A free drink from the bartender costs you more than you think. It's not just about the purchase price, but also about the lost profit. In this article you'll learn to calculate exactly what each given-away drink really costs you.
What does a free drink really cost?
If your bartender gives away a beer, you lose not only €1.50 in purchases. You also lose the profit you would have made on it. We call this opportunity cost - the missed chance to earn.
💡 Example:
Heineken beer given away:
- Purchase price: €1.50
- Selling price: €3.50 (incl. 21% VAT)
- Selling price excl. VAT: €2.89
- Lost profit: €2.89 - €1.50 = €1.39
Total cost: €2.89 (not €1.50!)
The formula for given-away drinks
For every free drink these costs apply:
- Direct costs: Purchase price of the product
- Opportunity costs: Selling price excl. VAT minus purchase price
- Total costs: Selling price excl. VAT
The formula is simple: Cost of free drink = Selling price excl. VAT
⚠️ Note:
Always calculate with the price excl. VAT. Alcoholic beverages have 21% VAT, not 9% like food.
Impact on an annual basis
A few free drinks seem harmless, but they add up quickly. Especially if multiple bartenders do this or if it becomes a habit.
💡 Example:
Bar with 2 free drinks daily:
- Average drink price excl. VAT: €3.50
- Per day: 2 × €3.50 = €7.00
- Per week (6 days open): €42.00
- Per year: €2,184
Annual cost: €2,184
Different types of drinks
The costs vary by drink type. Here are common prices:
- Beer (draft): €1.20 purchase → €2.89 total cost
- Wine (glass): €1.80 purchase → €4.13 total cost
- Cocktail: €3.50 purchase → €8.26 total cost
- Premium spirit: €2.80 purchase → €6.61 total cost
Cocktails and premium drinks cost much more than a simple beer.
💡 Example:
Mojito given away:
- Rum: €1.20
- Lime, mint, sugar, soda: €0.30
- Total purchase: €1.50
- Selling price: €10.00 incl. VAT
- Excl. VAT: €8.26
Real cost: €8.26
How do you prevent unnecessary costs?
Free drinks don't have to be forbidden, but they do need to be controlled. Here are practical tips:
- Set rules: When can a bartender give something away?
- Register it: Note every free drink with reason
- Set limits: Maximum X free drinks per shift
- Alternatives: Discount instead of free (50% discount costs less)
A system like KitchenNmbrs helps you keep track of the real costs of given-away drinks, so you see what it really costs you.
How do you calculate the cost of a free drink?
Determine the selling price excl. VAT
Take the normal selling price and divide by 1.21 (alcoholic beverages have 21% VAT). A beer of €3.50 becomes €3.50 / 1.21 = €2.89 excl. VAT.
Add up all ingredient costs
Don't just count the main product, but also garnish, mixers and additions. For a cocktail you count rum, juice, garnish and ice all together.
Calculate the total cost
The real cost is the full selling price excl. VAT. This is what you lose in potential revenue by giving away the drink instead of selling it.
✨ Pro tip
Check weekly how many free drinks have been given away. Calculate the costs based on selling prices excl. VAT. Often owners are shocked by the amount.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Why don't I just calculate with the purchase price?
Because you lose not only the product, but also the profit you would have made on it. The real cost is always the missed selling price.
Do I calculate 9% or 21% VAT for alcoholic beverages?
Always 21% VAT for alcoholic beverages. Only food and non-alcoholic beverages have 9% VAT in hospitality.
What if I give a discount instead of free?
50% discount costs you half of the selling price excl. VAT. That's always cheaper than giving it away completely.
How do I keep track of how many free drinks are given away?
Have your bartenders note every free drink with the reason. Count this weekly to see the impact.
Is a free drink for a good customer worth it?
That depends on how much that customer normally spends. If they spend €50 per visit, a free beer of €2.89 can be worthwhile for customer retention.
📚 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.
Calculate your cocktail costs down to the ml
Drink margins seem high, but spillage and free pours eat them up. KitchenNmbrs calculates the exact cost price of every cocktail and drink. Try it free.
Start free trial →