For many owners, when your bar or restaurant opens, it’s the culmination of a long, elaborate process. You’ve likely spent countless hours poring over every detail of that process, slowly transforming your dream into a reality.
Maybe it all started with a simple vision that came to you one evening as you were enjoying a pint with a friend. From there, the idea started taking hold, always gnawing at the back of your brain until you started thinking “You know what? Maybe I can really do this.” Then it’s time to build a business plan, do some homework, and figure out just how much of a long shot it really is.
If that due diligence doesn’t derail things, then the ball really starts rolling. Picking a space, designing a brand, crafting perfectly balanced food and beverage programs, hiring a dependable team, dealing with all of the inevitable roadblocks that pop up…the list goes on.
But eventually, opening day arrives. It’s time to finally start recouping some of that seemingly endless amount of cash you’ve been spending. That’s a great feeling right?
Well, it’s not such a great feeling if you don’t have your beer priced at a level that makes sense for your business. Obviously, you can’t charge so much that no one will come in and patronize your bar, but you also can’t give things away unless you have a magic pile of money that replenishes itself. That’s why you need this handy chart.
Using this chart as a reference, you can quickly and easily understand how much money that each ½ keg you have represents for your bottom line at your preferred price point. Basically, this chart is a shortcut to helping you make money. A standard ½ barrel keg holds roughly 1,984 ounces of beer. That’s the number you see all the way to left of the equation (which we’ll get to in a second). Keep this number in mind when you’re setting prices per serving in your bar, and we promise, you’ll never lose money.
Taking it a step further, this chart tells you what the standard glass is for your preferred ounce serving of a given beer. So maybe you have a high ABV (alcohol by volume) IPA that you only want to serve in 10 ounce glasses (Belgian half pints) to help keep everyone from getting over-served. To understand how you should price that, simply consult the top row and see where you need to be to break even/pull ahead on the price of your keg. For example, you’ll note that at that top row (10 oz.) level the difference between a $3.50 and a $3.75 serving amounts to essentially $50 per keg. Maybe that’s enough, maybe it’s not. But at least you know. And once you have that information quickly at your fingertips, you can make informed decisions that help keep your business in a position to thrive and grow.
Of course, if you prefer to ignore the chart (maybe you’re marketing your bar as the home of the 11 ounce craft pour), the equation itself offers all the information you need to understand how much profit you’ll garner from a single ½ barrel keg. Simply start with those same 1,984 ounces then divide it by the number of ounces you’d like to have in a serving. From that number, you’ll derive the number of servings available to you in that keg, then just multiply that number by various proposed price points and you’ll see just how much money you can recoup for your keg. Once you subtract the cost of that keg (and any other allocated expenses that come directly from your bar program) from what you can charge for it, you’ll end up with a number that keeps you in the red or black.
Obviously, there are a number of factors that go into keeping your bar or restaurant solvent. But ensuring that your draft beer program is profitable is a great start towards keeping things afloat, and we promise that this chart/equation will help you do just that.