Costing out Soda cost has made me curious, help a guy out!

[ChunLiPizza]

I’ve been talking to a good handful of other operators out there and I am confused.

Soda/Pop/Coke, whatever. What are your food costs for it?

We use Coke, BIB, in a fountain. After crunching the numbers we’ve seen a consistent 37% in soda cost alone WITHOUT counting things like straws, lids, cups, ice, etc.

We run a pizza place and talk to operators who run similar establishments. They claim to have at max of 20% cost in this area INCLUDING straws, lids, cups, ice, etc

Drinks, kids drinks, and pitchers are what we offer and its the same for the operators we talk to. Our POS gives the the server the option of entering how many guests are serving at whatever table they are servicing and I assume (I will also be reiterating to them that this is needed) they are entering them consistently.

So what gives? What is everyone doing right that I am not or are these other operators BSing me?

 

[smeagol8]

How do your prices for pop compare to the others?

 

[pizza2007]

I run a full service + carry-out + delivery business. All said and done (paper costs included), the FC for soda runs about 11 - 13%. We have free re-fills (limit 1). Don’t compete with service stations on soda price - its their bait to get you to come in. It goes without saying, you need to raise your price and do away with the 32oz mug.

 

[eupher61]

37% is sky high.

Are you buying direct from Coke, or from a mainline vendor?

What are your prices? At that cost, with no other information, you can probably safely raise your prices.
I’m not open yet, but past experience, with free inside refills–unlimited–fountain costs were roundabout 19% with only 32oz carryout and 12oz for kids. That also included unlimited for employees on the clock.

IIRC, $1.69 for the dine in or carryout fountain drinks, $1.00 for the kids (they’re now at $1.99 for the dine in or carryout). This is not counting cans, 20oz, and 2 liter sales.

I will not do delivery fountain drinks. It’s too much of a PITA, spillage, cups breaking, difficult to transport. A bottle or can in a bag is the way to go. And, margins on 2liters are usually great, and people will not mind paying for it.

a

 

[Rick_G]

2 liter pricing from Coke is terrible. Over $1.80 a bottle. I have not purchased a 2 liter from them in almost 2 years, I buy at the local grocery stores or WalMart. It is a real PITA but I can not support their pricing. They are also over $22.00 a case for 20oz. bottles.

 

[pcl111]

Rick G:

2 liter pricing from Coke is terrible. Over $1.80 a bottle. I have not purchased a 2 liter from them in almost 2 years, I buy at the local grocery stores or WalMart. It is a real PITA but I can not support their pricing. They are also over $22.00 a case for 20oz. bottles.

When my first store was just starting out, Coke stuck it to me with the prices. Not their fault, pepsi wasn’t much cheaper, and I prefer drinking Coke so that made the choice for me. I was getting weekly deliveries, I cut back to bi-weekly, doubled up on the order and my costs came down a lot because of their pricing structure. I also cut down slightly on variety to reduce the chance that they would not move before they hit the date on the bottle. You get the best price on 35+ cases at a time, so that is what I shot for. If you don’t want to lay out money too far in advance for sodas, get it on terms, and threaten to switch to Pepsi if they don’t like the idea. I don’t remember exactly what I’m paying, but it is cheaper than or close to Sam’s Club for the most part and saves me the back pain of lugging cases of soda into and out of my car.

 

[ChunLiPizza]

smeagol8:

How do your prices for pop compare to the others?

To be honest, I’m not sure. We have a subway, a restaurant next door, and a coffee shop across the street but thats about it as far as direct competition. I’ve been there many times but cant remember what they charged.

pizza2007:

I run a full service + carry-out + delivery business. All said and done (paper costs included), the FC for soda runs about 11 - 13%. We have free re-fills (limit 1). Don’t compete with service stations on soda price - its their bait to get you to come in. It goes without saying, you need to raise your price and do away with the 32oz mug.

We charge $2.39 for 20 ounces of soda with unlimited refills.

eupher61:

37% is sky high.

Are you buying direct from Coke, or from a mainline vendor?

What are your prices? At that cost, with no other information, you can probably safely raise your prices.
I’m not open yet, but past experience, with free inside refills–unlimited–fountain costs were roundabout 19% with only 32oz carryout and 12oz for kids. That also included unlimited for employees on the clock.

IIRC, $1.69 for the dine in or carryout fountain drinks, $1.00 for the kids (they’re now at $1.99 for the dine in or carryout). This is not counting cans, 20oz, and 2 liter sales.

I will not do delivery fountain drinks. It’s too much of a PITA, spillage, cups breaking, difficult to transport. A bottle or can in a bag is the way to go. And, margins on 2liters are usually great, and people will not mind paying for it.

a

We are direct from Coke, charge $2.39 for 20 ounces with unlimited refills. Employees drink also but I should point out that we also get things like unsweetened/sweetened tea and lemonade from Coke too.

We do pitchers (rarely for the big party packages that have them), no cans, and we DO have 2 liters but are close to getting rid of delivery and we didn’t sell many 2 liters anyway.
Rick G:

2 liter pricing from Coke is terrible. Over $1.80 a bottle. I have not purchased a 2 liter from them in almost 2 years, I buy at the local grocery stores or WalMart. It is a real PITA but I can not support their pricing. They are also over $22.00 a case for 20oz. bottles.

This is something I havent thought about. We offer the option to get 2 liters from us for deliveries but it is rarely taken.

I also didnt take into account any 2 liters we may have purchased in that time.

Also, this FC alone is just for the months of January and February if that makes sense.

Thanks for discussion guys, lets keep it up!

 

[bouldercreekpizza]

What are you paying on your product from Coke?

 

[Brunospizza]

I made coke and Pepsi duke it out for my business. In the end coke won and I signed an exclusive contract with them for three years. I got the prices I wanted and they give me a nice check every may!!

 

[pcuezze]

ChunLi and I are from the same restaurant. When we sat down and added back in revenue from our Party Packages (assuming almost the maximum (e.g. a party package for 12 had 12 sodas), we arrive at 30.5% soda cost.

We pay $61 for 5 Gallon BIBs. That is the national pricing with a minimum 5 item delivery per week and a 1 year contract.

Here’s the problem - I have found very few people who actually calculate their soda cost. Everyone assumes it is $.10 a cup or $.15 a cup or 15% cost, etc. But I have met very few people that have relied on hard data from their POS.

Anyone here got a hard percentage from their POS? I’m trying to figure out if we have a real problem or if the perception is just off in the industry.

We charge $2.39. We are 80% dine-in. We serve in a 20 oz cup with ice. Free refills.
Jan/Feb we did $7139 in soda over $2181 in BIB costs.

Is it possible it’s a post-mix to rich issue?

 

[brad_randall]

ChunLiPizza:

Employees drink also…

Free drinks? Free refills?

 

[eupher61]

Pat, I can’t give much insight beyond what I said upthread, but I like your location. I’ve been out of KC for 2.5 years now, and I can’t believe how much that specific area has grown. How long have you been open? I’m not familiar with you, unfortunately.

That said, too, how about a thread hijack?

How much ice do you (your servers) put into dine-in cups? Giving free refills, my idea is to put less ice than most. FAR less ice, no more than 1/3 the volume of the cup/glass. Why? Even if that person drinks the same amount as with lots of ice, there will be fewer trips for the server to make to that table. That doesn’t mean the server ignores the table, just carries fewer drinks. Admittedly, that’s one of my personal biases (I usually take no ice for a fountain drink), but watch sometime. The glasses with less ice get refilled fewer times, at least in SOME cases. Not all, but if ONE table takes fewer refills, that gives the server more time for another table.

With fountain costs at 12% or so, I could afford that. I’ll be using plastic cups for dine-in too, which makes a lot of difference in costs.

 

[durbancic]

eupher61:

How much ice do you (your servers) put into dine-in cups? Giving free refills, my idea is to put less ice than most. FAR less ice, no more than 1/3 the volume of the cup/glass. Why? Even if that person drinks the same amount as with lots of ice, there will be fewer trips for the server to make to that table. That doesn’t mean the server ignores the table, just carries fewer drinks. Admittedly, that’s one of my personal biases (I usually take no ice for a fountain drink), but watch sometime. The glasses with less ice get refilled fewer times, at least in SOME cases. Not all, but if ONE table takes fewer refills, that gives the server more time for another table.

I don’t have dine-in, but thinking along those lines if a person is getting less ice in their cup they are getting more pop in their first cup. With the more pop, they may have enough to not warrant wanting a refill. Again, not working in dine in, but I am sure a lot of the times most of the refill may be wasted.
Thoughts?

 

[eupher61]

durbancic:

eupher61:

How much ice do you (your servers) put into dine-in cups? Giving free refills, my idea is to put less ice than most. FAR less ice, no more than 1/3 the volume of the cup/glass. Why? Even if that person drinks the same amount as with lots of ice, there will be fewer trips for the server to make to that table. That doesn’t mean the server ignores the table, just carries fewer drinks. Admittedly, that’s one of my personal biases (I usually take no ice for a fountain drink), but watch sometime. The glasses with less ice get refilled fewer times, at least in SOME cases. Not all, but if ONE table takes fewer refills, that gives the server more time for another table.

I don’t have dine-in, but thinking along those lines if a person is getting less ice in their cup they are getting more pop in their first cup. With the more pop, they may have enough to not warrant wanting a refill. Again, not working in dine in, but I am sure a lot of the times most of the refill may be wasted.
Thoughts?

You made my point much better than I did!

 

[josh]

Are you basing your costs on physical inventories or is it based on purchases only?

Are you able to isolate the costs and sales of fountain soda and bottles, cans, etc.? Since both have much different costs & profits, by calculating them separately for a few weeks you may be able to identify where the problem is coming from.

For example if you are running an extremely high cost on 2 liters and have a week of very busy catering or delivery orders, it will drive your overall costs up.

This would happen to use when we featured steaks at our full service restaurant. We were running 40-50% cost on our steaks but of course our profits were much higher than other items so we loved it. However, those weeks are food costs were very high but our gross profits were much higher and in line with the higher costs.

Or could theft be an issue? It is not uncommon for employees to steel cases of Soda?

 

[bodegahwy]

Using a 5.4 ratio fro BIB you get a little over 4000 oz of product from a bag. Assuming 16oz of product per sale at $2.39 (20 oz cup with ice should average about 12oz so this assumes some re-fills) you generate about $610 in sales… so your cost would be 10% using these assumptions for just product.

1 Gal = 128 Oz
5 Gal = 640 Oz
5.4 Ratio water to syrup means 640 X 6.4 = 4096 Oz of product

4096/16oz product per 20 oz serving comes to 256 servings

256 servings @ $2.39 = $612

$61 per bag / $612 revenue = 10% “Ideal” COG

Add to that cups, straws etc. Subtract some waste, freebies, employee drinks… whatever.

 

[Mark_Matthieu]

Using a 5.4 ratio fro BIB you get a little over 4000 oz of product from a bag. Assuming 16oz of product per sale at $2.39 (20 oz cup with ice should average about 12oz so this assumes some re-fills) you generate about $610 in sales… so your cost would be 10% using these assumptions for just product.

1 Gal = 128 Oz
5 Gal = 640 Oz
5.4 Ratio water to syrup means 640 X 6.4 = 4096 Oz of product

4096/16oz product per 20 oz serving comes to 256 servings

256 servings @ $2.39 = $612

$61 per bag / $612 revenue = 10% “Ideal” COG

Add to that cups, straws etc. Subtract some waste, freebies, employee drinks… whatever.

Great summary, thanks! What about cost of CO2? (Sorry I am new to this) IS that included here or not? You’re showing a 90% profit margin on the bags (10% COG) without the cups and straws. So I was wondering if CO2 was included. Also, if you can get the cans for $.25 and sell for $1.00 that’s a 75% profit…is it at all worth it to just stick with cans then and avoid this hassle? Or is it because you have to go get your own cans at a Sams store and thats a bigger headache plus the space to keep so many cans…i guess i am answering my own question

 

[stebby1]

Pcuezze hit on exactly what I was thinking… it’s not all about costs as this thread has gone to. Get yourself a brixing kit and check every one of your fountains yourself. If the fountain is running rich on syrup, you’re going to go through more and your costs will be higher. Unfortunately, there are some dishonest salespeople/techs that will intentionally set your fountains rich in order to sell more product. Not all do, but some do.

 

[Ben_Kitay]

I’ve been talking to a good handful of other operators out there and I am confused.

Soda/Pop/Coke, whatever. What are your food costs for it?

We use Coke, BIB, in a fountain. After crunching the numbers we’ve seen a consistent 37% in soda cost alone WITHOUT counting things like straws, lids, cups, ice, etc.

We run a pizza place and talk to operators who run similar establishments. They claim to have at max of 20% cost in this area INCLUDING straws, lids, cups, ice, etc

Drinks, kids drinks, and pitchers are what we offer and its the same for the operators we talk to. Our POS gives the the server the option of entering how many guests are serving at whatever table they are servicing and I assume (I will also be reiterating to them that this is needed) they are entering them consistently.

So what gives? What is everyone doing right that I am not or are these other operators BSing me?

Anyone who needs help with soft drink pricing should talk to the folks at ENLIVEN, LLC. Just go to http://enlivenllc.com