Gin & Tonic is getting pricey!

Gin & Tonic is getting pricey!

Many of you will have noticed that the price of G&T’s has increased in the past 2 to 3 years. The price for a “normal” G&T was usually less than 10 euros – apart from in well-stocked bars or generally expensive places. But nowadays, prices beyond 13 euros are no longer uncommon.

So, what happened? So, what happened? Okay, the question makes the situation sound more mysterious than it is. The truth is quite simple really; the demand for luxury, artisan products, including gin and tonic, has been on the rise. And it will come as no surprise that premium products are more expensive than commercially available industrial goods. We deliberately say “premium” and not “high-quality”, because we all know that price and quality don’t always correlate. High prices don’t necessarily guarantee quality – but that’s a different conversation entirely.

Some of you might be rolling your eyes and thanking captain obvious at this point. Okay fine, “higher purchase prices = higher prices at the bar” isn’t exactly breaking news. Nonetheless, let’s go over the statement in detail.

How does the food service industry calculate?

Let’s take a brief dive into the world of gastronomic pricing. There are many factors to consider here, and it is always difficult to lump things together. The following examples are therefore more of a rough guide than a fixed rule.

In practice, a rule of thumb has become established in the catering industry: the percentage mark-up on the purchase price. . Although often considered outdated, the mark-up calculation is omnipresent. While the average mark-up for wine is 300% and up to 1000% for coffee, the figure for spirits and long drinks is 450 to 600%.

Net purchase price * factor = gross sales price

At first glance, this may seem like an outrageous amount, but you have to consider that this mark-up has to cover the cost of EVERYTHING… rent, personnel costs, ancillary wage costs, electricity, investments, insurances, GEMA, professional associations, IHK membership fees, furniture, company cars, retirement provisions, repairs, taxes, and so much more. And yes, of course, VAT must also be paid. By the way, surcharges for food are usually lower than they are for drinks. As a guest, you might not always be fully aware of all these circumstances.

How about a concrete example?

We will use a Siggi Tonic, i.e. a G&T with Siegfried Rheinland Dry Gin and a Premium Tonic Water in a 0.2 litre glass bottle, as the basis of our calculation.

It all starts with the question of how much gin to use. A good guideline here is 4cl. With a 500ml bottle, that’s 12.5 servings without taking into account dispensing losses.

Calculation “Siggi Tonic”

Cost of goods (net)
2,02 Euro net Siegfried Gin
1,18 Euro net Premium Tonic Water
0,10 Euro net Ice cubes and garnish
___________________________________
3,30 Euro net

Price in gastronomy
Mark-up 450%: 14,85 Euro incl. VAT
Mark-up 600%: 19,80 Euro incl. VAT

You might be thinking “those mark-ups are mere theory and unrealistic”… But let’s just do a cross-check with an “industrial gin & tonic”, e.g. both with a yellow label. The gin costs 12.00 euros per 0.7l bottle and the tonic comes in a PET litre bottle for 1.20 euros.

Calculation “Industrial Gin & Tonic”

Cost of goods (net)
0,58 Euro net Standard Gin
0,20 Euro net Standard Tonic Water
0,10 Euro net Ice cubes and garnish
___________________________________
0,88 Euro net

Price in gastronomy
Mark-up 450%: 3,96 Euro incl. VAT
Mark-up 600%: 5,28 Euro incl. VAT
Mark-up 1000%: 8,80 Euro incl. VAT

So, what’s the moral of the story?

Well, the second example is proof that mark-ups of 450% or more are definitely realistic. Whether this is good/bad, too little/too much is not for us to say. But we will go out on a limb and say this: the more premium the products, the lower the mark-up and thus more value for money. Drink premium and save ;)

Source:
https://resmio.com/de/restaurantstories-magazin/kalkulation-gastronomie/
http://www.about-drinks.com/kalkulation-leicht-gemacht/
http://mixology.eu/news/craft-beer-in-bars/
http://www.nomyblog.de/nomyblog/longdrinks-richtig-kalkulieren/
https://www.orderbird.com/blog/preiskalkulation-gastronomie/