The Staggering Costs of Overpouring

Gregg • January 13, 2025

(2nd in the "It’s Not Magic, It’s Math" series)



Short on Time? Skip to the Recap Below!




Why Focus on Business Impacts First?


Why begin with the negative impact of overpouring on businesses versus the adverse impact it has on community safety, or how it increases calls for service?


By understanding how eliminating overpouring tremendously benefits businesses, we appreciate how likely businesses are to embrace the profitable pouring practice shared in the Best Practices for Nightlife Establishments booklet.


For a best practice to be useful, it's critical to connect the dots between it and its business benefits. 




The Math of Overpouring


In a business selling 7 one-spirit cocktails for every 3 multi-spirit cocktails, this is the calculation to determine a weighted average overpour.



The Financial Impact


A 53% overpour means 35% of spirits purchased are effectively given away for free. 

Calculation:

y = Desired pour level

x= Actual pour

 

% Overpour = (x-y)/y 

% Poured that was waste = (x-y)/x

 

Given the constraint that % overpoured = 0.53:

 

(x-y)/y = 0.53

x/y-1 = 0.53

x/y = 0.53+1

x/y=1.53

Thus, y/x = 1/1.53

or y/x = 0.65

 

We know from the constraint that y/x=0.65, thus, % of what was poured that was waste = (x-y)/x or: (x-y)/x = 1-y/x = 1-0.65 = 0.35 or 35%

Using derived ratios, 65% of each poured spirit is used effectively, and 35% is wasted, translates as:

For a typical business, more than a third of the spirits they purchase are given away free. 



Lost Revenue (Opportunity Cost)



Overpouring reduces the opportunity to sell more drinks because customers get intoxicated faster, consuming fewer beverages overall.


Input from my clients who have significantly reduced or eliminated overpouring suggests that around 1 out of 8 customers orders an additional drink after adopting profitable pouring practices. The number of extra drinks sold depends on the level of the initial overpouring.


This means bartenders and servers make more money once overpouring stops because it increases sales and tipping opportunities.


Let’s consider how eliminating overpouring might impact profits if the business:

·      Typically overpours its spirit cocktails by 53%.

·      Historically sells on average 2.5 spirit cocktails per customer. 

·      Finds that 1 out of 8 customers now orders an additional cocktail.


Final Thoughts


Even customers who order additional drinks after overpouring stops remain less intoxicated because they consume slower, metabolizing more alcohol in the process.


Note:

Before opening restaurants, I worked for 3M's Orthopedic Division as a Quality Assurance Technologist, conducting statistical analysis.



Upcoming in the It’s Not Magic, It’s Math series:

  • Profitable Pouring Guards the Customers & Communities
  • Case Study: Overpouring Eliminated
  • My $14,000,000 Mistake
  • The People Behind the Numbers

People Behind the Numbers

By Gregg • January 17, 2025
(6th in the "It’s Not Magic, It’s Math" series)

My 14-million-dollar Mistake

By Gregg • January 16, 2025
(5th in the "It’s Not Magic, It’s Math" series)

Case Study: Boosting Profits and Safety by Eliminating Overpouring

By Gregg • January 15, 2025
(4th in the "It’s Not Magic, It’s Math" series)

Profitable Pouring Guards the Customer & Community

By Gregg • January 14, 2025
 (3rd in the "It’s Not Magic, It’s Math" series)

The Industry Plague: Overpoured Spirits

By Gregg • January 12, 2025
(1st in the "It's Not Magic, It's Math" series)

Is Your City Losing $1,000,000 to Its Alcohol Footprint?

By Gregg • January 11, 2025
Most city leaders see alcohol businesses as reliable sources of tax revenue. However, many cities unknowingly carry a financial burden called the Alcohol Footprint —the net cost to the city after accounting for all revenue from alcohol businesses versus the expenses they generate. The Hidden Costs of Alcohol Businesses Take Fullerton, California, as an example. In 2002, the city created a Restaurant Overlay District downtown, eventually housing 49 alcohol-licensed establishments. While this boosted nightlife, it also brought increased demand for city services. A 2006 report revealed the District cost the city $935,500 more annually than it earned. The largest expenses came from police, fire, and maintenance services. The report anticipated the deficit would grow with the need to add four new police officers costing $412,000 per year. Fullerton officials deserve credit for identifying the problem, but what about the Alcohol Footprint for an entire city? The numbers can be staggering. A Broader Issue One client city recently calculated its Alcohol Footprint across all 300 of its alcohol-serving businesses and discovered losses “significantly more than $1,000,000 annually. ” If your city is like most, with alcohol businesses that mostly close by 10 PM, some by midnight, and a few staying open until 2 AM, it likely carries a substantial Alcohol Footprint. Why does this happen? It’s often due to a lack of best practices: Inadequate Conditions of Approval: Many cities fail to include effective regulations for alcohol businesses in permits due to insufficient training in urban planning programs. Limited State Flexibility: California’s Alcohol Beverage Control (ABC) is constrained by State liquor laws on what conditions the agency can document for a new licensee. Insufficient Police Training: California police officers receive just two hours of ABC law training in their Basic Academy, which includes no guidance on preventing disorderly alcohol establishments. Knowledge Gaps in the Industry: Most alcohol business operators and food-and-beverage managers lack access to training in best practices. The Solution: Best Practices for Alcohol Businesses Despite these challenges, there’s a clear path forward. Our Best Practices for Nightlife Establishments booklet equips alcohol businesses with strategies to reduce intoxication, lower service calls, and improve community safety. Research by Levy and Miller found every $1 spent on controlling over-service saves cities $260. We’re passionate about supporting well-run alcohol businesses—they bring communities together for meals, entertainment, and memorable moments. But they need to operate responsibly to protect public safety and city resources. Learn more through our Insight series, It’s Not Magic, It’s Math.