BBPA Benchmarking Survey: Wet-led pubs’ GP falls below 50%
The British Beer & Pub Association’s (BBPA’s) annual guide to costs for tenants and lessees, entitled Running A Pub, found that total GP for community wet-led pubs (c.90:10 wet:dry split) with a turnover of around £5,000 a week is 49.1%; and for those with turnover of around £8,000 a week it is 49.6%.
These figures compare with margins of 50.9% and 51.7% respectively in the previous year.
GP levels
However, the BBPA cautioned against attempting to identify trends from its data as survey samples differ year-on-year.
The report shows that pubs with more substantial dry sales are better able to boost their profitability, as their food margins range from 56.3% to 60.6%, compared to drinks margins ranging from 49.3% to 53.8%.
The highest levels of GP were achieved by rural destination pubs (56.3%) and food-led pubs (55.6%).
However, higher levels of food sales also bring higher operating costs, including average wage bills of more than 20% of turnover.
Divisible balances
As such, the divisible balances of community wet-led pubs — described as “the profit to be made before rent is deducted” — are around 17%, better than some other categories of pub, including small rural character pubs (15.8%) and town-centre pubs (18.6%).
After wages, rent and product purchase, the next highest costs for pubs are: utilities, which range on average from 4.4% to 5.7% of pubs’ turnover; and business rates, which range from 2.9% to 4.2% of turnover.
'Nasty shocks'
Brigid Simmonds, chief executive of the BBPA, said: “Good awareness of the main costs associated with running any business is crucial. For pubs, costs such as business rates and energy supplies, for example, may not figure high on a new licensee’s list of priorities when taking on a pub, but they can eat up a large part of revenue.
"As well as avoiding nasty shocks, an early look at the pub’s rates bills, energy efficiency and power supply contracts could result in significant savings.”
The Running A Pub survey uses data supplied by the BBPA’s tenanted and leased pubco members for the year ending 31 December 2012.
It excludes managers’ salaries, amusement machine income and the cost of entertainment, such as TV sport and live music. All figures are exclusive of VAT.
Divisible balance
Association of Licensed Multiple Retailers strategic affair director Kate Nicholls said: "This information from BBPA landlord members reinforces the findings from ALMR operator members contained in our Annual Benchmarking Report which show the tight net profitability across the sector at outlet level, whatever your size or trading style. This is a key message for Government and suppliers."
Simon Clarke of the Fair Pint campaign said: “These figures demonstrate incredibly low earnings potential for the average tied tenant.
"Free-of-tie pubs can achieve a gross profit of close to dry GP on wet products, even beer, if purchased at the open-market trade price, and a divisible balance of closer to 25% to 30% of sales, which, after rent deduction of just over 10%, sees a reasonable reward."
