The $24 Last Word

Why One Cocktail Reveals Everything that is Wrong with Restaurant Pricing

The Last Word is my wife's favorite cocktail. Equal parts gin, green Chartreuse, maraschino liqueur, and fresh lime juice. It is perfectly balanced, bracingly complex, and built on one of the most extraordinary spirits ever made. We love finding it on a menu, because not ever restaurant or bar has green Chartreuse or Luxardo liqueur.

A few weeks ago we sat down at a local restaurant , opened the cocktail menu, and found it listed at $24. We folded the menus, pushed back our chairs, and left.

On the way home we stopped at the butcher and bought a beautiful prime NY Strip for $35. We got home, made the Last Word ourselves, put the steak on, and had one of the better evenings we have had in a while. The whole night cost us under $40.

Danny Meyer wrote something in Setting the Table that has stayed with me for years. "Hospitality is present when something happens for you. It is absent when something happens to you." That $24 price tag was something happening to us. The evening we built instead happened entirely for us.

That feeling is not isolated to one suburban restaurant on one Tuesday evening. Southern Glazer's Wine and Spirits, the largest wine and spirits distributor in the country, reported that restaurant wine sales have declined 26 percent since 2019. Every trade publication I read confirms it. I saw it firsthand at Fifth Group Restaurants in Atlanta. The decline is real, it is accelerating, and it is not happening because people stopped loving wine and cocktails. It is happening because restaurants stopped making them feel worth it.

Now let me show you the math, because the math is the story.

The retail cost of every ingredient in a Last Word runs approximately $2.25 per drink. Gin, Chartreuse, maraschino, fresh lime juice. At $24 that is a 9.3 percent beverage cost. The industry standard sits between 18 and 22 percent. That restaurant was running at roughly one third of what is considered fair. They were pocketing almost $22 in profit on every single cocktail.

I have sat across from CFOs and owners who look at numbers like that and smile. They see a perfect percentage, a strong week and exactly what they were trying to build. What they do not see is the couple who folded their menus and never came back. What they do not see is that the transaction they just optimized was the last one they will ever have with that guest. That is the short con. Maximum extraction on a single visit. The margin looks extraordinary but the relationship is over.

The long con is the opposite. You price the drink at $14. Your beverage cost is around 13 percent, still healthy, still profitable. The guest orders two. They feel respected. They come back next week. They bring someone. Over two years that guest is worth thousands of dollars to you, not $22 on a Tuesday.

Costco has built one of the most profitable retail operations in the world on exactly this logic. They cap margins at 14 percent on almost every item and they sell rotisserie chickens for $4.99 at a loss. The loyalty that model generates is worth more than any single transaction they will ever have with a customer. Danny Meyer built Union Square Hospitality Group the same way. Texas Roadhouse, the most consistently successful steakhouse chain in America, reported 15 consecutive years of same store sales growth through 2025. Their CEO Jerry Morgan said it plainly on the record in February 2026: "We focus on a great experience, value in our menu that's built in throughout everything that we have, and it's been a great strategy. We don't skimp on any of our portions." Their pricing runs lower than every casual dining competitor. Their results run higher. Houston's, now part of Hillstone Restaurant Group, has operated the same way since George Biel opened the first location in Nashville in 1977. Nearly 50 years, no discounting, no compromises, no interviews, and lines at the door in every market they enter. The practice is the statement. Buffalo Trace has kept its flagship bourbon at fair retail for years while the secondary market exploded around it. Rittenhouse Bonded Rye retails at around $27 and performs against spirits three times its price. I have sold thousands of cocktails with both because my guests trusted the recommendation. That trust transferred from the brand to me and back again.

I will tell you exactly how this works in practice because I have lived it.

Many years ago I walked into a CFO’s office and told him I wanted to cut the price of a well known yellow label Champagne dramatically. We were barely moving it at the current price. He thought I was out of my mind. I told him I was confident enough in the theory that If we did not double our bottle sales in a single quarter, I would make up the revenue shortfall myself. We tripled it.

The guests had already made the decision. They loved the product and just needed the price to get out of the way. We gained customers who trusted that the list was built for them, not against them. Robert Simonson documented this shift in Grub Street earlier this year. The operators making it are not losing revenue. They are gaining guests and increasing revnue.

Now let me tell you about the Chartreuse, because it deserves its own moment.

Green Chartreuse has been made by Carthusian monks since the 1700s. Only three monks at a time hold the recipe. In 2021 the spirits world went into a quiet panic. Global demand had exploded. Bars were hoarding bottles. Everyone expected the monastery to expand. Instead the monks said NO.

They chose their monastic life over the market. Their statement is one of the most quietly precise things I have read in this industry. "We look to do less but better for longer." That is the philosophy behind one of the essential ingredients in the drink on your menu. They have held this position for centuries. It is working.

The restaurant that listed their cocktail at $24 took that ingredient and attached a margin that inverts everything the monks stand for. Tell your guests why you are using it and tell them about the monks. Tell them about Frank Fogarty introducing the drink at the Detroit Athletic Club in 1915. Tell them about Murray Stenson at the Zig Zag Cafe in Seattle who rescued it from obscurity decades later and put it back on menus across the country. Give them the drink and the story and the care.

I understand the environment. Food costs are up. Labor costs are up. Insurance, rent, and financing have made running a restaurant one of the hardest businesses in America. I am not dismissing any of that and have tremendous respect for operators navigating this every single day.

But the ones who survive it, the ones who build something that lasts, are not the ones who solve a cost problem by extracting it from their guests. They are the ones who understand that a loyal guest is the only asset on the balance sheet that appreciates over time. They know that the guest sitting across from them tonight is worth far more than the margin on one cocktail. They understand the need to absorb short term pressure to protect long term trust.

The decline of restaurants is not a mystery. It is not inflation alone or labor costs or delivery apps. It is the decision, made one menu at a time, to treat guests as a revenue source rather than as the entire reason the restaurant exists. The CFO who celebrates a 7.7 percent beverage cost is optimizing for the wrong variable. Margin percentage on a single item tells you nothing about lifetime customer value. Nothing.

The monks understood something most operators have forgotten. “Do less. Do it better. Make it last.”