Select Page
4 min read

Now that you’ve determined your proper pour, trained your staff, and got a plan in place for proper inventory management, it’s time to check the competition.

Ideally a competition check would be part of a full Competition and S.W.O.T Analysis to determine how you want to fit with the other companies in your space, but assuming you’ve done something similar in the recent past, it’s time to recheck pricing.

Furthermore, it’s good to patronize your competitors at least twice a year to get a better feel of their operation and where you gain an additional competitive advantage. One of these advantages may be on pricing.

Now, when looking at competitor pricing do not just take your competitor’s pricing and make it yours. First, there are many other factors that determine drink price such as pour size, liquor cost, labor, and overhead cost. Plus there can be varied preparation in many drinks (especially Old Fashions which are a staple drink native to Wisconsin. Look it up they’re delicious).

Rather, when looking at pricing use it as one of the guides to pricing. Taking they’re price, assumed they calculated costs correctly, which may or may not be true. Ideally, if your drinks cost more than fifty cents cheaper on average than your competition, you may consider raising your prices to match closer to the market. However, if this conflicts with your brand position and is unnecessary after a cost analysis, you may want to stay where you are at and be known as a place with cheap drinks.

Having the lowest drink prices in the area may be detrimental to your brand if it doesn’t match your desired positioning. If you are trying to sell higher end meals yet are bringing in people only seeking the lowest priced items, you are going to have a hard time selling them higher priced entrees. Additionally, patrons looking for the higher end food may avoid your restaurant as they don’t want to enjoy an expensive meal next to a bunch of college kids trying to get drunk for cheap. Again, match pricing to your brand position. This should be common sense but can get lost as restaurant owners and managers start to get in price wars with a competitor they particularly dislike.

Okay, but what if you are drastically above the price of your competitor’s drinks on average. Once again decide, is this my competitive advantage. Do I want to be perceived as high end? If so, you may be on the right track with your higher pricing just make sure you don’t get offensive with your pricing relative to the opinions of your target clientele.

If you do not want to be perceived as high end but your drink prices are significantly higher than your competition, you may need to consider lowering them. Many factors can go into this decision.

First, how many competitors are charging the lower prices, if it’s just one or two and their restaurants lie in a less desirable location or have inferior food or service you may be alright leaving them where they are.

Second, before lowering pricing determine your drink cost to make the drink including a percentage to account for unforeseen losses and mispours. Are you making enough to comfortably cover your cost of making it? If you are just barely covering, keep your prices where they are as your competitor may be losing money on every drink they sell because they haven’t done the math.

Third, what do you want to be known for? Aside from total brand positioning, do you want people to order beer, wine, or liquor while at your bar or restaurant? If you want to sway patrons to order beer or wine you can keep your liquor pricing higher to sway decisions.

Coming back to where we started, it is important to look at competitor pricing as a guide to controlling liquor cost, but use it as just that, a guide. Using your brand analysis, cost controls, and pour size along with competitor pricing can help to make a more accurate and informed decision and help strengthen your brand as a whole and hopefully even make you some more money in the process.