24/05/2025
Why Alcoholic Beverages Are Budgeted at 20–25% Cost
Alcoholic beverages, especially cocktails and wine, carry a high perceived value for customers. This allows for strong margins while still meeting guest expectations. The 20 to 25 percent beverage cost range is widely accepted in the industry, although actual costs can vary depending on the type of drink and the venue.
The ingredient cost of most alcoholic drinks (liquor, mixers, garnishes) is often quite low, sometimes as little as 15–20% of the selling price. Guests generally expect premium pricing for alcoholic beverages, particularly in hotels, upscale restaurants, and bars.
This pricing model helps to balance overall profitability in the food and beverage (F&B) department. It’s considered the "sweet spot" where guest expectations, product value, and operational profitability align.
It's important to note that the 20–25% cost is not a flat rate across all beverages:
🍷 Cocktails and wine by the glass can have costs as low as 18%.
🍺 Bottled or canned beer, depending on brand and pricing, can reach up to 35–40%.
