How To Calculate Your Most Profitable Restaurant Bar Food
Alcohol sales have long remained a robust revenue stream in pubs around the world. For example, in 2019 alcoholic beverage sales reached more than $250m in the U.S. In the same year, the UK sold an average of 255 pints per second throughout the year. While alcohol might be a draw, at least in some places it’s no longer the star attraction. Since there are many costs associated with operating a bar, finding a way to streamline your restaurant bar food sales is ideal for avoiding a headache. So where can you start?
The History of the Gastropub
Alcohol has been produced for over 12,000 years, with drinking establishments dating back to Babylon. During the Roman Empire, these pubs took a foothold, with pubs appearing more like a hostel or motel, a place where you could grab a drink, some restaurant bar food, and a place to stay for the evening. In many places around the world, alcohol is or has been prohibited at one time or another. In the U.S., alcohol prohibition shaped the modern pub, which was for a time thought of as a place for undesirables to congregate. The term “gastropub” was coined relatively recently in a London pub that shifted its focus away from solely libations to a mixture of food and drink. Now, let’s look at what an ideal meal might look like in your establishment.
There are several factors in determining your most profitable restaurant bar food. Whether you’re starting or reimagining your concept, finding the right menu items is in and of itself a challenge that involves everything from menu engineering to the supply chain. The simplest place to start is to talk to your potential or existing guests and just ask.
Mileage varies on what constitutes the best restaurant bar food, which is unique from place to place. By and large, many gastropubs look at mid-price sandwiches or burgers, the kinds of foods that pair easiest with alcoholic beverages. It makes sense to start with what you believe is the most common, but it doesn’t hurt to ask and then listen. You might consider asking guests with a word-of-mouth campaign, putting a survey out through whatever social media channel you might use, and/or asking your contemporaries with similar concepts. Take note of what you hear and then start pricing out how to best satisfy that demand.
Food Cost Calculator
An ideal start point for any restaurateur in identifying the most profitable menu items is to perform or consult a pro forma. A pro forma is an accounting function that breaks down the total cost of every single thing you use from the ingredients in your dishes to the cost of your utilities and staffing. With a pro forma, you can establish the requisite baseline to break even, and build on that to succeed.
Once you’ve determined your optimal menu items, you can start to plug those numbers in. Suppose that one of your most popular dishes is a cheeseburger platter. Price out the cost of each item to determine the cost to purchase and prepare your meal. To fully account for that cost, you need to account for every single item on the plate, from the lettuce and tomato to the bun and pickle (and everything in between).
For the sake of this example, let’s assume that the total cost of everything, including the side, is around $6.00. It’s unlikely that your ingredients alone cost that much to procure, so understand that this includes an amalgam of all of your overhead as well, such as your rent and staff wages. To determine your profit, divide what you want your margins to be equal to the suggested retail price (SRP). Your SRP is what you hope to charge on your menu.
To determine your profit margin, you can simply divide your food cost by the suggested retail value, which varies depending on where you are. Here, we’ll use $12 as the accepted retail value of a cheeseburger and fries at a table service gastropub. The equation would look like this:
6 (cost) ÷ 12 (SRP) = .5 (profit)
In that scenario, you have a 50% profit on your meal. This is a particularly simple example and one that doesn’t reflect the 3-6% profit margins of restaurants in general.
If the calculation above seems familiar, you might already be familiar with menu engineering. Menu engineering is the pro forma toolset that you need to identify your costs, while simultaneously learning what orders offer the most bang for your buck. While this may all be tedious, menu engineering sets you up for success by minimizing the variables to your bottom line. You can apprise yourself of the exact costs of your operation while keeping tabs on what does and doesn’t work. Let’s look at a few more tools that might help.
Data analytics are where the rubber hits the road. By utilizing data analytics, you can cross-reference your most profitable restaurant bar food, with the facts and figures. There are plenty of ways to slice the pie, from looking at kitchen data to determine the turnaround time on each order (another metric that you can gauge your profitability with), in addition to sales. Use data analytics as to the follow-up after determining your ideal restaurant bar food profitability to see what works and what doesn’t.
While we’ve mentioned pairings above, it bears repeating. One of your primary draws —and a big moneymaker— is what you stock in your bar. Whether that’s beer, wine, or spirits, finding a good match can help enhance your restaurant bar food profitability. This is an especially useful marketing tool, to help promote menu items that you believe might be profitable, but haven’t quite moved as you hoped.
Priced to Move
When all else fails, price your foods to move. If you’ve reached this step, it’s safe to say that while an item may be profitable from a cost analysis perspective, it may just not be popular enough to bring in the money you’d hoped for. Don’t let this get you down; if an item isn’t moving, try to move as much of your dead stock as possible as an opportunity to pivot to something better suited to your needs.
Profitable Restaurant Bar Food – Conclusion
While guests are willing to pay a little more than they used to, be mindful of finding a balance between the potential for a profit and something priced to sell. Be extra attentive to foods that pair well with a beverage in terms of taste and how they impact alcohol. If done right, restaurant bar food has the potential to help mitigate drunkenness, which is a plus for Dram Laws, and potentially even help sober up your guests. As the industry recovers, you can use these tips to help guide your choices.
Interested in learning more about how alcohol sales can increase help you earn big? We’ve got you! Read our article that covers everything you’d need for alcohol sales in your restaurant.
About the Author
Syd was a content marketing specialist, which are fancy words for writing pretty to tell a good story. He likes writing things about food, drinks, and music. He’s a musician himself, a father of two, and loves his wife a whole lot.