Most bar managers obsess over one metric while completely ignoring the other. Gross margin shows your total profit per drink, but pour cost reveals if you're pricing your alcohol correctly. Track both and you'll spot profit leaks that single-metric tracking misses entirely.
What is gross margin on cocktails?
Gross margin shows the gap between what you sell and what it costs you, calculated as a percentage of your selling price. It's your total profit on each cocktail.
💡 Gross margin example:
Mojito selling price: €12.00 incl. 21% VAT = €9.92 excl. VAT
- Rum (5cl): €1.80
- Lime, mint, sugar: €0.40
- Ice, garnish: €0.30
Total costs: €2.50
Gross margin: (€9.92 - €2.50) / €9.92 × 100 = 74.8%
What is pour cost?
Pour cost tracks only the alcohol expenses as a percentage of your selling price. It's like food cost but focuses purely on the spirits in your glass.
Pour cost formula:
Pour cost % = (Alcohol costs / Selling price excl. VAT) × 100
💡 Pour cost example:
Same mojito:
- Selling price excl. VAT: €9.92
- Rum only: €1.80
Pour cost: €1.80 / €9.92 × 100 = 18.1%
The key difference
The split comes down to which costs you include:
- Gross margin: Every ingredient (spirits + mixers + garnish)
- Pour cost: Alcohol exclusively
Pour cost tells you if you're making enough on the priciest part of your cocktail. Gross margin reveals your complete profitability picture. And here's a pattern we see repeatedly in restaurant financials - establishments tracking just one metric consistently miss profit opportunities the other would catch.
⚠️ Note:
Always calculate with the selling price excluding VAT. Alcoholic beverages carry 21% VAT, not 9%!
Standard percentages in hospitality
For profitable bar operations, aim for these ranges:
- Pour cost: 18-25% (spirits only)
- Gross margin: 70-80% (complete profit)
Pour cost creeping past 25%? You're undercharging for alcohol. Gross margin dropping below 70%? Your fixed costs will eat you alive.
💡 Comparison example:
Whiskey-cola vs. Mojito (both €12 incl. VAT):
Whiskey-cola:
- Pour cost: 22% (whiskey only)
- Gross margin: 78% (whiskey + cola + ice)
Mojito:
- Pour cost: 18% (rum only)
- Gross margin: 75% (rum + mixers + garnish)
Whiskey-cola shows higher pour cost but delivers better gross margin.
Using each figure effectively
Use pour cost for:
- Spirit purchasing decisions - which brands actually make money?
- Comparing cocktail profitability
- Supplier negotiations
Use gross margin for:
- Menu planning - which cocktails earn their keep
- Checking if you're covering fixed expenses
- Complete profitability reviews
Modern bar management software calculates both metrics automatically per cocktail, so you can instantly spot which drinks generate real profit.
How do you calculate gross margin and pour cost? (step by step)
Calculate your selling price excluding VAT
Divide your menu price by 1.21 (alcoholic beverages have 21% VAT). For example: €12.00 / 1.21 = €9.92 excl. VAT.
Add up all costs for gross margin
Include all ingredients: alcohol, mixers, garnish, ice. For example: rum €1.80 + mixers €0.70 = €2.50 total.
Calculate both percentages
Pour cost = (alcohol only / selling price excl. VAT) × 100. Gross margin = (selling price - all costs) / selling price × 100.
✨ Pro tip
Run the numbers on your top 3 cocktails this week and compare their pour cost versus gross margin. You'll likely discover pour costs around 20% while gross margins hit 75% - that gap shows exactly how much you're earning on mixers and markup.
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 include VAT in my pour cost calculation?
Never include VAT in your calculations. Always use the selling price excluding VAT. Alcoholic beverages carry 21% VAT, so divide your menu price by 1.21 first.
What's a good pour cost for cocktails?
Aim for 18-25% pour cost on cocktails. Anything below 18% means you're maximizing alcohol profits beautifully. Above 25% and profitability becomes a real struggle.
Why is gross margin more important than pour cost?
Gross margin reveals your actual profit and shows if you've got enough left for rent, wages, and utilities. Pour cost just helps with buying decisions and comparing spirit brands.
Should ice and garnish count toward costs?
For gross margin, absolutely yes. For pour cost, definitely no. Pour cost examines alcohol expenses exclusively, while ice, garnish and mixers all factor into your total gross margin.
How do premium spirits affect these calculations?
Premium spirits push pour cost higher but can actually improve gross margin if you price them right. A €15 premium cocktail with 28% pour cost might still deliver 75% gross margin.
Can I track these metrics for wine and beer too?
Pour cost works perfectly for wine since it's 100% alcohol. For beer, pour cost equals your total cost percentage since there aren't additional mixers involved.
📚 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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