What’s the Markup on That Drink?

We all know that it costs more to have a drink out than it does to drink at home, but most of us do it anyway. Drinking a lot at home makes you look like you have a problem, while drinking at a bar or restaurant at least makes it look like you have both friends and a problem. A Deadspin writer set out to see what the markup is on the drinks you can get at a local bar by taking a good, hard look at some invoices from some local (to Boston, MA) bars to see how much they were paying for their booze and how much they were selling it back to you for.

The piece offers some interesting insights, such as the fact that small bars (unlike huge chains) don’t really get much of a discount off the retail price of their liquor. More importantly, it shows you what types of drinks are offering a better value – less markup for a better product – and when it might be worth spending that extra couple of bucks.

For instance, you might want to pay a bit more for a “craft cocktail” made with premium spirits over a mysterious well drink made with bulk, bottom shelf booze. The markup percentage on the premium drink is actually going to be less than that on the well drink, so you’ll be paying a lot more than the ingredients are worth in a well drink. And when it comes to craft cocktails, you’re not going to bring home a bottle of every item in that signature drink from the liquor store just to make yourself one, so the odds are very good that you won’t make it at all, whereas you might make a rum and coke without hesitating.

People don’t like to pay a lot for drinks. Unlike restaurants, where people have a vague sense that there are cooks, who have to be paid, working to prepare their food, bar patrons often want their drink at the same price they could make it at home. Bars and restaurants both have a lot of overhead expenses to cover in those drink costs – staff, rent, insurance, etc – so the markups are necessary even if the numbers seem high at first glance. Remember that you can always drink at home if you don’t want to contribute to keeping the bar in business. But also remember that the atmosphere and crowd at a great bar isn’t something that you can replicate at home. And, of course, don’t forget to tip even if you’re sure that you could make that same drink for less in your kitchen.