A bar posts the highest gross margins in hospitality and still nets only 5-15%. The reason is almost always pour-cost creep — the difference between a drink priced at a 21% cost and one that actually costs 28% after free-pouring and comps.
The bar diagnostic dashboard
| Metric | Healthy | Red line |
|---|---|---|
| Beverage cost (blended) | ~21% | above 24% |
| Food cost | 29-32% | above 32% |
| Labor % of sales | ~30% (20-30% turnover) | above 30% |
| Rent % of sales | 5-10% | above 15% |
| Stock + utilities + other | 25-35% + 3-6% + 6-12% | — |
| Net profit | 5-15% | below 5% |
Pour cost by drink — audit each
| Drink | Target cost % |
|---|---|
| Liquor | 17-24% |
| Bottled beer | 23-25% |
| Draft beer | 21-28% |
| Wine | ~30% |
| Soft drinks | 6-8% |
Gross margins: beverage (wet) 70-80%, food 60-65%. A single point of pour cost above 21% is lost net — and free-pouring plus unrung drinks are the usual cause.
Pour discipline is the profit: weekly inventory and a measured-pour policy protect the 70-80% wet gross margin. Dram-shop liability insurance is not optional — a single over-serving claim can exceed years of net.
Sources (retrieved 2026-08-13): Restohub bar/pub cost ratios (beverage ~21%, food 29-32%, labor 30%, net 4-10%); Zenbusiness bar-and-tavern guide (pour cost 18-24%, net 10-15%); startup-cost bar 2026 (blended gross 70-80%); Epicure Digital pub playbook (wet GM 60-70%, food GM 60-65%).