Are you actually making money on that €6 glass of wine? Most restaurant owners think they know their beverage margins, but they're often just guessing. Here's how to calculate the exact percentage of your drink revenue that becomes profit.
What exactly is beverage margin?
Beverage margin is the percentage of your drink revenue that remains after you've subtracted all drink costs. It's the flip side of your pour cost (drink costs as a percentage of revenue).
💡 Example:
You sell a bottle of wine for €24.00 (incl. 21% VAT):
- Selling price excl. VAT: €19.83
- Wine cost price: €8.50
- Margin per bottle: €19.83 - €8.50 = €11.33
Margin percentage: (€11.33 / €19.83) × 100 = 57.1%
The formula for total beverage margin
Here's the formula you need:
Beverage margin % = ((Total drink revenue excl. VAT - Total drink costs) / Total drink revenue excl. VAT) × 100
⚠️ Note:
Alcoholic beverages carry 21% VAT, not 9%. Always work with prices excluding VAT for accurate margin calculations.
Which costs do you include?
Your drink costs should include all direct expenses tied to beverage sales:
- Cost prices: Wine, beer, spirits, soft drinks, coffee, tea
- Garnish: Lemon slices, olives, cocktail picks
- Mixers: Tonic water, cola, juices for cocktails
- Ice: For cocktails and chilling
Don't include staff wages, rent, or utilities. Those belong in operational expenses.
💡 Example calculation:
Monthly drink revenue: €15,000 incl. VAT
- Revenue excl. VAT: €15,000 / 1.21 = €12,397
- Total drink costs: €3,100
- Margin in euros: €12,397 - €3,100 = €9,297
Beverage margin: (€9,297 / €12,397) × 100 = 75.0%
Standard beverage margins by drink type
Different beverages yield different margins. From tracking this across dozens of restaurants, here are typical percentages:
- Wine by the glass: 70-80% margin
- Draft beer: 75-85% margin
- Cocktails: 70-80% margin
- Soft drinks: 80-90% margin
- Coffee and tea: 85-95% margin
Bottle sales typically show lower margins (50-70%) since customers perceive better value in full bottles.
⚠️ Note:
Low total margins often indicate you're selling too many bottles (lower margin) versus glasses (higher margin). Analyze your sales mix.
How do you improve your beverage margin?
If your margin sits below 70%, try these strategies:
- Push glasses over bottles: Higher profit per unit sold
- Feature cocktails prominently: Strong margins and higher check averages
- Audit your suppliers: Compare pricing quarterly
- Minimize waste: Every poured-out drink kills your margin
💡 Impact example:
At €10,000 monthly drink revenue:
- 65% margin = €5,372 profit
- 75% margin = €6,198 profit
Difference: €826 per month = €9,912 per year
Digital help with margin calculation
Manually tracking drink costs and revenue eats up valuable time. Many restaurant operators use systems to automatically calculate beverage margins by category and overall totals.
This gives you instant visibility into which drinks drive the most profit and where margins are slipping, without wrestling with VAT calculations and complex formulas yourself.
How do you calculate beverage margin? (step by step)
Gather your total drink revenue
Add up all drink sales from a period. Note: use revenue excluding 21% VAT for alcoholic beverages and 9% VAT for non-alcoholic.
Add up all drink costs
Calculate all cost prices together: wine, beer, spirits, soft drinks, mixers, garnish and ice. Use your cost prices, not the selling prices.
Calculate your margin percentage
Subtract drink costs from your revenue (both excl. VAT), divide by your revenue and multiply by 100. This gives you beverage margin as a percentage.
✨ Pro tip
Track your beverage margins weekly for the first 8 weeks after any menu change. Price adjustments can shift customer ordering patterns dramatically, and you'll want to catch margin drops before they become expensive habits.
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 beverage margin calculation?
No, always calculate using prices excluding VAT. Alcoholic beverages carry 21% VAT, non-alcoholic items 9%. VAT isn't profit—it goes straight to tax authorities.
What is a good beverage margin for restaurants?
A healthy beverage margin falls between 70-80%. Below 65% signals trouble, while above 85% might mean your prices are scaring away customers and hurting overall revenue.
Why is my beverage margin lower than expected?
Beverages should deliver much higher margins (70-80%) than food. If yours are low, check that you're calculating excluding VAT and verify you're not missing hidden costs like excessive waste or theft.
How often should I check my beverage margin?
Review total margins monthly and break down by drink type each quarter. Supplier prices change frequently, so your margins can erode without warning if you're not watching closely.
Do I include staff wages in drink costs?
No, wages belong in operational expenses. Drink costs should only include direct product expenses: purchases, garnishes, mixers, and ice.
Can seasonal drinks affect my overall beverage margin?
Absolutely. Summer cocktails with fresh fruit cost more to make, while winter mulled wine might use cheaper ingredients. Track seasonal variations to spot trends and adjust pricing accordingly.
📚 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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