BBPA Running A Pub guide: Operating costs rise again

By Mike Berry

- Last updated on GMT

Related tags Community wet-led pubs Public houses in the united kingdom Public house Beer

Operating costs across tenantde and leased pubs are rising
Operating costs across tenantde and leased pubs are rising
Total operating costs of running tenanted and leased pubs increased last year — with rises across all types of pub businesses, according to the British Beer & Pub Association’s (BBPA) latest Running a Pub benchmarking survey of companies representing 14,000 pubs.

The average total weekly operating costs for a community pub with sales of around £5,000 a week now stands at £1,624, representing 32.9% of turnover, up from 31.8% in the previous year.

These types of pubs on average spent 4.8% of their turnover on utilities, 3.5% on business rates, 2.1% on repairs and renewals, and 1.5% on marketing, alongside various other costs.

For a community wet-led pub turning over £8,000, operating costs stood at 33% of total sales — again up slightly on the previous period.

Cost drivers

The Running a Pub​ guide uses the latest available data supplied by the BBPA’s tenanted and leased pubco members. It excludes managers’ salaries, amusement machine income and the cost of entertainment, such as satellite TV. All figures are exclusive of VAT.

The main cost drivers for all pubs were wages, which ranged from 12.5% of turnover for small community pubs to 26.1% of turnover for food-led pubs; the latter fuelling total food-led pub operating costs of 43.1% (up from 41.5% in 2012).

However, the BBPA cautioned against attempting to identify trends from its data as survey samples differ year-on-year.

Total operating costs

The guide shows the average costs of running a pub across a range of pub models based on turnover and business types. It covers a wide range of pubs, from those with virtually no food sales, to those that are largely food led.

Profit margins

According to the figures, gross profit (GP) margins have recovered to above 50% for community wet-led pubs, after dipping below this threshold in last year’s guide. Total GP for community wet-led pubs with £5,000 and £8,000 a week turnover is 52% (up from 49.1% and 49.6% respectively in 2012).

The highest levels of GP were achieved by rural destination pubs (58%) and food-led pubs (61%).

BBPA chief executive Brigid Simmonds said: “Investing in a tied pub partnership is a decision that requires the prospective publican to be as well informed of costs, and their market conditions, as they can possibly be. Each pub is unique, but used alongside other sources, our updated benchmarking data should be an indispensable tool for anyone thinking of investing in a tied pub. Once again, we have made it available free-of-charge on our website.”

Gross profit margins


However, Fair Pint campaigner Simon Clarke said the figures were “practically meaningless guesswork” based on limited information provided by pubcos, not actual tenants.

“It is a ‘wonderland’ for most tied tenants to anticipate a gross profit in excess of 50% and we believe to suggest otherwise is at best irresponsible, at worst misrepresentation. The fact is the prices charged for tied products by pubcos undermine tenant profit and encourage the sale of any products other than beer,” Clarke said.

Download the guide below

Cost guide for tenants Jan 15 FINAL

Cost guide for tenants Jan 15 FINAL.pdf 0.39 MB

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