Profit Margins for Liquor Stores: 3 Ways to Increase Yours

On average, it takes most small businesses two or three years to become profitable. 

That’s just to go from zero to $1 of profit. 

But most ambitious entrepreneurs didn’t start their businesses to make a single dollar, and we suspect you didn’t either. 

You have a much larger vision for your business. 

So how do you go from simply owning a profitable liquor store to operating a smart, efficient, and extremely successful shop with consistently healthy profit margins? 

The simple answer: sell more beer, wine, and liquor.

It’s a simplified answer because what if you only make $0.01 on every sale? Will that help you reach the level of success and profitability you aspire to? 

Probably not. 

There is more than one way to lead your business toward predictable and profitable growth. This article will highlight a few of them such as managing your cost-to-expense ratio, and knowing which products are selling and which aren’t. We’ll also discuss how using your modern POS system can help you identify and eliminate underselling products and dead stock.  

How You Can Increase Profit Margins for Your Liquor Store

There is more than one way to increase profit margins for your liquor store. Of the many profit-producing activities you read about, each one likely fall into one of three categories:

1. Increase sales 
2. Increase margins on sales
3. Reduce expenses 

Sounds easy, right? 

The truth is, it’s a lot simpler than you might think if you have the right systems to help you accomplish each goal. 

The real power of profitability comes not from doing one of these activities but from tackling them simultaneously. 

A modern POS system with the right functionality can make increased profit margins for your liquor seem as easy as one, two, three. 

1. Increase Sales by Attracting New Customers and Running Promotions

Running promotions is a great way to entice new customers to shop at your store. Some of the most common promotions include discounting bottles or running a buy one get one (BOGO) offer. 

Customers who have a great experience with friendly and knowledgeable staff while shopping at your store are more likely to return. 

But how do you reach customers who aren’t physically at the store? 

That’s where e-commerce functionality comes in. A modern POS system with e-commerce integration makes reaching new customers much easier. 

It allows you to run digital marketing campaigns that target customers in your area through email or SMS and allows them to place orders online either for delivery or pick up (your choice). This functionality can be quite pricey on its own, but not when it’s built into a modern POS system. 

When combined, offering discounts and promotions through your online store is a great way to get new customers in the door. 

While discounts and promotions have their place, they will eventually eat away at your profit margins if you’re not careful.     

A more profitable approach is to increase sales on products with the best profit margins. The trick is being able to identify those products easily. 

2. Increase Margins on Sales with Strategic Product Recommendations

If you were to recommend two equally delicious bottles of wine, one with a profit margin of 25 percent and the other 40 percent, which one would you choose? 

For a savvy business owner, the answer is simple.  

As long as the customer gets what they want and leaves the store satisfied, recommending the product with a healthier margin makes perfect sense.  

The only way to make such a strategic recommendation is for those numbers to be front of mind.

A smart POS system can help you identify those high profit margin items so you can either stock more of them or place them in high-traffic areas within the store and have staff recommend them more often. 

Another way to think about profit margins is to be strategic about which products you carry. Typically, beer has a 20 to 30 percent markup, whereas wine could be marked up as much as 40 percent. 

We’re not saying you absolutely should, but it’s worth considering if you would be better off becoming a wine specialty store if you aren’t already. 

Now that you have some ideas about attracting new customers and increasing sales on the products with the highest margins, the final piece to the profitability puzzle is to reduce expenses.   

3. Reduce Expenses by Using a Smart POS System

One way to reduce expenses in your business is to do everything yourself. And we do mean everything:

• Sales
• Marketing 
• Website
• Accounting
• Inventory 
• Stock

A more efficient and less stressful approach would be to use a smart point of sale system to give you  insights into your business. A smart POS system would allow you to automate inventory counting, saving labor costs. 

It could help you identify and eliminate underselling products which would save money and reduce deadstock. The Bottle POS system also reduces credit card processing fees which can amount to a great deal of savings. 

If given the option to increase sales, increase margins on sales, or reduce expenses, do you know what most successful business owners choose to do? 

The Most Successful Business Owners Do All of the Above

As mentioned earlier, a good liquor store operator will do some of these things, but a great one will do them all. 

A smart POS system in your liquor store can help you identify and automatically reorder the best-selling products with the highest margins while simultaneously reducing the labor cost of running your business with its smart inventory tracking features. 

Upgrading your system can help take you from being barely profitable to being predictable and consistently profitable. To learn more about how the Bottle POS system can help you increase the overall profit margins of your liquor store, please schedule a product demo.