What is COGS in a drink program, and why does it matter for pricing?

• A. COGS is the labor cost of bartenders.
• B. COGS is the depreciation of equipment.
• C. COGS is the marketing expense for the program.
• D. COGS is the total cost to produce a drink; affects profitability; track ingredient costs and waste to set margins.

Answer: (D)

COGS in a drink program is the total cost to produce a drink, counting the ingredients used and any waste or shrinkage that happens during preparation. This matters for pricing because the selling price needs to cover that production cost and still leave room for profit. By figuring out the exact ingredient cost per cocktail and tracking waste, you can set menu prices that achieve a desired margin and quickly spot when costs creep up or portions are off. For example, if a drink’s ingredient cost goes up or you’re wasting more than expected, you’d adjust the price or tighten portion control to protect profitability. Other expenses like bartender labor, equipment depreciation, or marketing sit outside COGS and affect profitability in different ways, so focusing on COGS helps ensure each drink contributes to the bottom line.