Publican

PRICING DRINKS THE RIGHT WAY
BE CONSISTENT WITH YOUR CONCEPT
by Ian Foster
Pricing drinks is as much art as science. Calculating the profit contribution and
pour cost is important, of course, but often not as important as comparing your
pricing to your competitors and making sure that your pricing is consistent with
your concept.
For example, a neighbourhood pub can’t sell domestic draft beer for $1 more
than the bar down the road - unless their concept somehow allows them to
charge a premium (if they have live music, for example).
Following are some pricing guidelines:
First, you have to figure out who your competitors are. One key factor is their
proximity to your establishment. If you own an Irish pub downtown, your
competitor is not the Irish pub in the suburbs, because your guests are not
going to drive 10 km to save 50¢ per drink. A second key factor is figuring out
which establishments compete for the same guests as you do. Part of this is
demographics: a wine-bar may target guests over the age of 30, while a nightclub
will target women under the age of 30. Some types of establishments target
guests looking for a nice setting for good conversation and well-made drinks
while others are targeting university students who want a rowdy atmosphere
and shots.
Once you know who your primary competitors are, you need to make sure that
your pricing is roughly the same as your competitor’s for well drinks and domestic
beer. This is because these drinks are the ones chosen by your price-sensitive
guests who often compare prices from one bar to another. In university, we often
chose where to go based on drink prices - and when we arrived my friends would
ask the bartender for the price of a vodka/tonic and the price of a domestic beer
before deciding what to drink that night.
However, you do not need to match your competitor’s pricing on call and
premium drinks. In fact, on premium brands, you can easily charge an extra buck
or two without losing any sales - and that extra buck or two is pure profit. I’m
not in university anymore and like to drink Hendricks or Glenlivet. And, frankly,
I don’t pay any attention to the price of my drink. I know that Glenlivet will cost
me about $10, give or take a couple of dollars. So if I really don’t care if I get
charged $8 or $12 - in fact, I don’t even notice. Of course if I get charged $16, I
know I’m getting ripped off and you’ll lose a customer.
The best example is the guest who drinks a Grey Goose and soda. By definition,
vodka is a colourless, odourless, neutral spirit, and I know there are plenty of
people who swear they like one vodka better than another, and that may be true
when consumed straight up in a martini. However, any distinctions are completely
lost when vodka is mixed with soda, orange juice, Kahlua or cream. Those guests
who order premium brands in mixed drinks are (subconsciously) declaring that
they choose to pay more simply for the status of paying more.
Ian Foster is Vice President, National Accounts with Sculpture Hospitality. He can
be reached at foster@sculpturehospitality.com.
The Publican
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