What Is Beverage Cost Percentage?

Beverage cost percentage measures how much of a restaurant’s beverage sales are consumed by the cost of the products sold.

The formula is:

Beverage Cost Percentage = Beverage COGS ÷ Beverage Sales × 100

If a restaurant sells $100,000 in beverages and those beverages cost $25,000:

$25,000 ÷ $100,000 × 100 = 25%

The restaurant’s beverage cost percentage is 25%.

The metric is useful because it shows the relationship between product cost and revenue.

But it doesn’t tell you whether the underlying business is healthy.

Two restaurants can both run a 25% beverage cost while having completely different sales volume, gross profit, inventory investment, and pricing structures.

Beverage cost percentage is a measurement.

Understanding what produces the percentage is where management begins.