Beverage Cost Percentage
Cost of a drink's ingredients relative to its selling price.
Formula
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Example
Cost $2, price $10: BC = 20%
How it works
Beverage cost percentage tells you how much of a drink’s selling price is used up by the ingredients that go into it. It is found by dividing the ingredient cost by the menu price, then multiplying by 100 to convert the result into a percent. This works because a percentage is just a part-to-whole comparison, with the drink’s price treated as the whole amount you charge the customer.
When to use it
Use this formula in cafes, bars, restaurants, and catering when checking whether a drink is priced profitably. It is also useful for comparing different beverages to see which ones have a lower or higher ingredient-cost share.
Worked example, step by step
Ingredient cost = $1.80 Menu price = $9.00 BC = (C_drink / P_drink) × 100 BC = (1.80 / 9.00) × 100 BC = 0.20 × 100 BC = 20% The beverage cost percentage is 20%.
Common mistakes to avoid
- Dividing by the ingredient cost instead of the menu price
- Forgetting to multiply by 100 at the end
- Using the wrong cost value, such as including labor or overhead instead of only ingredient cost
Did You Know?
Bars run lower cost percentages than kitchens — which is why drinks subsidise many restaurants.
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