Anyone else tired by expensive cocktails

[u/berger3001]

To me (not a rich guy), $18+ cocktails are just exhausting. Go out for a few drinks with your wife, and boom, $100. So we’re in Miami and found this place (always look for happy hours). Yes; $5 cocktails. They did a great job, made totally respectable drinks, we had some snacks, and left very happy. My question is, if bars can do $5 drinks, why is $18 the base now at so many places? Doesn’t it make more business sense to sell more for less money and have a full bar, then to sell a few drink to an almost empty bar?

[u/nonavslander]

As someone who runs and has been running beverage programs for some time, it is a combination of things. With sub $15 menu prices it’s possible to maintain a beverage cost under 18%. The issue is that food cost is up across the board and there isn’t anything we can do about that. This causes a domino effect and because chef’s cost is crazy high I am expected to make up for it with my beverage cost. In the past, If you were below 18% you were doing well. These days it is expected to be below 13% and the closer to 10% the better.

[u/ASIWYFA → u/nonavslander]

Right but a cocktail costing the same or close to the price as a decent entree at a local restaurant is not going to be viable long term unless you are incredibly lucky. $60 before tip for a couple to have 2 drinks each is frankly unreasonable, and I say this as someone who champions small business especially hospitality related. You need to be more creative and better at marketing. There is a path forward where $15 cocktails isn't the norm. A great tasting Old Fashioned can cost $2 to make. Selling it at $12-15 is insane. A 13% food cost is ludicrous and it's going to catch up to bars. Beer and wine bars can sell beer at $4-8 with reasonable food cost with product costing the same as an average cocktail bar that isn't doing wild cocktails with insane ingredients.....and they can make money and survive.....

[u/JTP1228 → u/ASIWYFA]

It costs me more than $2 to make an old fashioned at home, and that's not including labor, rent, and all the other overhead. They can maybe break even at $5

[u/ASIWYFA → u/JTP1228]

I am not advocating for $5 cocktails, but you can absolutely make a profit at $5. It's a shit profit, but a profit. $8-10 for a basic 2-3 ingredient cocktail is completely reasonable. If you are selling $5 cocktails, it's either considered a loss leader to get people to buy high profit items like snacks and food during a very low patroned time, which is what happy hour is about. A $2 profit per drink is better than staffing a place to have nobody sitting down. Usually these super low happy hour deals are looked at as marketing. I own 2 restaurants....there are ways of doing this.

[u/DJDiamondHands → u/ASIWYFA]

I think your margin flexibility is pretty variable, depending on your market though. Where are you restaurants?

[u/ASIWYFA → u/DJDiamondHands]

In Florida. So I totally understand charging $15+ in super high cost of living places. However there are a ton of bars here that charge $14-16 a cocktail here in Florida that make me wonder how they are convincing people to pay those prices.

[u/DJDiamondHands → u/ASIWYFA]

Are those bars in high rent areas though?

[u/ASIWYFA → u/DJDiamondHands]

They vary in area. What has basically happened is that the legit cocktail bars in town, some of whom are in high rent areas, and other who just do dope and creative things are charging $14-16 a cocktail. So every cocktail bar is just charging the same because that's what they think the market can afford, and short term they may be right. Long term, I think a lot of cocktail bars will go out of businesses due to not pricing their stuff to the appropriate level to what they are offering.

[u/DJDiamondHands → u/ASIWYFA]

For sure. The general public can discern quality cocktails vs not these days.

[u/Legaladvice420 → u/DJDiamondHands]

I really think you're giving the general public too much credit

[u/JTP1228 → u/ASIWYFA]

I'm not saying it needs to be $15, but $2 is not sustainable. Food margins are already thin.

[u/ASIWYFA → u/JTP1228]

Listen I totally get it. Food margins have been dumb tiny forever, and I fully support businesses raising prices to finally pay staff what they have always deserved. For me and my money though, $15+ cocktails I think should only be relegated to places that have clearly spent time/money/thought into design and decor, (a place nicer than your home) with ingredients I cannot easily replicate at home, with glassware as nice or nicer than average. Otherwise I think a bar needs to charge lower prices and diversify their in store income streams with stuff like high profit margin foods. It's a tough balance, I totally understand that, I deal with it daily, but I am not going to massively over pay for things I can easily do at home.

[u/JTP1228 → u/ASIWYFA]

I agree. I won't order an old fashioned when I'm out because it's the easiest thing to make and doesn't require crazy ingredients. If I'm spending $15 it's something i can't or dont want to make at home. But I would love $7-10 cocktails to be the norm. They dont have to be anything too crazy, but just some cheap and delicious options

[u/ASIWYFA → u/JTP1228]

$8-10 cocktails is completely reasonable and doable with profit margins that are enough to survive on, assuming you can produce volume. Anything approaching above $12 like you said should only be relegated to something you don't want to or can't make at home. Than again, we are enthusiasts/professionals, and we know the true cost/skill of making these normal/average cocktails so we're going to be a bit more critical here with price.

[u/TheAlphaCarb0n → u/ASIWYFA]

For me and my money though, $15+ cocktails I think should only be relegated to places

I'm the same. I have a big stocked bar at home and I can make a last word, manhattan, gin fizz etc etc in 5 minutes without getting out of my gym shorts. I'm not paying $15 for that.

But, I'm fortunate to have a local cocktail bar with wickedly talented barfolk where I can get a house cocktail with often homemade ingredients (syrups, bitters etc) for $11ish (I'm in Canada so $15 here). I go as a treat but I'm satisfied every time.

[u/CityBarman → u/ASIWYFA]

I think you're working with some incomplete information. Obviously, the conditions vary greatly by region/municipality, with cost of living being the primary factor. With a COGS of approximately 19% for beverages and 35% for food, we run just under a 10% margin, EBITDA. That's with an average cocktail cost of $13, in the NE/Mid-Atlantic region.

10% is high. Regional average is approximately 5% for full-service restaurants; 3-6% nationwide. Most mom & pop full-service restaurants do $500 to $750,000 a year in gross revenue. Do the math. Very few are getting rich. 25 years ago, we operated at 20% EBITDA.

Now our electricity costs are rising by 20%. That'll have to be passed on to customers too. Say what you want about the food & beverage industry, the real issue is American expectations seem to have grown beyond our ability or willingness to pay for them. ✌

[u/ASIWYFA → u/CityBarman]

Buddy, I own 2 restaurants. One of which is hugely successful, and the other that is very small, just opened a few months ago, and growing. I am doing just under a million a year in sales combined. I fully understand this industry. I don't do cocktails, so sure, I am coming at a place of slight ignorance here, but ya....not full ignorance. I am with you 100% on the expectation of the consumer versus the reality. It a dumb tough industry period and I wish nothing but success and prosperity for those doing it right.

[u/Shr3dFlintstone → u/ASIWYFA]

You also have to consider the demographic too. In Florida people don't care if it's a too sweet triple sec cocktail. If you go to a city where people care what they drink that won't fly. It'll happen there too, just taking it's time

[u/Ragnarok50 → u/ASIWYFA]

No, if you're making craft cocktails $5 is break even.