Contribution margin per drink item shows how much each drink contributes to your fixed costs and profit. This is more crucial than your food cost percentage, because it tells you which drinks actually make money. In this article you'll learn step-by-step how to calculate this for every drink on your menu.
What is contribution margin for drinks?
Contribution margin is what's left from your selling price after you subtract the direct costs. For drinks, these are the purchase costs of the drink itself, plus any garnish or mixers.
The difference from food cost percentage: contribution margin shows the absolute euros you keep per sold item. That gives you a more realistic picture of what each drink contributes to your business results.
💡 Example:
A glass of house wine you sell for €6.50 (incl. 21% VAT):
- Selling price excl. VAT: €5.37
- Purchase costs wine (150ml): €1.20
- Contribution margin: €5.37 - €1.20 = €4.17
Per glass you generate €4.17 for fixed costs and profit.
Calculate purchase costs per serving
For drinks you need to convert the purchase price to the amount you serve per glass. This varies by drink type and your own portion size.
Standard portion sizes:
- Wine: 125ml or 150ml per glass
- Beer (tap): 250ml or 330ml
- Spirits: 35ml or 40ml
- Cocktails: variable, add up all ingredients
💡 Example whisky:
Bottle of Jameson (700ml) costs €28.00 at purchase:
- Price per ml: €28.00 ÷ 700ml = €0.04 per ml
- Serving of 40ml: 40 × €0.04 = €1.60
- Selling price €8.50 (incl. 21% VAT) = €7.02 excl. VAT
Contribution margin: €7.02 - €1.60 = €5.42
Cocktails and mixed drinks
For cocktails you add up all ingredients: spirits, mixers, garnish, ice. Here too you calculate based on the actual amount you use.
💡 Example Mojito:
Ingredients per cocktail:
- Rum (50ml): €1.80
- Lime (half): €0.15
- Mint (sprig): €0.05
- Sugar water: €0.05
- Soda: €0.10
Total purchase costs: €2.15
Selling price €12.50 (incl. 21% VAT) = €10.33 excl. VAT
Contribution margin: €10.33 - €2.15 = €8.18
⚠️ Note:
For alcoholic drinks you always calculate with 21% VAT, not 9%. This applies to beer, wine, spirits and cocktails. Non-alcoholic drinks in your restaurant fall under 9% VAT.
Compare contribution margins between drinks
Once you've calculated the contribution margin per drink item, you can compare which drinks generate the most revenue. This helps with composing your menu and training your staff.
Rank your drinks:
- Highest contribution margin: promote these actively
- Popular but low margin: consider price increase
- Low margin and low sales: consider removing
- High margin but low sales: better positioning on menu
Use contribution margin for decisions
Contribution margin helps you make concrete decisions about your drink menu and sales strategy.
Practical applications:
- Happy hour: feature drinks with high margin in your offer
- Staff training: teach them to recommend drinks with good margin
- Menu layout: place profitable drinks prominently
- Purchasing: focus on suppliers who enable your best margins
💡 Example menu optimization:
Your top 5 drinks by contribution margin:
- House cocktail: €8.50 contribution margin
- House white wine: €4.17 contribution margin
- Premium gin and tonic: €6.20 contribution margin
- Tap beer: €3.80 contribution margin
- Espresso martini: €7.90 contribution margin
Focus your sales and marketing on these 5 items.
How do you calculate contribution margin per drink item?
Determine your selling price excluding VAT
Subtract 21% VAT from your menu price for alcoholic drinks. Formula: Price incl. VAT ÷ 1.21 = Price excl. VAT. For non-alcoholic use 9% VAT (÷ 1.09).
Calculate purchase costs per serving
Divide the purchase price of your bottle/keg by the number of servings you get from it. For cocktails add up all ingredients: spirits, mixers, garnish.
Subtract purchase costs from selling price
Contribution margin = Selling price excl. VAT - Purchase costs per serving. This amount is what each sold drink contributes to your fixed costs and profit.
✨ Pro tip
Check your contribution margin on your 5 best-selling drinks. If those are good, you've optimized 80% of your drink profit.
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 contribution margin calculation?
No, always calculate with prices excluding VAT. VAT you pass on to the tax authority, so it's not real revenue for your business.
How often should I update my contribution margins?
Check at least monthly your top 10 drinks. Suppliers regularly raise prices, and then your calculation is no longer accurate. With major price increases you need to adjust your selling prices.
What is a good contribution margin for drinks?
This varies by drink type. Wine and beer often have €3-5 contribution margin, cocktails €6-10. More important is that you know which drinks generate the most revenue, so you can promote those.
Should I include staff and energy costs?
No, contribution margin only accounts for direct costs (the drink itself). Staff and energy costs are indirect costs that you cover from your total contribution margins.
How do I handle drinks I sell by the bottle?
For wine bottles calculate the contribution margin per bottle. Subtract the purchase price from your selling price (excl. VAT). Note that your wine list price is often higher than per-glass sales.
📚 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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