Ever wonder why some cocktails make you money while others seem to drain your profits? Liquor cost represents the percentage of your drink price that goes toward purchasing alcohol — essentially food cost but for beverages. Most bars either calculate this incorrectly or skip it entirely, losing money on every cocktail they serve.
What exactly is liquor cost?
Liquor cost (also called 'pour cost') represents the percentage of your selling price that covers alcohol purchases. It functions identically to food cost calculations, just applied to beverages.
The formula:
Liquor cost % = (Alcohol purchasing costs / Selling price excl. VAT) × 100
⚠️ Note:
Alcoholic drinks carry 21% VAT, not 9% like food. Always calculate excluding VAT for accurate liquor cost.
Standard liquor cost percentages
Different drink categories have distinct benchmarks:
- Beer: 20-25%
- Wine per glass: 18-25%
- Spirits/cocktails: 15-22%
- Premium cocktails: 20-28%
Any liquor cost exceeding 30% typically signals underpricing your beverages.
Calculation for different drink types
Simple drinks (beer, wine)
💡 Beer example:
You sell a Heineken 0.25L for €3.50 (incl. 21% VAT)
- Selling price excl. VAT: €3.50 / 1.21 = €2.89
- Purchase price per bottle: €0.65
Liquor cost: (€0.65 / €2.89) × 100 = 22.5%
Cocktails (multiple ingredients)
For cocktails you'll add up all alcoholic ingredients. Juices, syrups and garnish fall under 'food cost', not liquor cost.
💡 Mojito example:
Selling price: €9.50 (incl. 21% VAT) = €7.85 excl. VAT
- White rum (5cl): €1.20
- Lime juice (2cl): €0.15 (this is food cost)
- Sugar syrup: €0.10 (this is food cost)
- Mint: €0.05 (this is food cost)
Liquor cost: (€1.20 / €7.85) × 100 = 15.3%
Where things often go wrong
Most bars stumble with these common calculation errors:
- Using 9% VAT: Alcohol carries 21% VAT, making your liquor cost appear artificially low
- Pouring too generously: 6cl instead of 5cl rum means 20% higher liquor cost
- Ignoring waste: You're not accounting for spills, tastings, or returns
- Counting only the main spirit: For cocktails include all alcoholic components
⚠️ Note:
A difference of 1cl per cocktail can push your liquor cost up by 3-5 percentage points. With 200 cocktails weekly that's €2,000+ annually.
I've seen this mistake cost the average restaurant EUR 200-400 per month in lost profits. Bar managers often don't realize their staff's generous pours are eating into margins until they run the numbers.
How to determine the right selling price
Once you've established your target liquor cost, you can calculate minimum selling prices:
Minimum selling price excl. VAT = Alcohol purchasing costs / (Desired liquor cost % / 100)
💡 Pricing example:
Gin and tonic with €1.80 in gin, desired liquor cost 20%
- Minimum price excl. VAT: €1.80 / 0.20 = €9.00
- Minimum price incl. 21% VAT: €9.00 × 1.21 = €10.89
You need to charge at least €10.90 to achieve 20% liquor cost.
Digital tracking vs. manual
Many bars rely on Excel spreadsheets or skip tracking entirely. The drawbacks:
- Supplier prices fluctuate, Excel doesn't update automatically
- Recipes aren't centrally stored
- Bar staff remain unaware of drink costs
- You'll recalculate everything for new cocktails
Systems like KitchenNmbrs let you store cocktail recipes with automatic liquor cost calculations. Update prices once and all cocktails recalculate instantly.
How to calculate liquor cost? (step by step)
Gather all alcoholic ingredients
Note which alcohol goes in your drink and how much cl of each. For a whiskey-cola that's 5cl whiskey for example. For cocktails add up all alcoholic ingredients.
Calculate total purchasing costs
Work out what the alcohol costs per serving. A €25 bottle of whiskey contains 70cl, so 1cl costs €0.36. For 5cl you pay €1.80 in whiskey.
Divide by selling price excl. VAT
Divide the purchasing costs by your selling price excluding 21% VAT. A whiskey-cola for €6.05 incl. VAT is €5.00 excl. VAT. Liquor cost: €1.80 / €5.00 = 36%.
✨ Pro tip
Track liquor costs on your 3 highest-volume cocktails every 2 weeks. These drinks typically represent 60% of your bar's alcohol revenue.
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
Should I count juices and syrups in liquor cost?
No, only alcoholic ingredients count toward liquor cost. Juices, syrups and garnish fall under 'food cost' and require separate calculations.
What VAT do I use for alcoholic drinks?
Alcoholic drinks always carry 21% VAT in the Netherlands. Non-alcoholic drinks in restaurants have 9% VAT.
What's a good liquor cost for cocktails?
For standard cocktails, 15-22% works well. Premium cocktails with expensive spirits can reach 28%. Above 30% suggests underpricing.
How often should I check my liquor cost?
Review your top-selling drinks monthly at minimum. Suppliers adjust prices regularly, so your liquor cost can creep up unnoticed.
What if my bartender pours too generously?
Each extra 1cl per drink increases your liquor cost by 3-5 percentage points. Train staff on proper portions and provide jiggers for consistency.
Can I use the same liquor cost target for all spirits?
Different spirits have different cost structures. Premium whiskeys might run 25-28% while well vodka should stay under 20%.
How do I handle cocktails with multiple spirits?
Add up the cost of all alcoholic ingredients, then divide by your selling price. A Long Island Iced Tea with five spirits requires calculating each one separately.
📚 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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