7 Mistakes You're Making with Your Bar’s Drink Margins (and How to Fix Them)

Let’s be honest: running a bar in 2026 isn't for the faint of heart. Between the fluctuating energy costs, the latest supplier price hikes, and the ever-evolving tastes of our customers, keeping your head above water: let alone making a healthy profit: can feel like a full-time job in itself.

At Jarvis and Son Holdings LTD, we spend a lot of time looking at the "back end" of hospitality. We see the spreadsheets, the inventory counts, and the look on a manager's face when the month-end numbers don’t quite match the effort the team put in. More often than not, the culprit isn't a lack of customers. It’s the margins.

If you feel like you’re busy but the bank account says otherwise, you might be falling into one of these common margin traps. Here are the seven biggest mistakes we see in the industry today and, more importantly, how you can fix them to ensure your business thrives.

1. Chasing the "18-22% Industry Standard"

For decades, the "18-22% pour cost" was the golden rule of the bar world. If your costs were in that bracket, you were doing fine. But in 2026, relying on a generic industry average is a dangerous game.

The problem? Every bar is different. If you’re running a high-volume dive bar in the city centre slinging draft lagers and basic spirits, a 16% pour cost might be your sweet spot. However, if you’ve pivoted to a high-end craft cocktail lounge with premium ingredients, you might be looking at a 26% or even 28% pour cost.

The Fix: Stop comparing yourself to the bar down the street. Instead, focus on your Contribution Margin: the actual pounds and pence you take home after the drink is sold. A £14 cocktail with a 28% cost puts more money in the till than a £5 pint with a 15% cost. Define your own "theoretical" target based on your specific menu mix and business model.

2. The "Invisible Thief": Untracked Waste and Shrinkage

According to recent industry data from the Diageo Bar Academy, shrinkage in the average bar can range anywhere from 5% to a staggering 25%. That is literally money being poured down the drain or walked out the front door.

Whether it’s "one for the road" for a regular, a spilled tray that wasn't recorded, or: let’s face it: a bit of internal theft, these "invisible" costs add up. If you're doing £50,000 a month in sales and losing 10% to shrinkage, that’s £5,000 of pure profit gone.

The Fix: Implement a strict "no waste sheet, no replacement" policy. Every spill, every comped drink, and every "mistake" needs to be logged. When the team knows that every drop is accounted for, the "invisible thief" usually decides to move on.

3. "Eye-balling" the Pour

We’ve all seen it: the "flair" bartender who free-pours with confidence. It looks great, but it’s a margin killer. Even an extra 5ml of a premium gin on every serve can swing your margins by several percentage points over a busy weekend.

Inconsistency doesn't just hurt your wallet; it hurts your brand. If a guest gets a strong drink on Friday and a weak one on Saturday, they won't blame the margin: they'll blame the service.

The Fix: Standardize everything. Use jiggers for every single spirit pour. If you prefer the speed of free-pouring, ensure your staff undergo weekly "pour tests" using a Precision Pour system to ensure they are accurate to the millilitre. Consistency is the foundation of profitability.

4. Forgetting the "Small Stuff" (Garnishes and Ice)

When costing out a drink, most managers remember the spirit and the mixer. But in 2026, the cost of fresh produce and "specialty" garnishes has skyrocketed. If your "Signature G&T" features a sprig of fresh rosemary, a slice of dehydrated grapefruit, and premium clear ice, have you actually costed those in?

A sophisticated garnish can cost anywhere from 20p to 60p per drink. Across 500 drinks a week, that’s £300 a week you might be forgetting to account for.

The Fix: Treat garnishes like ingredients, not afterthoughts. Include them in your recipe costing software. If a garnish is too expensive to maintain a healthy margin, look for alternatives like dried citrus wheels (which have a longer shelf life and lower waste) or simple expressed oils.

5. Static Pricing in a Dynamic Market

Are you still using the same menu prices you set twelve months ago? If so, you’re likely losing money. In our current economy, supplier prices can shift monthly. If your tequila supplier raises their prices by 8%, but you don't adjust your Margarita price, that 8% comes directly out of your pocket.

The Fix: Perform a "Menu Audit" every quarter. Check your current invoices against your menu prices. You don't always have to do a massive price hike; sometimes a 20p or 30p adjustment is all it takes to keep your margins where they need to be. At Jarvis and Son Holdings LTD, we recommend setting a digital reminder to review your top 10 best-sellers every 30 days.

6. Theoretical vs. Actual Cost Blindness

This is the "big one." Your Theoretical Cost is what your margin should be if every drink was made perfectly and sold at full price. Your Actual Cost is what happened in reality based on your inventory counts.

The "Gap" between these two is where your profit lives or dies. Most bars only look at their Actual Cost at the end of the month, but by then, it’s too late to fix the problem.

The Fix: You need to track the "Variance." Aim for a variance of no more than 1.5% between your theoretical and actual costs. Use modern inventory management tools: there are plenty of great apps available in 2026: to do "spot checks" on high-value items like premium whiskies or kegged beer mid-week.

7. Ignoring the "High Contributor" (Menu Engineering)

Not all drinks are created equal. Some have a great margin but sell slowly. Others fly off the shelf but barely make you a penny. Many bar owners make the mistake of promoting their "favourite" drinks rather than their most profitable ones.

The Fix: Use a simple Menu Engineering matrix. Categorize your drinks into:

• Stars: High popularity, high profit (Promote these everywhere!).

• Plowhorses: High popularity, low profit (Work on reducing the cost or slightly increasing the price).

• Puzzles: Low popularity, high profit (Find ways to make these more attractive to guests).

• Dogs: Low popularity, low profit (Get them off the menu!).

By focusing your marketing and staff recommendations on your "Stars," you can significantly increase your overall house margin without changing a single price.

Bringing it All Together

Fixing your margins isn't about being "cheap" or "stingy." It’s about being professional. When you control your costs, you have more money to invest in your team, your décor, and the overall experience for your guests.

Running a successful bar is a balancing act, but with a little bit of focus on these seven areas, you can ensure your business remains a "Star" for years to come.

If you’re feeling overwhelmed by the numbers or just want a fresh set of eyes to look at your operations, we’re here to help. At Jarvis and Son Holdings LTD, we live and breathe the hospitality industry.

Feel free to reach out to us at www.jarvishospitality.co.uk for a chat about how we can help your business reach its full potential. Let’s make 2026 your most profitable year y