Recipe Costing

What recipe costing actually means

Recipe costing is the discipline of knowing what every drink on your menu costs you to make, down to the penny. Not the liquor only. Every ingredient: spirits, modifiers, juices, syrups, bitters, garnishes, ice, and anything else that ends up in the glass.

Without recipe costing, your menu pricing is a guess. Most bars guess, then wonder why their pour cost does not line up with their math.

How it is used on the floor

A bar manager writes out each recipe with exact ounces per ingredient. Then they look up the current wholesale cost per ounce for each ingredient and multiply. Sum it all up and you have the total cost per drink. Divide by menu price and you have the drink’s pour cost percentage.

Good recipe costing runs to every recipe, including the well drinks nobody bothers with because “everyone knows vodka soda is cheap.” Everybody knows until they check and the pour is 2.2 oz instead of 1.5.

The math

Example: a classic Old Fashioned.

• 2 oz Bulleit bourbon at $0.95/oz = $1.90
• 0.25 oz simple syrup at $0.10/oz = $0.03
• 2 dashes Angostura bitters at $0.02/dash = $0.04
• Orange peel garnish = $0.08
• Cherry garnish = $0.15
• Total cost: $2.20

If the menu price is $12, pour cost is $2.20 / $12 = 18.3 percent. Healthy.

Why most bars get it wrong

Three common mistakes. First, they only cost the spirits and ignore modifiers, juices, and garnishes. Second, they use old cost data (distributor prices change, their sheet does not). Third, they cost the recipe on paper but never verify what actually gets poured.

A drink costed at 18 percent on paper can run 26 percent in reality if the bartender pours 2.5 oz instead of 2 oz and adds a heavier syrup pour.

When recipes change

Any time a distributor raises prices, ingredients get swapped, or recipe specs change, the recipe cost has to update. Most bars do this twice a year at best. The best bars do it every week automatically.

A 5 percent cost increase on Bulleit across 400 Old Fashioneds a month is $38 of margin gone silently every month until somebody updates the sheet.

Common mistakes

Treating recipe costing as a one-time project. Ignoring ingredients under $0.10 (they add up). Not tying recipe cost to POS buttons so theoretical cost matches actual sales data. Copying recipes from another bar without adjusting for local ingredient prices.

How PourIQ handles it

PourIQ keeps recipe costs live. Every time a purchase receipt comes in, the unit cost of that ingredient updates, and every recipe using it recalculates automatically. You see current pour cost on every drink without touching a spreadsheet, and you get alerted when a menu item crosses a pour cost threshold you set.