Pubs urged to be less modest with profit margins

Pubs are being encouraged to be less modest with their profit margins post smoking ban.

With dining out set to increase further after 1 July, research provided by Horizon FS urges pub caterers to work towards a more generous profit margin.

Horizons managing director Peter Backman said that pubs cost dishes by 2.9 times the price of ingredients, whereas restaurants go for a more healthy 3.4 times.

The mark up in pubs tends to be on the light side and the problem is that as a pub sells more and more food, the less they can rely drinks sales to cover over heads​Horizons managing director Peter Backman.

He added: "The mark up in pubs tends to be on the light side and the problem is that as a pub sells more and more food, the less they can rely drinks sales to cover over heads. I think they should aim for 3 times the the cost of ingredients."​

According to Horizons' research, the average cost of ingredients for one dish in a food-led pub is £2.42, with a menu price of £6-8.

The overall average cost of ingredients for a pub meal in Britain is £1.15, with unbranded managed outlets spending £1.05 on an average plate full and high street names spending an average of £1.29.

Peter said: "The interesting thing here is that in 2001, the average cost of​

ingredients was also £1.15 - in inflation adjusted terms - yet the standard of pub food has improved vastly.

"Pubs are spending the same now as they were six years ago and I think this is largely due to the improved standard of offering from foodservice suppliers and distributors."

The research also revealed that revenue growth from food and drink sales has risen by 2.1% year on year to show £12,417 million in 2006.