From The Bar ~ Saloon Economics ~ Pricing

Another segment of a project The Rise and Fall of a Saloon In The Latter Part off The Twentieth Century. These excerpts are not chronological. In fact very little logic prevails…

There are four pricings on liquor in most full service bars depending on the cost of the product used.  “Well” is the lowest price. These liquors are usually found in the “speed rack”, the array of bottles kept in wire racks at bartender thigh level for easy access.
After that come your “Call” which may or may not be included in the speed rack depending on the saloon.  Usually, though, “Call” brands were displayed so the customer could see and recognize the brand.  “Call” is followed by “Premium” in pricing and sometimes “Super Premium.” which are progressively more expensive.    These last two categories are sometimes kept in a visually exclusive area so the customer can feel his order has Extra Special Status.

                                                                Pour Cost

There is a thing called “Pour Cost” that is critically important to a saloon’s fiscal health.  This is the calculative guide saloonkeepers use to figure out approximately how much it costs to pour each drink. 

From the web we have this definition:


“…Pour Cost – jargon for cost percentage – is a reliable indicator of profit/loss performance.
Pour cost is obtained by dividing the cost of depleted inventory by the gross sales generated over a given period of time. Because liquor, beer and wine sell at radically different cost percentages, each must be calculated separately for the process to have true significance…”


To allow The Bar to apply this formula part of the closing bartender’s duty was to line up every bottle of alcohol emptied that day on the end of the bar.  This is called the “Breakage.” 

       Here we have a little historical interlude…

The history of the word ‘breakage’ allegedly came about after Prohibition.  It was a common practice in the early alcohol industry to re-use bottles or worse, refill an empty bottle having an expensive brand’s label with an inferior product.  Laws were passed that required saloons to at least break the necks or shatter the empties at end of their service to make them unusable.  Hence the term “Breakage.”

The empties are itemized on a clipboarded chart, brand by brand according to its rank in the call order.  Beer tallies are by cases sold or kegs emptied as are the mixing liquids such as Coke and Tonic etc.  These numbers are totaled up by the resident number cruncher, The Formula is applied and the end result is the Pour Cost.
 Ideally, in an efficiently run saloon the pour cost would be  around .22 or less meaning out of every dollar taken in, twenty two cents is spent on the actual amount of liquor used in pouring a drink. 
Some saloons, like The Other Place opted for dispensing guns, a buttoned control that precisely measures the alcohol dispensed. 
T.O. did not like dispensing guns.  He liked the idea of  his customers actually seeing the label on the bottle as the drink is poured.

                                             T.O.’s pour cost was never anywhere near the ideal. 

Pay attention, kiddies… Pour Cost and Profit… is the true Bottom Line.  That which actually determines the Rise and Fall of a Saloon.                     

 There are three ways to dispense liquor using a Bartender.
      You have your metered guns.  The most precise and controllable.  Also the most impersonal.
      You can have a bartender use a measuring cup called a “jigger”.  The ‘jigger’ is a double sided metal measure.  One cuplet measures one ounce and the other side measures and ounce and a half.  A shot glass is a more attractive way of measuring the amount poured.  Some shot glasses used for this had a white line that the bartender would of course pour past that line for effect.
      Or you could have your bartender pour the drink without any measuring devices at all.
    This is called “Free Pour”.

All pouring was assisted using special spouts “pour spouts”,  inserted into the neck of the bottles that are designed to keep the flow of liquid steady and controlled no matter at what angle the bottle is held.  It uses the simple physics of routing the liquid through a tube narrower than the open neck of the bottle.  This allowed a truly skilled bartender to vertically up-end the bottle and vary the distance the liquid actually flowed in impressive flourishes to delight the eye.  The spouts were designed to make a little cheerful sounding, bubbly noise, as they dispensed liquor.  In reality they were still dispensing the same amount of liquid that would be dispensed if poured in a more staid, measured, method. 

Free Pour, to the viewer’s eye, looks to be more generous than a measured amount, carefully poured, using the jigger/shotglass method and certainly more interesting than that generated by a dispensing gun. 

Even so, a skilled Free Pour actually dispenses the same amount if the gun is calibrated to the industry standard..  Notice the word “skilled”.  I’ve used the word ‘skill’ a few times already because skill and being skilled is extremely important.  People tend to ignore that word but in this case, skill affects the money line.

The Bar and The Other Place and most of the local saloons were expected to pour an ounce and a half of liquor when a drink recipe called for a “jigger” or “a shot” of alcohol.  Free Pour was the ability, nay, the skill,  to pour that ounce and a half without using a ‘jigger’, shot glass  or other measuring device and come up with exactly an ounce and a half of booze in the drink.

At The Bar Free Pour amount was measured by cadence, usually by counting to four in one second increments. 
Bartenders in training were given an empty liquor bottle and a pour spout and sent home to practice until they got Free Pour down correctly. 

A visually clever way to test this was to pour into a brandy balloon glass and, having done so, tip the glass gently so it lies on its side. 
A perfect ounce and a half Free Pour will go to, but not run over, the edge of the glass.   This is a clever technique visually but a better test is more realistic.  That is to Free Pour into different sized containers, with and without ice, then measuring the results in a measuring device of known value… a shot glass or jigger… to see just how accurate the bartender’s pouring wrist is.

 There were problems with a Free Pour.  Some people never got the hang of it and either wasted booze or shorted the customer.  Neither was good for business and it didn’t help the bottom line.
 It’s amazing how complicated some people can make counting to four.  Equally amazing how some cannot achieve this simple act at all.  If a bartender didn’t work well under pressure of a crowded, loud, night the Free Pour (and the Pour Cost) could be affected adversely.

 The bartenders hated to be denied, however, and regarded having to use a shot glass to pour a drink to be like using training wheels on a bike.  They also felt they could do better with tips using Free Pour because it looked more generous than scrupulously measuring using a gadget.  This is particularly true if the bartender has sparkle and knows how to flourish and exploit the time it takes the pour to finish.

A well executed Free Pour was an asset but a bad one was its own trap because seasoned observers knew how to count to four too and no one likes to be short poured…

If your bar indulged in Free Pour you had a very real danger of over-pouring by a bartender looking to increase the tip factor by appearing to favor a customer. 

                                                       “Have a Drink On The House!”

Pour Cost is affected by pouring ‘free’ drinks because, of course the product is not free. 

                                             It is paid for by the owner. 

Some comping is necessary for good public relations.  In fact T.O. had a “P/R key” (for ‘Public Relations’) on his register to try to keep track of the “on the house” drinks.  Most bars make a provision for this.  This could be abused by a less scrupled bartender looking to increase their tips by pouring a drink “on the house” for a customer who tips well.  Some would do this without even bothering to ring it on the P/R key.

Then there are your surveys:

“…according to a survey done by the California Restaurant Association, the average bar or restaurant loses–simply loses–25 percent of its beverage alcohol. One-quarter of the wine, beer and spirits in the average restaurant or bar simply disappears, due to spillage, over pouring, mistakes and outright theft…”
Ah, yes…theft!  Sometimes…sometimes a bartender at The Bar goes a little farther to have more than a small effect on Pour Cost.  And that was due to the fact that the bartenders had their hands on company cash.  They handled T.O.’s actual money.  Money is always a temptive thing…

   Bartenders, being as they are, in a trade that is somewhat nomadic at times, occasionally produced someone who “skimmed a little,” using whatever rationale they conjured up to ease it in their mind. 

And there were those who flat out stole from The House.   If the pour cost was calculated weekly, thievery would eventually be spotted because it caused strange fluxuations in the Pour Cost.  Even so, a skilled thief could cause a lot of damage in the long run before they were found out and terminated. 

                            The losses incurred came, of course, out of the owner’s pocket.

                 After your Pour Cost is determined then comes The Open Palms.

Your city license, your state liquor license, cabaret license, BMI/ASCAP licensing, state and local taxes, ‘contributions’ to Social Security and Workman’s Comp, liability insurance, lease/rental of the actual premises, such money spent on necessities as utilities,  gas, garbage disposal, ice machine servicing, refrigeration costs.  Quite a list of hands wanting to get paid First. 

Then comes your inventory.  In California, if you ran out of a certain brand of booze you couldn’t shop the local stores for the best price.  No.  You had to buy from a state licensed supplier.  

Inventory could be even more costly if your saloon, like The Bar, included food service.

You must also add extraneous repairs as might be needed which include the obligatory visit from your local Roto-Rooter four times a year to snake out the toilets. 

Lest we forget there must be salaries paid to the crew.  And with that comes all the fun and taxes that come with payroll.

             After all that is paid and/or accounted for the amount left over, if any, is profit.

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