Running a pub guide: How high should your operating costs be?

The data shows these types of pubs, with turnover of around £10,000 a week, spend £4,916 a week, or 42.3%, on operating costs compared to £1,464, or £34.8%, in small community locals turning £4,000 a week, which was the lowest. 

The guide shows the average cost of running a pub over a range of pub models based on turnover and business types, such as pubs with little in the way of food sales, to largely food-led pubs.

In all types of pubs the highest proportion of operating costs was spent, unsurprisingly, on wages — with small community pubs dishing out 12.6% of turnover on salaries.

These pubs also spend 3.6% on their business rates, 1.6% on repairs and renewals, with marketing/promotion/telephone and professional fees both costing 1.5% of turnover.

Utilities

But utilities were the second highest operating cost for all types of pubs, ranging from 4.4% of turnover in community wet-led pubs turning over £8,000 a week, to 6.9% in rural pubs with turnover of £5,000 a week.

The BBPA stressed the importance of knowing all the facts when developing business plans and negotiating leases and tenancies in the pub trade.

Brigid Simmonds, chief executive of the BBPA, said: “Our updated 2016 report provides the latest figures to help anyone thinking of investing in a pub, or those who are already in the
trade. Publicans in the leased and tenanted sectors, or anyone else, can download it free of charge.

“Business plans, and lease and tenancy negotiations need to be as well informed as possible, so this should be a great help to all those running a great British pub.”

Energy

The 2016 data showed energy costs take up a significant proportion of turnover for pub companies. With this in mind the BBPA has published guidance for tenants and lessees on how to lower their energy costs.

It includes advice on energy-saving lighting and efficiencies in hot water, air conditioning and electricity, among many others.

The full report and advice can be viewed at www.beerandpub.com.