1. What is Gross Profit Percentage?

Gross Profit Percentage (GP%) measures how much out of every pound of revenue a business retains as gross profit. It's a key metric for assessing the profitability of a bar's operations in the UK.

2. How Does the Calculator Work?

The calculator uses the GP formula:

Where:

• \( Revenue \) — Total monthly sales income
• \( COGS \) — Cost of Goods Sold (direct costs of products sold)

Explanation: The formula shows what percentage of revenue remains after accounting for the direct costs of products sold.

3. Importance of GP Calculation

Details: Monitoring GP% helps UK bar owners understand pricing effectiveness, control costs, and benchmark against industry standards (typically 70-80% for UK bars).

4. Using the Calculator

Tips: Enter revenue and COGS in pounds sterling (£). Both values must be positive numbers, with revenue greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What's a good GP% for UK bars?
A: Most successful UK bars maintain 70-80% GP. Below 60% suggests pricing or cost control issues.

Q2: Should I include labor costs in COGS?
A: No, COGS should only include direct product costs (alcohol, mixers, garnishes). Labor is an operating expense.

Q3: How often should I calculate GP%?
A: Monthly calculation is recommended for proper financial monitoring in the bar industry.

Q4: Why is my GP% lower than industry average?
A: Possible causes include underpricing, over-pouring, waste, theft, or supplier price increases.

Q5: How can I improve my bar's GP%?
A: Strategies include menu engineering, portion control, supplier negotiation, and regular stock takes.