A small café owner recently discovered their cappuccino was only generating €0.40 profit per cup instead of the expected €1.20. The culprit? Their beverage cost had crept up to 45% without them noticing. Setting proper target beverage costs prevents this silent profit killer.
What is beverage cost?
Beverage cost (also called pour cost) works the same as food cost, but for drinks. It's the percentage of your selling price (excl. VAT) that goes to purchasing drinks.
💡 Example:
You sell a beer for €3.63 incl. 21% VAT
- Selling price excl. VAT: €3.63 / 1.21 = €3.00
- Purchase price beer: €0.60
- Beverage cost: (€0.60 / €3.00) × 100 = 20%
⚠️ Note:
Alcoholic drinks have 21% VAT, not 9% like food. Always calculate with the price excl. VAT for accurate beverage cost.
Common beverage cost percentages
Different drink types have different guidelines:
- Beer: 18-25% (draft beer often lower than bottled)
- Wine by the glass: 20-28%
- Spirits/cocktails: 15-22%
- Soft drinks: 15-25%
- Coffee/tea: 10-20%
These percentages are guidelines. In a trendy cocktail bar you can often charge higher prices, resulting in lower beverage cost.
Factors that affect your beverage cost
Location and concept largely determine what you can charge. A café in the city center can set different prices than a neighborhood café.
Purchase volume plays a big role. Larger volumes mean better purchase prices from your supplier.
💡 Example volume effect:
Heineken beer purchase:
- Small café (10 crates/week): €0.70 per bottle
- Large café (50 crates/week): €0.55 per bottle
At €3.00 selling price: 23% vs 18% beverage cost
Waste and spillage increases your actual beverage cost. Think of beer sitting too long, wine going bad, or pouring too generously. This oversight alone costs the average restaurant EUR 200-400 per month in lost profits.
How do you set a realistic target beverage cost?
Start with an analysis of your current situation. Calculate the beverage cost for your 5 most popular drinks and see where you stand.
Look at your total costs. Besides drinks you also have staff, rent, energy. A café typically has this cost structure:
- Drink purchases: 20-28%
- Staff: 25-35%
- Rent: 8-15%
- Other costs: 15-25%
- Profit: 10-20%
⚠️ Note:
A too low beverage cost often means too high prices. Your guests will then go to the competition. Find the balance between profitability and competitiveness.
Practical tips for better beverage cost
Measure your pours. Use jiggers for spirits and train your staff to pour consistently. 5ml extra per glass can ruin your margin.
Monitor your inventory weekly. Count what's in your bar and compare with your sales figures. Big differences indicate waste or theft.
💡 Example inventory check:
Last week:
- Opening inventory: 50 bottles of beer
- Purchased: 100 bottles
- Sold according to register: 120 bottles
- Closing inventory: 25 bottles
Difference: 5 bottles not sold but gone = leakage
Negotiate with suppliers. Ask for volume discounts or seasonal promotions. Every cent less in purchases directly improves your margin.
Digital tools
With an app like KitchenNmbrs you can have your drink prices and beverage cost calculated automatically. You don't have to manually track all prices in Excel.
The system also alerts you when suppliers raise their prices, so you can adjust your selling prices in time.
How do you set a target beverage cost? (step by step)
Analyze your current beverage cost
Calculate the beverage cost of your 5 best-selling drinks. Use the formula: (purchase price / selling price excl. VAT) × 100. This gives you insight into your current situation.
Determine your total cost structure
Add up all costs: staff, rent, energy, other costs. Subtract this from 100% to see how much room you have for drink purchases + profit. Divide this between beverage cost and profit margin.
Test and adjust
Start with a target beverage cost between 20-25% for your main drinks. Monitor weekly whether you're hitting this target and whether your revenue stays stable. Adjust your prices or purchases if needed.
✨ Pro tip
Track your espresso-based drinks' milk usage for 2 weeks straight. Over-steaming milk wastes about 15ml per drink, which adds 2-3% to your coffee beverage cost.
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
What is a good beverage cost for a café?
For most cafés a beverage cost between 20-28% is typical. Beer can be slightly lower (18-25%), cocktails slightly higher due to complexity. It depends on your location, concept and competition.
Should I include VAT in my beverage cost calculation?
No, always calculate with the selling price excluding VAT. Alcoholic drinks have 21% VAT in the Netherlands. A beer costing €3.63 incl. VAT is €3.00 excl. VAT for your calculation.
How often should I adjust my target beverage cost?
Check monthly whether you're hitting your target. Adjust your target if suppliers become structurally more expensive or if your concept changes. You can deviate temporarily during seasonal fluctuations.
What if my beverage cost is too high?
First check where the problem is: pouring too generously, waste, theft or selling prices too low. Fix the root cause before raising your prices.
Can I have different beverage cost targets per drink type?
Yes, that's actually smart. Beer can have a lower beverage cost than cocktails. Premium brands can justify higher margins than house brands.
How do seasonal ingredients affect my beverage cost targets?
Fresh fruit cocktails or seasonal specials often have higher beverage costs due to ingredient price fluctuations. Factor in a 3-5% buffer for seasonal drinks compared to your standard targets.
📚 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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