for alcohol) or 1.09 (for non-alcoholic). For example: €5.00 ÷ 1.21 = €4.13 excl. VAT for a beer.
Calculate your pour cost
Divide your purchase price by the selling price excl. VAT, times 100. For example: €0.45 ÷ €4.13 × 100 = 10.9% pour cost.
Compare with target percentage
Check if your pour cost falls within your target margin. For beer, 18-25% is standard. Too low? You can raise your price. Too high? Check your purchase prices or adjust your price.
✨ Pro tip
Calculate your top 3 cocktails' pour costs weekly for the next month. These drinks often represent 40% of your bar revenue, so getting their margins right impacts your bottom line immediately.
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
Why is VAT on alcohol higher than on food?
This is Dutch legislation. Alcohol falls under the high VAT rate of 21%, while food and non-alcoholic beverages in restaurants have 9% VAT. This applies to all alcoholic beverages, regardless of strength.
Should I include VAT in my pour cost calculation?
No, you always calculate pour cost with the selling price excluding VAT. Just like with food cost. So divide your menu price by 1.21 first before calculating the pour cost.
What is a healthy pour cost for cocktails?
For cocktails, 15-22% pour cost is standard. Premium cocktails can go up to 25%. Count all ingredients: spirit, mixers, fruit, syrup, ice and garnish.
How often should I adjust my drink prices?
Check your purchase prices and pour cost at least quarterly. Suppliers regularly raise prices, especially for beer and wine. If your pour cost exceeds your target percentage, adjustment is needed.
Can I use different pour cost for different drink types?
Yes, that's normal. Beer often has a different margin than cocktails. Premium brands can have higher pour cost because customers are willing to pay more for quality.
Do I need to calculate VAT differently for wine by the bottle versus by the glass?
No, both fall under the same 21% VAT rate since they're alcoholic beverages. However, your pour cost calculation might differ since bottle sales typically have lower pour costs than glass pours.
📚 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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