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Costing Out Soda & Free Refills - How to Price Soda

(By Wilton Marburger)  A traditional box of syrup or B- I- B (bag in the box) holds 5 gallons of syrup. Let's say a five gallon BIB of your favorite Cola costs $50.

The ratio of syrup to water is 5 to 1, meaning for every gallon of syrup served, 5 gallons of water is also used. In other words if you serve an entire BIB to Foodservice customers you have served 5 gallons of syrup + 25 gallons of water for a grand total of 30 gallons of product. As we know, there are 128 oz in a gallon. Therefore, 128 oz x 30 gallons yields 3,840 oz of product. To take this one step further, I am accustomed to getting around an 98.5% yield out of each BIB. Because I pay for 100% but only use 98.5%, my costs increase concurrently. To figure out the real usable product we will take 3,840 oz x 98.5% and the true amount of product to be sold is now = 3,782.4 oz.

To figure our soda cost we will need to uncover the $ cost per ounce and apply that to the soda sizes you offer. We will use a 20 oz beverage for this calculation. Knowing we get 3,782.4 oz out of a 5 gallon BIB we will divide into this quantity of 3,782.4 oz into our $50 BIB cost. Therefore, $50 / 3782.4 = .0132 This tells us that each oz of served product costs us $0.0132

For a 20 oz soda we will now take our pour size of 20 oz x $0.0132 and get $0.264 or basically 27 Cents per 20 oz soda. Now lets consider ICE! If you fill your 20 oz cup with ice to the brim, you will only be pouring about 8.75 oz of soda into the cup. Realistically your soda cost will only be 8.75 oz x $0.0132 or 12 cents per unit sold. To finish the cost out lets say we have a 7 cent foam cup, 1 cent lid and 1.5 cents straw to complete the package. Although these last three items will most likely be accounted on your Profit & Loss statement as paper goods, let's add them to the soda cost to realize the total cost involved with selling a 20 oz soda.

20 oz cup of soda with ice requires 8.75 oz of product or $0.12
20 oz foam cup cost $0.07
Lid for cup costs $0.01
Straw costs $0.015
Total Cost = $0.215 or rounded up $0.22 per soda

Next, take your sell price and subtract your per soda cost to realize gross profit. If you sell the 20 oz soda for $1.25 then you make $1.03 in gross profit and your attributable NA/BEV cost for the soda is $0.22 / $1.25 = 17.6% (18% to 20% is very common for Soda)

Lets assume that you see 60% of your soda-buying guests getting refills. To figure in this additional cost lets go back to the soda requirements in the first cup. We figured with ice that we would need 8.75 oz of soda in a 20 oz cup. Two cost busting scenarios will now happen. The guest will refill the cup with more product and almost always there will be less ice to take up space this time around. First, because of melting ice we will boost our soda requirement on refills to 10 oz as you can almost without fail measure this yourself and see that the requirements will be around 1.25 oz greater to fill the cup. What we have just determined is every time you sell a soda you are really selling 8.75 oz of product + (60% of guests x 10 oz) In other words 8.75 + 6 = 14.75 oz. Now we take our 14.75 oz x $0.0132 = $0.1947 or 20 cents a soda.

20 oz cup of soda with ice & free refills requires 14.75 oz of product or $0.20
20 oz foam cup cost $0.07
Lid for cup costs $0.01
Straw costs $0.015
Total Cost = $0.215 or rounded up $0.32 per soda

Refills are very popular in a number of establishments and there are certainly nothing wrong with them, many guests love it. Just make sure to reconsider your sale price to keep and ideally retrieve more gross profit and keep you soda cost around that 18% to 20% mark. If you priced your 20 oz soda with free refills at $1.75 then your gross profit would increase and you would retain $1.75 - $0.32 = $1.43 of GP$ Also, your % NA/BEV cost of goods for the soda would now be $0.32 / $1.75 = 18.3% Makes cents right!