The Craft Cocktail Effect

Hold on to your profits in a sea of sky-high drink prices.

Pulling in a fat profit with booze used to be a no-brainer. Line up 10 glasses, pour a bottle of cheap rum, follow it with Coke off the gun, and call it a day. Not anymore.

Boutique ingredients, high-end glassware and lengthier prep times for craft cocktails continue to drive bar prices into the high teens. But is selling one $19 cocktail really better than two $10 cocktails? 

If you have a sustainable clientele willing to pay that higher price for any given cocktail all night, then sure. That’s rarely the case, though. 

Time is the biggest factor, says Matt Piacentini, owner of craft cocktail lounge The Up & Up in New York City. The time it takes to make each drink and how long the customer spends drinking it can determine which drink makes more money.

“Since it’s such a lovely, handcrafted drink, it’s not going to get downed in two (minutes). They’re going to savor it. The price has to cover all that time,” Piacentini says. He aims for one minute of prep time for each drink, factoring in seven to 10 minutes for ticket time and 20 to 30 minutes to sip slowly, about 40 minutes per round. 

That doesn’t mean you should avoid time-consuming drinks altogether, says Benjamin Schiller, beverage director of The Fifty/50 Group in Chicago. At recently opened cocktail bar The Sixth, Schiller balances labor intensive cocktails, such as a drink featuring a rose frozen in ice with quick hits like hand-blended spiked milkshakes. 

Higher-priced spirits and ingredients can be balanced out with cheaper ones. “When a couple (cocktails) are lower cost, we can mitigate the higher cost of goods on another menu item,” says Anthony Schmidt, beverage director of San Diego bars Rare Form and Fairweather, plus others by CH Projects. “Really good bourbon is pretty cheap; really good rum is really cheap. It gives us the opportunity to use things like single-village mezcal that costs way more, but now we can afford to use.” 

When impaired diners tangle with booze, the high-quality glassware breakage starts to add up, Schiller says. For that reason, Piacentini usually forgoes the high-end glassware. “No one will notice if it’s Libbey or hand-cut from Poland. Add a lovingly made garnish and some nice ice, and you’ve visually said all you need to about the level of quality,” he says. “Of course, the drink needs to be good, too, or it’s all a waste of money.”   

The Price is Right

Be meticulous with cocktail pricing to avoid draining your profits. 

DO consider your neighborhood, not just the market. What your customers want to spend is just as important as what you want to serve. Don’t make really fancy $12 cocktails when the neighborhood wants an $8 cocktail, says Anthony Schmidt, beverage director of San Diego bars Rare Form and Fairweather. 

DON’T go overboard with glassware. High-end, custom glassware was the very first thing to go at the Beagle, Matt Piacentini’s first bar (now closed). “Most people still drink in bars with cheap, even plastic glasses,” he says. “Just seeing a nice shape makes a huge difference.” 

DO use menu design to your advantage. Control costs by directing diners to a few popular cocktails that are efficient to execute and have a profitable pour cost.

DON’T go overboard with pricey spirits. Mix affordable, good quality cocktail-friendly spirits with the well-known, expensive bottles, says Piacentini. “You can get a very high level of quality while maintaining a reasonable pour cost.”

DO watch out for cheap imports. 

Be wary of the carbon footprint, sustainability and ethics that go into a cheap bottle of rum, Schmidt says. “At some point, you have to say, this is a really delicious product; it shouldn’t be this inexpensive.” 

DON’T succumb to gimmicks. A drink price is too high when the cost becomes the story. Garnishes like caviar, gold leaf and pricey spirits are not meant for mixing. “Are you trying to give somebody a good cocktail or are you trying to give some guy bragging rights?” says Benjamin Schiller of The Fifty/50 Group