Restaurant Happy Hour Calculator
Happy Hour discount — with food cost at 30% and drink cost at 20%, can you still make money?
The Restaurant Discount Math: Drinks vs Food
The secret to profitable Happy Hour pricing lies in understanding the massive margin difference between food and drinks. Drinks carry 70-80% gross margins, while food typically runs only 30-40% gross margins. This means discounting drinks is far safer than discounting food.
A 20% discount on a $10 cocktail (80% margin) still leaves you $6.40 in gross profit. The same 20% discount on a $15 entree (35% margin) leaves only $4.75 — and that margin has to cover labor, rent, and everything else.
Happy Hour Strategy Table
| Discount % | Food-Only Profit Impact | Drink-Only Profit Impact | Combined Impact |
|---|---|---|---|
| 10% | -25% to -29% | -12% to -14% | -17% to -20% |
| 15% | -38% to -43% | -19% to -21% | -26% to -30% |
| 20% | -50% to -57% | -25% to -29% | -34% to -40% |
| 25% | -63% to -71% | -31% to -36% | -43% to -50% |
Notice how food discounts hit profits 2-3x harder than drink discounts at every level. A 20% food discount can wipe out over half your food profit, while the same discount on drinks takes only a quarter.
Smart Restaurant Discount Strategies
Drink-only discounts: Offer 15-25% off cocktails and draft beer. With 70-80% margins, drinks absorb discounts best. The lost margin per drink is small, and increased traffic drives food orders at full price.
App/coupon-based food discounts during slow hours: Use targeted offers (10% off appetizers, 3-5 PM only) to fill dead hours without cannibalizing your dinner rush. Track redemption rates to measure incremental traffic.
"Buy entree, get drink X% off" combos: This protects your food margin while using drink discounts as a draw. The full-price entree anchors the ticket, and the discounted drink feels like a bonus — not a devaluation of your brand.
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