How can managers and bartenders dive into the art of cocktail menu design and make the most out of their beverages on offer? From calculating costs and reorganizing the drink menu to maximize sales of your profitable and popular drinks to innovating recipes and making them more sustainable, here are some tips our team at Choco put together to create a successful and appealing cocktail menu.
Whereas you want to include new recipes or change the way you present your menu, it is quite important that you base your design choices on the principles of drinks menu engineering:
Once you can use these formulas to dive deeper into your menu performance, we recommend considering the following tips to improve and complete your menu design:
Drinks Menu Engineering
In our previous article, we introduced the concept of menu engineering which explains how to calculate food costs, selling prices, and gross profit of your menu items. A similar set of rules applies to your drinks menu - too often overlooked, yet useful to boost your revenues.
Calculating pour cost percentage
To increase your cocktail menu profitability, you should start by retrieving your sales data and looking at the number of units sold within a given time. You can use the following formulas to calculate how much of the retail price you spend to make a specific drink (hence, your beverage cost):
:cocktail: Pour Cost = (Inventory Usage ÷ Total Sales) %
:package: Inventory Usage = Starting Inventory + Purchases - Ending Inventory
The average beverage or pour cost in the hospitality industry in the U.S. is between 18% and 24%. This value varies according to the type of alcohol: wine cost is around 30%, beer at 22%, and liquors at 15%.
To obtain a more accurate result and determine the right selling price, you should also consider the labor cost and all the garnishes and extra items (such as napkins, straws) you use. These can make the actual cost jump by 10%.
To achieve a good profit, you can follow a general rule of bringing up each cocktail’s selling price from 100% to 300% higher than its COGS - although this sounds like a high value, it is a widely used proportion covering all the expenses around menu items.
An overview of beverage costs and sales is helpful to find out your most popular and profitable drinks to know if you need to make any price changes. Take a look at our introduction to menu engineering to find out how to cluster your options according to popularity and profitability.
Of course, lower prices don't necessarily increase sales, and charging more for some drinks won't necessarily decrease your revenue. This means that when you check your sales report and notice a constant in monthly sales of popular items, you could take two or three of the most successful ones and slightly increase their selling price. Along with this, you can consider removing your least successful drink items from your list, especially those presenting a high beverage cost and low popularity among customers.
At the same time, you should always make sure to optimize your recipes for profit by tweaking ingredients, looking for less expensive alternatives, or by finding more convenient purchasing options such as bulk buying. It is always valuable to track spillage, over-pouring, undocumented sales, free drinks, or even theft, and act accordingly, to find where you have the biggest areas to address.
Drinks Menu Design
After re-assessing your menu offer and prices, you can move on to designing your drink list. The first step to designing your menu list is organizing it into categories, and this division should mainly rely on the different types of beverages.
First, take some time to think about what type of menu best fits your restaurant concept. Whether it's a printed or digital menu, presenting a short list of menu items gives you more chances to guide your customers' choices towards the most profitable and popular items.
To drive your customers' attention to your most profitable and popular drinks, you can highlight or box one or two of them, and place them strategically within your menu, usually at the top section. A separate drink menu that’s not combined with food can be all worthwhile and helpful in driving more attention to it. When deciding on the creative assets of your menu (such as color, font, and other elements), make sure to keep everything on-brand, clear, and essential.
Choose the right language
Creative titles under "staff picks", "guests favorites" can help attract attention to your best drinks while also making sure to communicate your brand. Bon Appétit magazine reports when talking about the stories of four restaurant chains' successful menu items' names, “the right name can be the difference between a middling success and a legend” (Rachel Sugar, 2017).
However, make sure that, if you are using creative or ambiguous names, your description is clear and exhaustive. At the same time, using narratives, flavor, or origin descriptors helps to emphasize the quality of products and boost sales. When presenting your menu, you can also opt to suggest drink pairings and train your front-of-house staff to present your offer at their best.
Adding pictures, illustrations, and price symbols
Using pictures or illustrations can also help draw attention to certain items, however, this usually suggests a less sophisticated type of menu and experience and therefore might not fit all bars' and restaurants' concepts.
When it comes to prices, make sure to omit the currency sign - which usually brings customers to focus on the money they will spend and can potentially decrease willingness to spend more - and just report the numerical value.
Check what's new this season
Your drink menu should always present seasonal offer changes and your sales report can help you understand which items to highlight each season. Additionally, it is important to be aware of the latest trends when it comes to drinks such as mocktails or ingredients with health-enhancing properties. Including non-alcoholic beverage options can be a good choice when considering the growing trend.
Can you formulate anti-waste cocktails?
Believe it or not, minimizing waste and using ingredients that strategically utilize leftovers to create new flavor components or garnishes for your cocktails can reduce your costs and increase profitability. Check out our webinar on"Bar Sustainability" with manager Billy Weston and bartender Nadia Hernandez from Otoko & Watertrade (Austin, Texas) to learn more about their process of developing drink recipes out of food waste. Spoiler: it’s super cool!