Having worked in the food industry for many years, I can say quite confidently that the mark-up on beer is usually about 300% to 400%. So in other words, you buy the beer at $1.50 and charge $4.50 up to $6.00. When going out, you’re always paying a premium on the service, the pretty waitress and the atmosphere. So what would it take to cut back on going out for drinks once in a while?
Meet Mr. Sloshed
Mr. Sloshed works a stressful job as a lawyer. He works long hours and needs to unwind at the end of the day. Let’s assume he goes out after work, every day for a drink at his local bar. The beers cost him $5.00 and he’ll typically have two a day. Let’s see what it would look like if he bought the beer at a store and drank it at home. Assume the beer is $2.00 a pop at his local cold beer and wine store and he’s going to invest the savings in investments which will yield an 8% return.
Scenario 1
If Mr. Sloshed drank at home twice a week, he would save $12 a week, so approximately $48 a month (let’s say $50). The numbers would then work out as follows…
10 years – $6,000 contributed, $8,538 market value, gain of $2,538
20 years – $12,000 contributed, $25,112 market value, gain of $13,112
30 years – $18,000 contributed, $57,304 market value, gain of $39,304
40 years – $24,000 contributed, $119,824 market value, gain of $95,824
Scenario 2
Let’s see what it would look like if Mr. Sloshed decided that he only wanted to go out on the weekend. He would drink at home Monday to Thursday, leaving Friday reserved for the bar saving about $24 a week, so approximately $96 a month (let’s say $100).
10 years – $12,000 contributed, $17,071 market value, gain of $5,071
20 years – $24,000 contributed, $50,233 market value, gain of $26,233
30 years – $36,000 contributed, $114,608 market value, gain of $78,608
40 years – $48,000 contributed, $239,649 market value, gain of $191,649
I love a frosty lager as much as anyone else, especially on a hot day. If you know me, you know that one thing I hate paying a premium for is atmosphere. I couldn’t less what the waitress looked like and what the music sounded like. I can happily drink at home. That makes the math for me a bit easier, but like anything else that works itself into our habitual lives, a simple change can yield huge results.
There aren’t too many places in Vancouver with $5 beer anymore, especially after you factor in taxes and tips and such.
I agree. I was trying to balance out the nightclubs and the dives you see in the burbs.
Great information! I like beer very much and thanks for sharing with us.
Anytime. What other vices do you have that you could make economies in?
When I was holidaying in Bangkok last month, I bought the local beer from supermarket and it cost only $1 per can! A 6-packs cost slightly lesser!
That’s so not fair!
I think there are certain American beers you can pick up in the states that work out to about a buck a can.