In the UK foodservice industry, whether you run a takeaway, café, restaurant or catering kitchen, drinks can be one of the highest-margin items on your menu. They are fast to serve, easy to store, and require minimal prep time. Yet many businesses still set drink prices on guesswork rather than strategy.
Learning how to calculate drink margins properly can significantly increase profitability. A 30p mistake per drink doesn’t sound like much, but when you’re selling hundreds or thousands of units per week, it quickly becomes a major gap in revenue.
This guide breaks down everything you need to know to calculate drinks margins, set competitive prices, avoid hidden costs and maximise returns, all tailored for UK foodservice businesses.
Why Are Drinks Your Most Profitable Menu Item?
Food items come with labour, waste, preparation time and more complicated supply chains. Drinks, on the other hand, offer:
- Predictable wholesale costs
- Longer shelf life
- Minimal wastage
- High markup flexibility
- Quick service time
This makes drinks the profit engine of many shops. In some cases, beverages account for 25-40% of total profit, even when they appear as a small part of the menu.
Understanding Drink Cost Price vs Selling Price
To calculate margins effectively, you need clarity on your:
- Cost Price (CP): What you pay per bottle, can or case.
- Selling Price (SP): What your customer pays.
However, the true cost of a drink includes more than just the wholesale price. Many businesses unknowingly underprice their drinks because they overlook:
- Regional delivery costs
- VAT implications
- Storage costs
- Spoilage or wastage
- Electricity for fridges
- Staff handling time
These factors vary, but they influence real margins.
The Margin Formula Every Foodservice Business Should Use
Here is the most accurate and widely used margin formula:
Margin % = (Selling Price – Cost Price) ÷ Selling Price × 100
Example:
- Cost price per can: £0.42
- Selling price: £1.20
Margin = (1.20 – 0.42) ÷ 1.20 × 100
Margin = 65%
This means 65p of every £1.20 drink sold is profit (before overheads).
Understanding Markup vs Margin (Most Businesses Confuse These!)
It’s crucial to understand the difference:
Markup = The percentage added on top of the cost price.
Margin = The percentage of the final selling price that is profit.
Markup makes YOU feel good.
Margin keeps your BUSINESS profitable.
Example:
If you buy a drink for £0.50 and add a 100% markup, you sell it for £1.00.
But your margin is only 50% not 100%.
In most foodservice settings, aim for:
- 60-70% margins on soft drinks
- 50-60% on juices
- 40-55% on premium imports
- 35-50% on bottled waters
These benchmarks keep you competitive in the UK market.
How to Calculate Cost Price Per Unit When Buying Wholesale?
Buying wholesale from suppliers like Magna Foodservice usually means purchasing by the case. To understand the true cost per unit:
Step 1: Take the case price.
Example: Case price = £8.99
Step 2: Divide by total units.
24 cans per case → £8.99 / 24 = £0.37 per can
Step 3: Add secondary costs if needed
- Delivery spread across cases
- Storage costs
- Predicted wastage
Many UK takeaways add between 2p and 6p per can to account for incidental costs.
How to Price Drinks for Maximum Profit?
When deciding your selling price, consider these factors:
1. Competitor price range
Local fast-food shops often sell:
- Cans: £1.00-£1.50
- Bottles 500ml: £1.50-£2.20
- Premium imports: £1.50-£2.50
2. Your location
Shops in business areas or high-footfall zones can push prices higher.
3. Product type
- Premium import fizzy drinks = higher margin potential
- Standard cola = stable but competitive
4. Meal deals
Meal deals significantly increase drink turnover and margin consistency.
5. Customer perception
A drink priced too low seems cheap.
A drink priced too high discourages add-on sales.
Practical Drink Pricing Models for Foodservice
Model 1: Market-Matched Pricing
Set standard prices similar to your local competitors.
Works best for high-competition areas.
Model 2: High-Margin Premium Pricing
Used for imported drinks, unique flavours or convenience-driven purchases.
Model 3: Loss-Leader with Meal Deals
Sell drinks slightly cheaper as part of a bundle to increase total order value.
Example:
Burger + Chips + Drink for £6.99
Even if the drink margin drops slightly, overall profit increases.
How to Increase Drink Margin Without Raising Prices?
If you want higher profit but don’t want to raise menu prices:
1. Buy drinks wholesale in bulk
Suppliers like Magna Foodservice offer better cost-per-unit when purchasing cases.
2. Stock the right mix of premium and value drinks
High sellers + high margins = balanced profitability.
3. Reduce wastage
Rotate stock based on expiry dates and seasonality.
4. Promote high-margin alternatives
Juices, imported cans and flavoured waters often outperform standard cola margins.
5. Improve display
A well-lit, full fridge increases impulse purchases by 20-30%.
The Bottom Line: Know Your Numbers, Grow Your Profits
When you properly calculate drink margins and strategically price your beverages, drinks become one of the strongest profit drivers in your entire business.
By buying wholesale, understanding margin calculations and optimising your mix of fizzy drinks, juices, waters and premium imports, your business can significantly increase revenue with minimal operational changes.
Magna Foodservice’s broad drinks range makes it easy for UK cafés, takeaways and caterers to stock profit-friendly beverages with a consistent supply.
