Draft beer delivers profit margins between 70-85% for most hospitality venues. Learn how to calculate your beer margins correctly and spot when you're earning too little on your taps.
Most operators obsess over food costs while their beer margins quietly leak money. Draft beer typically delivers 70-85% margins, yet many venues don't even track these numbers properly. The difference between good and poor beer margins can make or break your monthly profits.
Normal beer margins in hospitality
Beer margins fluctuate based on venue type and location, but these ranges are typical:
- Café/bar: 75-85% margin
- Restaurant: 70-80% margin
- Hotel/terrace: 80-85% margin
- Fast food/snack bar: 70-75% margin
💡 Example:
Amsterdam city center café sells Heineken 0.25L:
- Cost price: €0.65 per glass
- Selling price: €3.50 incl. VAT
- Selling price excl. VAT: €3.21
Margin: ((€3.21 - €0.65) / €3.21) × 100 = 79.8%
How do you calculate your beer margin?
Beer margin calculations work differently than food cost calculations. You're calculating backwards from your selling price:
Margin % = ((Selling price excl. VAT - Cost price) / Selling price excl. VAT) × 100
💡 Example calculation:
Restaurant serving Pilsner 0.25L:
- Menu price: €2.75 (incl. 21% VAT)
- Price excl. VAT: €2.75 / 1.21 = €2.27
- Cost per glass: €0.58
Margin: ((€2.27 - €0.58) / €2.27) × 100 = 74.4%
⚠️ Important:
Always work with VAT-excluded prices. Beer carries 21% VAT, not the 9% rate for food. Many operators mess this up and overestimate their actual margins.
Factors that affect your margin
Several variables determine what margin you can achieve on beer:
- Location: City center vs. suburbs
- Venue type: Pub vs. restaurant
- Beer brand: Premium vs. standard
- Order volume: Larger orders = better pricing
- Tap setup: Rental vs. purchase agreements
💡 Example difference:
Same Heineken 0.25L across different venues:
- Village café: €2.50 → 72% margin
- City center: €3.80 → 82% margin
- Hotel terrace: €4.50 → 85% margin
Cost price remains €0.65 everywhere
When is your margin too low?
From years of working in professional kitchens, I've seen that margins below 65% signal a real problem. Common causes include:
- Selling prices too low for your location
- Weak purchasing agreements
- Excessive waste (foam, spillage)
- Oversized glass portions
⚠️ Important:
Monitor your cost prices regularly. Breweries bump prices 1-2 times annually. Without matching menu adjustments, your margins quietly disappear.
Different beer types, different margins
Each beer category delivers different profitability. Here's what you can expect:
- Pilsner (tap): 75-85% margin
- Specialty beer (tap): 70-80% margin
- Bottled beer: 65-75% margin
- Alcohol-free: 70-80% margin
💡 Example comparison:
Café with mixed beer offerings:
- Heineken tap 0.25L: €0.65 cost → €3.50 selling = 79% margin
- La Chouffe bottle: €1.85 cost → €5.50 selling = 67% margin
- Heineken 0.0 bottle: €1.20 cost → €3.25 selling = 56% margin
Draft beer consistently delivers the highest per-glass profit.
How do you calculate your beer margin? (step by step)
Determine your actual cost price per glass
Divide the price of a keg by the number of glasses you tap from it. From a 50L keg you get approximately 200 glasses of 0.25L. Don't forget to include the costs of CO2 and cleaning.
Calculate your selling price excluding VAT
Divide your menu price by 1.21 (because beer has 21% VAT). A beer of €3.00 incl. VAT is €2.48 excl. VAT. This is the amount you need to use for your calculation.
Apply the margin formula
Subtract the cost price from your selling price excl. VAT, divide by your selling price excl. VAT and multiply by 100. This gives you your margin percentage.
✨ Pro tip
Check your draft beer waste percentage every 2 weeks - anything above 8% means equipment problems or undertrained staff are eating your profits directly.
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Frequently asked questions
Why does beer carry 21% VAT instead of 9%?
Alcoholic beverages fall under the standard 21% VAT rate, even in hospitality settings. Only food and non-alcoholic drinks qualify for the reduced 9% rate when consumed on-premises.
How many glasses can I pour from a 50-liter keg?
A 50L keg yields roughly 200 glasses of 0.25L after accounting for foam and spillage. With 0.20L pours, you'll get approximately 240 glasses.
What if my brewery offers volume discounts but requires exclusivity?
Exclusivity deals can improve your cost price by 10-15% but limit customer choice. Calculate if the margin improvement on your main beer outweighs lost sales from missing popular alternatives.
Should I price all beers the same or vary by brand?
Each beer has different cost structures, so uniform pricing hurts profitability. Premium brands cost more but command higher selling prices, while house brands offer better margins at lower price points.
How often should I review my beer pricing?
Audit your cost prices twice yearly minimum. Breweries adjust pricing regularly, and delayed menu updates can slash margins by 5-10% without obvious symptoms.
Can I negotiate better tap rental agreements to improve margins?
Absolutely, but it requires volume commitment or multi-year contracts. Some breweries offer free tap maintenance or reduced keg prices in exchange for guaranteed minimum orders per month.
📚 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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