Pizza Today - March 2017 - 22

with KEITH COFFMAN

on tap

Craft Beer Pricing and Promotions
the next quarter to keep the menu prices
looking more organized, so I would sell
this beer for $4.75.
As mentioned in a previous
article, half-barrel kegs are always
going to be the lowest priced per
fluid ounce. Sixth barrels, quarter bar-

I

t's International Pizza Expo
Month! Hopefully, I'll get to meet
many of you in Vegas and, hopefully, we can enjoy a pint or two at The
New Operator Reception, Beer & Bull
or at The World Pizza Games Finals &
Block Party. This will be my sixth Pizza
Expo. I have learned something new every
year at Expo that has helped me make my
restaurant better.
This month I am going to give you a
broad overview on pricing and promoting
the craft beer that you are now carrying for your customers. First, let's tackle
pricing. In some tourist trap markets,
such as The Strip in Vegas or downtown
Nashville, you may see restaurants and
bars charging astronomical prices for craft
beer. That may work in an area where
demand surges based on the increasing
influx of visitors, but in the markets where
most of us are doing business, that simply
2 2 / P I Z Z AT O D AY. C O M / M A R C H 2 0 1 7

won't fly.
Most restaurants and bars across the
United States sell their craft beer at 25- to
40-percent cost of goods sold (COGS).
This isn't just an arbitrary number that
operators have pulled out of the sky. Selling at a 25- to 40-percent COGS takes
into account your overhead costs, which
we'll gauge at 35 to 40 percent. There's
5- to 10-percent waste in addition to your
profits.
Now, let's look at the math using 30
percent as our COGS. For this example,
divide the $175 cost of a half barrel of an
average IPA by 30 percent. The answer
to our equation is $583.33. Now divide
$583.33 by 1,984, which is the number
of ounces in a 15½ gallon half barrel keg.
Your fluid ounce price is $.294 (29 cents).
In our example, a 16-ounce pint of our
example IPA will cost your customers
$4.71. I personally like to round up to

rels and bottles are usually significantly
more expensive per ounce. For example, a
case of 24 bottles of Three Floyds Alpha
King costs $42.99. When we use the same
pricing formula that we did earlier, that
results in a $5.97 per bottle price for the
customer. A half-barrel keg of Alpha King
costs $180.99. When you crank that price
into our pricing formula, you get a $.305
per fluid ounce price. When compared to
a 12-ounce bottle, a 12-ounce draft pour
using our formula will cost your customer
$3.66. You can still make the margin that
you need and sell a 12-ounce draft of
Alpha King for $2.31 less than the bottle.
With that being said, it's good to keep
bottles on hand for those beers not available in kegs.
There are lots of pricing promotions
that you can take advantage of when
selling craft beer that will incentivize customers to come in during your off-peak
hours. Popular promotions that you can
utilize to drive business include happyhour specials, late-night specials, pint
nights, flight nights, ballgame specials
and growler specials. Pricing promotion
discounts are completely up to you as
the owner. I offer $1 drafts during happy
hour, half off pints of featured beers on
pint night, $2 off flights on flight night
and specials on the big, light beers during
NFL games and during the local college
games. I encourage you to create and try
several different pricing promotions for
yourself and see what works. ■

KEITH COFFMAN is the owner and operator
of Lost River Pizza Company.

By JOSH KEOWN
http://www.PIZZATODAY.COM
Pizza Today - March 2017

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