Matthew D.
Part 1 - I think $5.50 is unreasonable throughout most of Louisville for a standard craft beer. There are exceptions though, specifically at sporting/concert events where I believe $5.50 is a bargain.
Part 2 - What influences the cost of draft beer?
Here are the major contributing factors:
1 -Beer Cost by the ounce (there are discounts given for buying in volume, but most restaurants do not have room to store 5 extra kegs of one type of beer) - Restaurants in Kentucky all pay the same price for beer, the only exception would be in quantity deals and those discounts are usually not very much. The cost of beer is different in Indiana than in Kentucky, but the overall difference is pretty small.
2 - Cost of the "privilege to serve beer" - various license fees must be paid on an annual basis not only for the businesses to serve alcohol, but for each employee to serve as well. Additionally, the fees for the business vary widely depending on the location.
3 - Labor - Not just the person serving your beer, but also the person who ordered those beers from the distributor and the person washing the glassware.
4 - Basic costs of operation - rent, electricity, equipment, etc.
Overall, the cost/price of beer is no different than any other equation in a restaurant. However beer/wine/alcohol sales are an ideal solution to balance fluctuations in the cost of other items.
It may be more effective to raise the price of beer, rather than to raise the prices of other items on the menu.
Beer/wine/alcohol sales are higher profit items for most restaurants and are often used to buffer the fluctuations that occur in the cost of other goods.
For example, cheese (mozzarella and provolone) are often priced according to the "market value" and can fluctuate widely over the course of the year, where as the cost of beer will may only have one or two increases during a year.
Just my two pennies worth
Shawn
