Venkat Mangudi wrote:
Madhu Menon wrote:
Srini Ramakrishnan wrote:
We were charged Rs. 150 per 30ml, i.e. $93.75 for 750ml. A bottle of
costs $6. A profit margin of 1465%
Because, of course, a restaurant has zero setup and operational costs,
and import duties on liquor are nil too.
Nice counter-argument. You forgot the cost of liquor license and the
occasional "baksheesh", recently legalised.
I didn't. It's there in the operational costs.
I was feeling lethargic when Aditya asked me about a restaurant's
business figures, so I shelved it as "something to respond to later".
But let me just take the example of Cinzano that Cheeni quoted.
A bottle of Cinzano may cost $6 in the US, but here, it's closer to Rs.
900-1000 per bottle if you buy it wholesale legally. That brings it to
about Rs. 40 per 30 ml shot as the basic cost. So Rs. 150 per shot is
less than 4x the cost of the raw material.
In Andhra Pradesh (since Cheeni gave a Hyderabad example), if I remember
correctly, the annual cost of a liquor licence is around Rs. 1.3
million. So that's more than 100,000 per month in just licence costs.
And as you point out, there is a "monthly" and a "yearly" payable to
corrupt excise officials too (in Bangalore, they have "outsourced" some
of the excise work to the local police, so now we have to pay those
b*****ds every month as well.) This is in addition to a whole lot of
other licences and "incidental expenses" we have to pay for. (It could
be worse; Maharashtra has even more licencing requirements.)
In Kerala, the annual licence cost for bars is Rs. 2.2 million. In
Singapore, it's the equivalent of Rs. 22000 per year. In New York, it's
~ $4000 ( http://abc.state.ny.us/JSP/content/feeSchedule.jsp )
In Bangalore, the Karnataka government stopped issuing fresh bar
licences back in 1993 (something to do with a government-decided maximum
number of bars as per the population blah blah blah). So any restaurant
wanting to add a bar has to buy a licence from someone who is closing an
existing bar. With the large increase in the number of restaurants, that
figure is now around the 2.5 million mark. After that, you have to
grease palms and pay one year's licence fee to transfer it to your name.
All this now costs an extra Rs. 1 million. The cost of setting up a
mid-sized restaurant + bar in Bangalore is now around the 10 million
mark, if not more. Annual liquor licence costs in Karnataka were Rs.
345,000 per year till this year, and then the government *doubled* it.
Why? Because they banned sales of arrack, and apparently that caused a
huge shortage in revenue, so of course we get to bear the cost of it.
If your booze is expensive, blame the 180% duty (it was lowered by a bit
recently to comply with WTO rules; I think it's 150% now) on imported
spirits, and the very high licencing costs imposed by the government.
So that 1465% "profit margin" in Cheeni's calculation... really isn't.
The profit margins on liqour are definitely more than on food but not as
much as you think.
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