Beer Math

Preston Rideout released his latest tips of the trade by outlining how to determine you cost and profit per pint of beer

Forecasting Gross Profit Margin per Pint is not often discussed much less written about because it’s Boring.  You know what’s Not Boring?  Putting Money in the Register.  You know whats even Less Boring?  Maximizing the Money before putting it in the Register.  Conducting Beer Math requires a Meticulous Attention to Detail.  Unfortunately, failing owner operators, make no attempt to calculate Draft and Craft Beer Profit Margins before ordering Beer

Why, because No One Cares. Except for me. I care and I will show 9 steps to forecasting Gross Profit Margins per Pint. It’s that simple. All you have to do is assemble your Keg Cost and Keg Size. Everything else is just basic Beer Math.

A ½ Barrel Pumpkinator Craft Keg costs $100. A ½ Barrel equals 15.5 gallons totaling 1,984 ounces.

• Keg Cost = $100
• Keg Size = ½ Barrel
• Keg Ounces = 1,984

Establishing Keg Cost and Ounces per Keg are the foundation for conducting Beer Math. However, it’s important to factor Loss per Keg due to foam, over pouring, spillage and theft. Factoring 10% Loss, into Beer Math, is very conservative. If you don’t think so, I challenge you to sit across the bar and watch your Bartenders pour Draft Beer, when slammed, on a Saturday Night. Increasing Beer Loss to12.5% or 15%, per Keg, is probably more realistic but for sake of simplicity lets factor 10% Loss

• Keg Cost = $100
• Keg Size = ½ Barrel
• Keg Ounces = 1,984
• 10% Loss reduces 1,984 ounces to 1,786 ounces

Now we can determine our Total Pints per Keg, Cost Per Ounce and Pint Cost. Although 15.5 Gallon Barrels yield 1,984 ounces, we opted to reduce our ounces by 10%, for Loss, yielding 1,786 ounces.

Before calculating the Cost Per Ounce, divide your pint glass size by 1,786 ounces to determine your Pints per Keg. Using 16 ounce pint glasses will yield 112 pints per keg.   To determine your Cost Per Ounce, divide $100 Keg Cost by 1,786 ounces Finally, multiply your Cost Per Ounce by 16 ounces to determine your Pint Cost

• Keg Cost = $100
• Keg Size = ½ Barrel
• Keg Ounces = 1,984
• 10% Loss = 1,786 ounces
• Pints Per Keg = 112
• Cost Per Ounce = .12
• Pint Cost = $1.86

At this point, forecasting your Gross Profit Margin per Pint is simple. Divide your Pint Cost by your Proposed Sale Price to determine your Profit per pint then divide your Profit per Pint by your Sale Price to establish your Gross Profit Margin per Pint.

Contact Preston Rideout for more Beer Math information or to download a your Free Copy of Beer Math excel sheets.

See the full article here – Preston Rideout