What’s the most profitable cocktail?
According to a report published by Wine & Spirits Daily, the biggest money makers in the American bar scene are the Old Fashioned and the Moscow Mule.
The report, based on data received from bar management software company BevSpot, details best and worst options by combining average profitability, unit pour cost and popularity.
Based on sales data from nine metro areas (Atlanta, Austin, Boston, Chicago, Los Angeles, Miami, New York, St. Louis and D.C.), Bevspot estimates that most cocktails are priced between $8 and $11 on average. While the the Old Fashioned and the Moscow Mule are both hot and profitable, the Last Word and the Manhattan are the least profitable in their estimation.
The Old Fashioned is the least costly whiskey-based cocktail to make with an average price of $8.95, said the firm. But BevSpot notes it is among the highest-selling cocktails, "making it one of the biggest cash cows of any product in our data set."
BevSpot makes suggestions about the best way to take advantage of the Mule’s growing popularity, like putting the Moscow Mule at or near the top of a cocktail menu because of its popularity, profitability, and the fact that producing the drink is fairly easy for bartenders to do swiftly and correctly. The Moscow Mule had the lowest pour cost of the cocktails mentioned but one of the highest average prices at $10.23.
Some bars have already noted how popular the Mule, originally the creation of a Smirnoff executive in the 1960s looking for ways to get Americans to increase their then-lagging vodka consumption, has become. In Colorado, the two ViewHouse Eatery, Bar & Rooftop operations have created a separate Mule drink menu with numerous variants available.
As for the cocktails not so profitable, the Last Word, considered popular in the craft world but not often served outside that niche, is the most costly gin cocktail to make compared to other categories, and pricing (the average price found to be $8.96) also keeps it from being very profitable. The more profitable options for gin cocktails cited were the Tom Collins and the Vesper.
Apparently, according to BevSpot, bars and restaurants are under-charging for their Manhattans, as they found it the cocktail with one of the highest pour costs and an insufficiently high average price ($9.19) to produce much profit. They found the Sazerac costs just as much to make but is being sold at more than $1 more on average.
What are the lessons here? Some bars average their prices for simplicity’s sake, rather than as they would a food menu: based on labor and ingredient costs. Simplicity is good, but if you’re selling more Manhattans than Mules, some adjustment is needed; lower the Mule’s price to generate more sales or raise the Manhattan’s to drive more profits. Other solutions include taking a more exact cost-to-value approach to pricing or lowering the cost of making the pricey drinks by looking at savings at the supply level. Data like this can provide a useful wake-up, but only if you take a hard look at your own menu.