Food pubs struggle with higher operating costs

The organisation’s findings, to coincide with British Food Fortnight (17 September to 2 October), emphasises the importance of a food offer in pubs but highlights the rising cost of having one, due largely to higher employment costs.

“The increased costs involved in delivering a high quality food offering should not be under-estimated,” said chief executive Nick Bish.

"This research shows that the greater the turnover derived from food, the higher the operating cost of the outlet.

“Margins across the sector have improved and costs have come down from their peak, but the bottom line is you have to invest more to make a profit from food. This is something that has to be borne in mind in valuation and rental calculations as well as business planning.”

However, survey figures showed that food-led pubs are now the main type with one in three pubs reporting that food represents 30% or more of turnover.

Ten years ago food sales accounted for 9% of an average pub’s turnover. This has increased to 25% or 47% for food-led operators, which could double when including food-related alcohol sales.
The report also revealed that margins and profitability of food over the past three years is up 14%, from 54% to 61.5%.

“This report makes it crystal clear that food plays an integral part in delivering a sustainable and dynamic offer in today’s market place,” said Bish.

“Cask ale may still be a pub’s USP, but food is a vital part of the success story and is crucial for driving profits. The ‘gastropub’ phenomenon has spearheaded the reputation of pub food and its impact has been felt across the sector – not just in the increasing number of food-led pubs, but also in the sales mix across the sector as a whole."