Draft Beer Profitability
One of the most profitable items that a retailer can sell today is draft beer. Increase your establishment’s profitability by properly installing and maintaining a draft beer dispensing system and implement a beer-friendly glass program to ensure maximum appeal and profits.
The purpose of this document is to bring awareness to the profits that can be realized by dispensing draft beer in an on-premise retail account.
The Profit in One Keg
Each 15.5-gallon keg (½ barrel) contains 1,984 ounces of beer. Realistically, you could expect to get at least 130-140 16 oz pints (if a 16 oz pint is served with a ¾ inch head, it has approx 14 oz in the glass) from that keg.
If a pint of beer were sold for $6.00, this would generate a gross profit of $780-$840.
The net profit from a keg based on the aforementioned figures (after subtracting the keg's wholesale cost) would be approximately $640-$700.
The Profit from 5 Kegs/Week
If only five kegs a week are sold in a retail establishment, a profit of over $170,000 a year is possible.
- 5 kegs/week X 52 = 260 kegs/year
- 260 kegs X $320 = $171,600 net profit
Calculating Profit Margin
The formula for profit margin is gross profit divided by selling price. The previous example 79% or $0.79 per $1.00 in sales.
The inverse of gross profit is the pour cost, so in the example, the pour cost would be $0.21 per $1.00 or 21% pour cost.
NOTE: The amount of profit realized could be affected by changing the glassware the beer is served in. Increase the number of glasses per keg, and you increase the margin and profitability.
Protect the Profit
The best way to maximize the profit per keg is to ensure that the draft beer system is properly balanced, installed, and maintained.
An out of balance system will create excessive foam, which is waste and lost profit, or it may create too little foam, and too much beer is poured into the glass. An incorrectly installed system can create foaming and over-pouring, resulting in lost profit.
A poorly maintained system will cost the retailer lost profit, not only from foaming and over-pouring, but also lost profit when customers stop buying draft beer.
No one wants to drink something that smells like rotten eggs, taste flat or has impurities floating in it. When customers see and taste those things, they will stop frequenting that place of business, resulting in lost sales and profits, not just from draft beer but for the entire establishment.
Increase your establishment’s profitability by properly installing and maintaining a draft beer dispensing system and implement a beer-friendly glass program to ensure maximum appeal and profits.
Raise a Glass to Draft Beer Sales!
For over 60 years, Micro Matic has been recognized as one of the world’s leading suppliers of draft beer equipment. Specializing in keg-to-glass technology, we offer a total solution for meeting your draft beer equipment needs. Our dedication to customer service is supported by four regional sales and distribution centers, the Micro Matic Dispense Institute for training and education, and a Certified Installer Network for draft beer installations. Want to speak with a “perfect pour” expert? Contact Micro Matic today.