Is beverage cost the same as gross profit?

They are the two halves of the same figure. Beverage cost is the cost of what you poured as a share of ex-tax revenue; gross profit is what is left. A 24% beverage cost is a 76% GP. Both must be calculated on ex-tax figures — tax you collect is not revenue and tax you reclaim is not cost.

Should every outlet in a hotel run the same GP?

No. A pool bar selling long drinks over ice runs a different mix from a lobby bar selling spirits by the measure and a wine list. Set a target per outlet from its own list and hold each to its own number; roll the outlets up in dollars, not by averaging their percentages.

What is a good GP for a cocktail bar?

As a rule of thumb, a serious cocktail list can be built to the mid-to-high seventies. The number is defensible only when every cocktail is costed with its preps and batches included — a house cordial or a clarified juice carries yield loss that a spreadsheet rarely captures.

What GP should a hotel bar run?

Jesse Williams · 18 September 2026

In one paragraph

A hotel bar programme in Australia or the Pacific can reasonably hold a beverage cost in the low-to-mid twenties — a gross profit in the mid-to-high seventies — across its outlets, with the pool and lobby bars sitting on different numbers for good reasons. The figure only means something if every drink is costed ex-tax and per serve and the GP is calculated on money, never as an average of percentages. At the resort I run, beverage cost is held at 24% with cost of goods down 3% since I started; at Eau de Vie in Sydney the cocktail programme held 78% GP.

The question I hear most from a general manager is some version of what should our GP be? It is the right question and the wrong first step, because the answer depends entirely on whether the number you have is real.

Two numbers, one figure

Beverage cost and gross profit describe the same thing from opposite ends. Pour a drink that cost you $4.80 in liquid and sell it for $24 including tax, and the ex-tax revenue is $21.82. The beverage cost is 22%; the gross profit is 78%. Neither figure means anything if the cost is not ex-tax and per serve, and neither means anything if the revenue includes the GST or VAT you are only collecting on the government’s behalf.

That sounds obvious. In practice most venues I walk into are comparing an inc-tax price to an ex-tax cost, or an ex-tax cost that was true when the spreadsheet was built and has drifted since.

What a defensible number looks like

At the InterContinental Fiji Golf Resort & Spa, where I run the bars, beverage cost is held at 24% across several outlets, and cost of goods has come down 3% since I started. At Eau de Vie in Sydney — forty technical cocktails, six hundred whiskies — the programme held a 78% beverage GP as venue manager and licensee. At the Oxford Tavern it was 75% through COVID trading.

Those are different numbers from different rooms, and that is the point. A resort pool bar selling long drinks over a lot of ice runs a different mix from a lobby bar pouring aged spirits by the measure. A wine list behaves differently again — by the glass and by the bottle are two different margins on the same product. A single target for the whole hotel is a target nobody can act on.

As a rule of thumb: a cocktail-led list can be built to the mid-to-high seventies; a wine list sits lower on the bottle and higher on the glass; a beer and RTD outlet is its own conversation. Set the target per outlet from that outlet’s own list, and hold each to its own figure.

The average that lies

The most common error I fix is an average of percentages. Ten drinks at 80% and one at 50% do not run at 77% if the 50% drink is what sells. GP is a money figure: total ex-tax revenue less total cost, divided by total ex-tax revenue. A menu’s GP is the sum of what each line sold multiplied by what it earned, not the mean of a column.

This is why the sales mix matters more than any single recipe. A list can be beautifully costed and still miss its number because the wrong drinks are the ones moving. That is a menu engineering problem, and it has a menu engineering answer.

“Held” is a monthly word

A GP is not a number you achieve once. Supplier prices move, a bartender free-pours, a batch is made short, a new hire learns a spec wrong. Held at 24% means the number was re-measured every month against real sales and real costs and kept there — pars and ordering tuned, the prep programme checked, pricing integrity between purchasing and the POS audited.

The practical requirement is that the costing lives somewhere a price change propagates. When a supplier lifts the price of a spirit by 8%, every cocktail, batch and pour that uses it should move at once. If your costing is a spreadsheet, it will not. This is the reason I built Deluge: one database in which a product is costed once and every prep, recipe, menu line and report that depends on it is re-costed on save.

What to do this month

Cost every product ex-tax, per serve, including the preps and batches behind the cocktails.
Take last month’s till report and set the sales mix against the costed list — in dollars.
Read the GP per outlet, not per hotel.
Decide a target for each outlet from its own list, and put the date of the next re-run in the diary.

The number you get the first time is rarely the number you thought you had. That is not bad news; it is the first real figure you have had to work with.