Ever wondered what that "free" drink your bartender just poured actually costs your business? It's not just the purchase price you're losing – there's a bigger financial hit you might not be calculating. The real cost includes all the profit you would've earned from that sale.
What does a free drink really cost?
When your bartender gives away a beer, you don't just lose €1.50 in purchases. You also forfeit the profit margin you would've earned. This is called opportunity cost – the revenue you miss out on.
? 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
Every free drink carries these costs:
- Direct costs: Purchase price of the product
- Opportunity costs: Selling price excl. VAT minus purchase price
- Total costs: Selling price excl. VAT
The calculation is straightforward: Cost of free drink = Selling price excl. VAT
⚠️ Note:
Always calculate with the price excl. VAT. Alcoholic beverages carry 21% VAT, not the 9% rate for food.
Impact on an annual basis
A couple free drinks might seem insignificant, but they accumulate fast. Especially when multiple bartenders do this or it becomes routine behavior.
? 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
Costs vary significantly by drink category. Here's what common beverages actually cost you:
- 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
From tracking this across dozens of restaurants, cocktails and premium drinks hit your bottom line much harder than standard 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 need to be banned completely, but they require proper oversight. Here are actionable strategies:
- Set clear rules: Define when bartenders can comp drinks
- Track everything: Log every free drink with justification
- Establish limits: Cap free drinks at 2 per shift maximum
- Consider alternatives: 50% discount costs less than full comps
A food cost calculator helps you monitor the true impact of given-away drinks, so you can see exactly what it's costing your operation.
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
Track your comp drinks for exactly 2 weeks and calculate costs using selling prices excluding VAT. Most owners discover they're losing €150-300 monthly just from "harmless" free drinks.
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 don't I just calculate with the purchase price?
Do I calculate 9% or 21% VAT for alcoholic beverages?
What if I give a discount instead of completely free?
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
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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