how does nightclub/bar make money?


how does nightclub/bar make money?

In: Other

Markup on alcohol, especially spirits, is a big part of it. Like any business you charge enough to cover wages, rent, insurance and other running costs. The rest is buying at a certain price and selling at a slightly higher one.

People will pay 7x the amount that it would cost to get drunk alone at home, to get drunk around people.

They sell alcohol for a lot more money than they buy it for. Sometimes they also charge people to enter. That’s it.

The profit is enough to cover staff wages, building costs, pay bands, etc and still have actual profit left over.

But it boils down to buying a 26 oz bottle of gin for $30 and then selling those 26 1oz portions for $5 each (26 x 5 = $130). Your local prices will be different, but there’s $100 profit on 26 drinks sold. A bar sells a LOT more than 26 drinks. More like hundreds, or thousands.

That’s how a bar/nightclub makes money.

Markup on drinks is insane. There are about 16 shots in a standard 750 mL bottle of alcohol. At the grocery store, the cheaper brands of most alcohols probably run $15, up to $30-$50 for nicer brands, but let’s use the cheaper end (what a bar would call a “well” drink) for comparison. That maths out to less than $1 per shot of alcohol, if you buy it to drink at home. Bars and restaurants, keep in mind, are buying their alcohol wholesale and in bulk, so they’re paying significantly less than that, even.

How much are you paying for an average well shot at a bar? Here in LA, at most bars, probably at least $4-$5, at the lower end of bar prices. That’s at least a 300% markup off of the price you’d be paying for the drink at home, and that’s *before* you factor in the cheaper cost that the bar is paying for their booze in the first place.

Plenty of room in that for overhead, wages, and profit. We like to spend more to drink in a fun place with our friends without having to host at home, so bars can turn an easy profit off of drink sales.

The drinks that a bar or club serves are at a much higher price than if you were to simply buy them at a store. Bars can set their prices that high because people are willing to pay them.

Btw, this question should probably be flaired as “economics”.