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Liquor & Restaurants: Profit Margins 101

Liquor & Restaurants: Profit Margins 101

In the five years to 2013, alcohol sales increased across the board—2.2% for wine, 2.1% for liquor and 1% for beer—and consumers relied on liquor stores over restaurants and bars for the majority of the alcohol purchases. However, according to IBISWorld, over the next five years, “escalating competition from restaurants and bars is expected to inhibit revenue growth as consumers with rising incomes choose to drink more on-premises beer, wine and liquor.”

The alcohol industry is worth some $46 billion in the United States alone (IBISWorld). How can liquor stores and restaurants capitalize on expected growth and increase profit margins on liquor sales? The answer is POS.

A mobile point-of-sale (POS) system equips your sales people with the tools they need to sell and the information you need to analyze those sales, empowering better and more liquor sales through mobility and access to information.

But how?

“One of the most important functions a POS system can offer is ease and speed of ordering the product,” says Jessica Ross, a restaurant manager for one of Northern California’s most exclusive eateries and wine bars. “The server can still be at the table, send in the order and continue to talk with the customers. Engage more, sell more, make more money!”

POS enables mobility, there’s no doubt about it. The software can also assist in increasing profit margins by:

  • Perfecting price points. By reviewing your software generated profit margins report on a daily basis, you can test price points on every product associated with liquor sales in your store or restaurant. The information that is generated and gathered is invaluable to the savvy business manager when it comes to setting optimum price points, and only grows more important over time. With the right POS system, you can break down sales by the hour, or any specified time period.

  • Pricing by percentage. Use POS software to calculate price by percentage profit margin, rather than by stepping up by dollar amount. Electronically controlling price structure eliminates errors and better achieves sales targets.

  • Getting detailed. Intelligent reporting is one of the hallmarks of a good POS system. Rely on a global breakdown of all financial payments and transactions, and really dial into the detail. Analyze every sale, track individual staff performance, review how products sell at different times of different times of day and from different displays or areas. For instance, do your restaurant customers purchase more alcohol when they’re seated within view of the bar? Do your liquor store customers purchase more beer during the week, but more liquor and spirits on the weekend? Answering questions like these is simple with POS and can lead to huge increases in profit.

  • Being comprehensive. Use a POS system that can handle barcode items for products AND food and beverage workflows. Having all data and all potential areas of sales revenue accessible from one source saves considerable time and effort, and is a simple and speedy way to boost your bottom line.

  • Improving inventory management. Keep track of your inventory in real time and manage the purchase and reorder process simply from your POS backend management console. Us the software to calculate waste loss variance, and waste loss percentages automatically, helping you manage shrinkage or loss, thereby giving you yet another way to monitor and increase profit margins.

We hope these ideas for increasing liquor sales profit margins prove useful, because they are just a few of the many POS-enabled opportunities at your disposal.

Cheers!