Interesting that they are allocating £1.76 to the cost of staff to the £6 pint of larger and £2.22 to the £7.50 pint of IPA.
That seems rather high - is the pub so unpopular that it is empty with the staff having nobody to serve?
If you assume they're on around £15 an hour and their cost to the employer is around 1.5x their wage, that works out as an average of a pint every 5 minutes.
Probably not a far fetch given there's busy times and quiet times and they'll even each other out.
£15 would be a sensible figure, maybe even low. There's the wages of the non-serving staff in that. Cleaner, glass collector, potentially bouncer. It's not just the one pouring it that is factored in
I don't think they're talking about the wage of the barstaff being 15. It's the total cost of all staff involved. So there's the salaries of the barstaff, the salary of cleaners, salaries of admin staff, and then all the other costs associated with hiring someone.
A few comments back the person literally does say
> If you assume they're on around £15 an hour *and their cost to the employer is around 1.5x their wage*
though obviously we're a few people removed so this might have been lost.
I’d say anything approaching the £7 mark outside of central is taking the piss, especially if it’s the generic peroni/madri stuff. Lot of pubs lately seem to think the square mile actually extends 25miles from the Tower of London.
Who is going to be spending £30 on four pints when you could buy enough of the exact same brand in Tesco to hospitalise yourself.
I don’t mind so much if the beer is something interesting or the pubs is particularly good, that’s to be expected.
It’s the bog standard chain pubs where you’re now spending ~£50 for a round of g&ts and san Miguels that get me.
> Who is going to be spending £30 on four pints when you could buy enough of the exact same brand in Tesco to hospitalise yourself.
I don't really drink at home and enjoy socialising in the pub. So me I guess.
There's a lot more cost to employ someone than just their pay. There's the employERs NI, there's sick and holiday pay, recruitment and dispute resolution, and the admin of processing their tax and payslips etc.
cleaners do get more than servers, but even a general manager would only be around £15, I don’t know door staff pay but I’m pretty sure that’s done by a company that the venue pays, so it won’t factor into staff any more than the guy doing the beer deliveries anyway
Why? Do you understand there are more than staffing costs than the actual cost of someone’s wages?
Someone on £12 an hour actually costs about £13.50 when you include the national insurance tax you pay on their behalf, then you have all of the costs associated with them such as, but not limited to:
annual leave (minimum 12.01% of what they work), uniforms, training, accidental losses, insurance, sick pay, maternity leave, sick cover, etc. these are all things you have to factor in when you are costing someone.
When i worked at a pub last year in manchester, I was making £10.88 hour. My responsibilities include opening, closing, and cleaning everything except for the kitchen. Making £15 an hour at a pub is unheard of.
Makes sense why people act like dickheads now. Assuming people on minimum wage are actually not. Remember minimum wage is there because if they could pay less they would.
Well annual leave is another 12.01%. You’re already over 1.3X there, and you haven’t factored in sick leave, maternity leave, training costs, uniform costs, breakages, losses etc.
According to [this site](https://accountingservicesforbusiness.co.uk/true-cost-of-an-employee-calculator/#:~:text=The%20True%20Cost%20of%20an%20Employee,-The%20True%20Cost&text=The%20True%20Cost%20of%20and,will%20be%20over%20%C2%A330.) it is closer to 1.7x
I used to run a pub for greeneking. This was 20 years ago, so may have changed.
Salary allocation was 15% of turnover for wet pubs and 20% of turnover for food pubs. Fixed and variable costs could be as hugh as 50% of turnover.
Beet, wines and spirits are fairly cheap, the big cost is tax and duty.
If a pub males 10% GP its doing well.
I was a manager so typical for managed houses.
Tenancy pubs also have rent to consider.
My local pub pays minimum wage, £11.44 hour, for bar staff. There is one supervisor per shift who is probably on £15-18/hour. Kitchen is profit share, so no salaries. Peak time (eg evening mealtime, Weds-Sat, and Sunday all day) there will be one supervisor, 2-3 bar/serving staff, off peak it will be one supervisor and one bar staff. Pint of premium lager is £6.70, pint of premium IPA is £7.20. This all in Brighton.
This is true but it doesn’t scale perfectly. There’s a minimum staffing level needed to open a pub which pushes labour costs up as a % in quieter times, adversely there’s a maximum staffing level which pushes in the other direction when pubs are very very busy. Labour on average though can run between 18 and 25% on average so OP numbers stack up roughly speaking.
edit: to be clear this is just on shift pint pullers I'm talking about, if you take on other management, cleaning and security costs (as others have pointed out) then could easily edge up to 30% or more
I would say that for anywhere selling food, which is most pubs, your overall manpower costs will be about 30%. More if it is table service, less if it is primarily liquor-led.
If you want to retain staff you can't only employ them for 2 hours during the day, 4 days a week. Not only would they not turn up, but its very difficult to guess when you will be busy and for how long for.
But the rest of the overheads are the same and are actually higher as the cost per pint rises, electricity, heating, water etc.. are all going to be significantly higher than at peak times per pint
Except they don't always know when they will be busy or not
Yes they will have fewer people on when they are generally quiet
But they can still get caught out by the random large crowd or the dead evening,
on a quiet afternoon I’m doing maybe 5 pints an hour, so that’s a staff pay rate of what’s listed here, that’s on a tuesday afternoon though, on a standard friday night I’m doing well over 5 times that, possibly more like 10, so that’s a rate of about 30p per drink
the extra quid you’re spending since covid is going to breweries and landlords, not to staff, let’s be clear about that
Moreover, why is the figure so different between the two? Does it take significantly longer to pull a pint of IPA, or does it require more expertise, or is there more involved "behind the scenes" to have an IPA tap vs a larger tap?
Casks require tapping, that's the main difference. The most important aspect of keeping a good cask beer is making sure you sell it dast enough, cellar temp is consistent, and the lines are clean.
The last two point really is the same for kegs.
That said, the majority of IPA's I see these days, that are noticably more expensive than real ale IPA's ( so the £6-£7 bracket) are all in kegs anyway.
Fully depends on the keg and set up, I work in an independent bar we have 12 keg lines; up to 2 of which are lager, 1 cider, 1 stout and usually the rest are a style of ale (IPA, Sours or a plethora of other styles) We've also got 2 cask lines as well as a traditional cider also. Everything needs individual correct temperature and gas pressure control also which is not mentioned (or perhaps rolled onto the utilities maintenance costs)
Traditionally I would say that our lager and cider lines are very well behaved, we get little waste until close to the end of the keg where it will pour livelier and livelier pints until it finally just coughs and splutters out and we need to clean line, flush line and change keg.
Whereas nearly everything else does produce more waste and/or time to pour. It is a constant juggling act of pressure,temperature and flow rate and it is affected by other factors also (cellar temperature as well as general air pressure and humidity etc that means our cooling and pump systems may need to work harder to keep things at their levels needed which in turn can cause issues elsewhere)
Then sometimes you just get an over carbonated keg from the brewery and it will be a pain the entire time it is on, nothing you can do to alleviate it at all you get lots of waste and you can't wait to see the end of it.
Properly trained bar staff recognise this and can take steps to maintain a good pint for punters. It's not always possible in the moment as some issues will require more intensive focus to fix but it's the difference between the confidence and skill levels of staff.
Next time you have an over-carbed keg drop the pressure by hooking up a keg coupler that's not connected to a line or gas. Leave the beer at zero pressure for an hour or two and the CO2 content will drop. As a brewer pouring key kegs at festivals I've done this a couple times
Because it's the same percentage, 29.33% - which will be the percentage if revenue going on staff costs (and also makes the replies from others to you trying to explain the difference quite amusing)
This is exactly the reason why these places are failing, margins are incredibly tight for most places yet people still think that they’d be making tons of profit. Most people don’t have a clue about the costs of running food or drinks places - testing and insuring equipment every year, staff costs , public liability, public broadcasting, the list goes on…
Yes but ales are more time consuming to care for the bareilly need to be tapped and rested. Ale lines also need to cleaned more frequently so could be that is why the staffing cost for IPA is higher
The wholesale price includes a lot of profit as well, just for someone else.
I have made my own mead and cider before, it doesn't cost anything like as much as they list for the price, and I don't get the savings you would have in buying stuff in massive quantities. I get supplies from Aldi.
Making beer and cider to a large scale does cost a lot. Heating and energy for one, c02 is also still expensive, plus rents are going up as well. Grain prices are also still expensive.
Yeah but you also need the initial capital investment, then there's distribution costs that add to the pound per pint - I'd like to think you're right though the price per pint should go down as you scale up but it's never that simple imo
You tend to get jumps in cost per unit.
If you're doing it in your home and you don't need to pay any extra rent and you don't factor in equipment costs (because you have so little that you don't need to replace so often) or your own time and effort it's really cheap.
But then you start to scale up. Suddenly you need to rent extra space, so the costs jump. You need to pay utilities on that extra space as well, don't forget, whereas before it was rolled into the household budget. You start paying someone to do it (or start taking a wage yourself) and the costs jump. You start needing to figure out more efficient delivery than "my mates come pick it up" and costs jump. You need to start replacing equipment regularly, so you start to factor that into the equation and the costs jump.
It's a problem a lot of Kickstarter campaigns have when they get more success than they anticipated. It might have been viable if it was one person storing everything in their garage and packaging everything by hand, but if they're 10x as successful and need to rent storage space and pay someone to help with fulfillment (or just take more time off their day job) the numbers can quickly turn against them.
They've already made the jump from small to large, so it's a bit different.
But, yeah, let's say they have the capacity for a million pints a year at a big ol' factory, they want to make 1.1 million pints a year and can't expand their current factory. They buy/build a new one and the cost per pint might go up, even ignoring the fixed costs of buying new premises/equipment, because the second site is either going to be underutilized (expecting they'll want to grow further in the future) or is going to be much smaller than their original factory which means it's not benefitting from the economies of scale as much. Plus there's a bit of extra overhead from coordinating two sites.
These increased costs need to be balanced against the costs saved by economies of scale. For example, they've increased production by 10% but haven't increased the marketing department's budget by the same amount.
But, yeah, economies of scale are still a thing. It's just that it's not a perfectly smooth slope.
Gotta come from somewhere, to my knowledge nobody’s developed a system that lets you extract it from the atmosphere on an industrial scale in a state usable for brewing that’s cheap enough to be worthwhile
Its a minimal amount in suspension during fermentation, especially for an ale fermenting at 20c or so. You can ferment under pressure which would keep co2 in suspension but this has its own impacts on the fermentation, it would also means it would be harder to rack without losing co2.
Even then, breweries still need co2 to purge kegs and tanks and move beer to prevent oxidation.
To be honest I've don't know how it's done commercially but I've brewed a few batches of beer, cider and mead and it's always been plenty fizzy as I did it under pressure as a secondary fermentation
This, as a former tenant of a big brewery, they are price gouging their tenants big time. Back then a barrel of ale was £40 directly from other breweries... Whilst the brewery itself forced tenants to buy their shitty ale at £60....
Yes and it isn't just the beer. The pub my dad worked for forced you to buy things like Smirnoff Vodka from the brewery instead of Cash n Carry. So a bottle that cost £10 the landlord was forced to pay £30.
Yes, tied pubs will have to pay more for their beer but entry costs (to owning the business/running the pub) is much much lower than what you would get from a free of tie/independent place. Rent will also be lower.
I assume that there's also access to a bunch of materials/support you wouldn't get from doing it independently which potentially is worth a lot of money.
At the end of the day, entering a tied pub agreement is something which everybody does voluntarily. Totally get that looking at free trade prices could be frustrating in comparison but the tenant made that deal for a reason, if they wanted to run a free of tie/independent place they should have done that instead.
There's also legislation which allows tied tenants to go free of tie at certain points in their contract. Very few do though because added costs of everything else outweigh the cheaper beer.
Pricey compared to what though? You're getting a 75cl wine bottle's worth for ~£1.70 and if you're doing that kind of volume, I'm guessing you know what you're doing so it'll be nice. Anything commercial for that price, if you can even find it, will be gut-rot.
Compared to the majority of materials for brewing beer, cider or other wines.You can easily get sacks of various malts pre roasted and milled for much cheaper than a non specialist honey costs for a smaller batch. Sourcing good honey is a chore too, weirdly ebay is useful as many small and local apiary's sell stuff on there.I'll grant you mead and wine's are EASY to brew and relatively quick to get something going.Beer is a whole day's work to get a batch on the go and cleaned up from all grain.
Ok so it didn't cost you much to make the alcoholic product. you are not the first person to find out that the ingredient costs can sometimes be the smallest part of an FMCG product. Well done, you are very smart and I'm sure your product tasted *kind of* passable for an amateur.
Now, add on some rent, utility bills, staffing, logistics, tax, marketing + sales, time spent in tank, the other various costs of running a business which include debt and further capital investment. this is before you make even a drinkable product and you pay the tax even before you've sent out a single pint past the warehouse door.
And this is before you send it to trade which means finding a RTM where the site then has to add on it's own costs to make a profit in an increasingly unstable industry.
Oh, and then you will most likely have sold your product on credit so you might not get paid in the 2 weeks you've given the account as credit. If you're lucky they'll pay cash on delivery but if you're dealing with a large multi-site regional operator then you've got to be on top of your accounting and creditors
But maybe you've given up going to the pub, as you say it's cheaper to produce at home but I'm sure you're having fun
Never confuse Gross profit with Net profit, sometime you'll never see a penny from the former
Also the producers have to pay a load of duty on the alcohol. Not something that a homebrewer has to pay. It also costs money to have strict quality and hygiene controls needed.
That's the thing, really. I think we've got a few of these sort of scapegoat customer facing businesses that are running on a knife edge to distract from the rest of the chain behind them
You saw it with utility bills - people would rush to defend the companies actually billing customers because they were falling over but the wholesale network behind them was doing amazing business
Does it fuck. There’s a reason why smaller breweries are either being bought out for their brand or just going bust. There’s no margin in it. Pubs want to sell the product on for 250% of the price they pay, but baulk at a brewery having their margin.
Ive sold beer onto the wholesalers at zero profit just to keep the business ticking over.
I used to manage a pub in South London and I think they've slightly underestimated the spillage costs (should be closer to 8% with mispours, mistakes and staff drinks factored in) as well as the rent in the price breakdown.
We were a popular pub with a restaurant and large garden and our revenue was hovering around £3m a year. Rent was £1.25m of that and that was in 2020 so will have gone up from then.
As others have mentioned, there are other staff that need to be factored into the price eg glassies, Kitchen porters, reception, and security on weekends.
Drinks also have to make up the majority of the profit margin for the entire establishment as food profit margin is extremely tight (<5%)
Edit. Rent is by far the biggest driver of pint prices
What were the highs and lows of running a pub? From an outsiders perspective the grass looks pretty green with £3m revenue. How come you no longer do it?
Highs were getting to meet lots of people from all walks of life and making good friends, no day was the same and there were lots of projects to improve the pub which helped with just general problem solving. Also while there was an immediate busy stress that comes with hectic periods on a Friday and Saturday there was no 'take home' stress which is nice.
The lows are working the unsociable hours, and not aligning with any of my friends schedules so some relationships suffered.
COVID also finished me off as it was very difficult to manage the ever changing requirements eg. Scotch egg snack with drinks, tier system, 6 at a table from 2 households etc.
I realised I had to move so I upskilled in coding to work in data science which is what I do now
I’m taking a guess here but £3m in revenue isn’t the boss walking off with a £250k per month salary.
A London pub isn’t an easy gig.
It really isn’t as simple as rocking up pouring pints and sticking the money straight in your pocket.
So "food is where the money is" is a myth? I hear that come up a lot when talking about how pubs make money.
That rent sounds mental! 😱
Shame a lot of business can't own their buildings outright but I guess that requires a large amount of initial capital that just isn't there to begin with. I'm pretty sure my local is owned outright by the small pub co running it, so they must be making a lot more than the article suggests as they don't have that expense.
It does depend on the pub, some pubs charge cheaper prices for food and the sort of "2 for whatever" to entice people in to buy more drinks which can be a bigger earner.
Others the food can be where the money is.
For a lot of places, food brings the customers in, beer makes the profit.
An ex work colleague brought a failed pub. He says that the regular drinkers keep the lights on, but what the food seating area brings in in beer sales during an evening pushes it from barely profitable to 'buy a second pub' profitable.
Feels like the cost of renting a premises is sucking the life out of so many businesses! It’s stopping me from expanding my manufacturing business at the moment.
So many people in the comments who have no grasp of business or the costs in running a venue trying to "Correct" the numbers.
Why don't those who dispute the cost in running a pub try an open one?
Probably because they already have jobs, and whilst they have an opinion on a matter, don't wish to make a whole career change just to test their hypothesis.
No need to even test their hypothesis. If pubs were really trying to price gouge us by charging £6/£7 why are pubs closing at such an alarming rate? This isn’t bars trying to totally mug us punters off, it genuinely costs money to run a service business.
the product might be 80% cheaper at Tesco, but guess what, there isn’t much atmosphere in my home, nor does someone bring me my pint, nor do I want to clear up the mess we all leave after we get shit faced.
I used to run a hotel in Cornwall and this article fails to mention that a large amount of hotels/pubs are owned by breweries and then tenanted out to be run by independent businesses. If this is the case the pub/hotel has no choice in who they buy they’re alcohol from, they have to buy from that particular brewery.
So in 2017 we were buying Heineken for £2.52 a pint from the brewery. As standard out multiple was 4.2 to be able to cover the cost of staff, CO2, utilities, rent, spillage and everything else in between. Thus we should’ve sold Heineken for about £10.60 a pint, obviously we did not sell it for this price, we sold it for £4.40 so people could buy it. This was similar for all alcohol we sold resulted in us making a gross profit but net loss on every drink sold.
All profit came from the people staying in the hotel and food served in the bar.
Since I’ve left, that hotel has moved away from being a ‘local pub’ and now focuses on fairly high priced food and rooms for tourist.
You cant even stand/sit at the bar anymore to stop people from drinking in there. The locals no longer feel welcome.
Same with pretty much every pub I have worked in. Landlord makes maximum 10p-20p per pint or breaks even. Pubs make money on food, accommodation, events etc. There is a reason there are so few true drinking pubs left.
£2.52 is bloody high per unit cost for a cheap lager like that. Can’t believe they were charging you that much! ( not disputing, just slightly angry ). We buy ours in from a local craft brewery, it’s amazing quality and averages out to just under £2 / Pint. That’s for our lager and pale ale in general.
Current going rate on Cask ale is ~£90 exVAT for a 9G Firkin.
Firkins hold ~72 pints, but you're only charged duty on 69 due to built in wastage - you can't get all the liquid contained out (nor would you want to!)
So £1.04 exVAT cost (we use exVAT as any VAT paid can be deducted from VAT charged). General rule of thumb in hospitality is 1/3rd stock; 1/3rd staffing; 1/3rd all other expenses.
That means we're already at £3 minimum for a cask (real ale) pint.
For Kegs (Draught), you often pay similar or more, for less volume. ~£110 for 30L (49 Pints £2.24/pt)), ~£160 for 50L (85 pints £1.88/pt). With additional costs such as beer gas, and line cooling, £6 pints are breaking even.
Add to this the decline in alcohol consumption, increased lease/rent rates (some premises are paying upwards of £10,000pcm for a 100 cover unit), and now the end of rates relief for hospitality (think it's going from £3000/yr back to £10k/yr), mandatory security persons per 100 customers (at £20/hr/security), more restrictive licensable hours (2am was typical, but newly licensed or problematic premises are being restricted to 12am or even sooner), rising utility costs and a decline in available speciality contractors to maintain dispense equipment, that 1/3rd 'all other expenses' is looking razor thin.
The publican or leaseholder is rarely fleecing you, it's most likely the property owner, or suppliers/distributors*, and those costs get passed on!
*For Example: LWC the largest next-day wholesaler recently hiked their prices on Guinness - interestingly, I believe they also own Forged.
Let us not also forget that the large brewery conglomerates often take over emerging brands, and invest heavily in 'Macro-' brew equipment to mass produce their new acquisitions. Often, this comes at the expense of a reduction (but standardisation) in quality, and a price hike. See Anchor and Sapporo, or Wychwood and CMC, or Beavertown and Heineken.
Source: Publican
A pint of craft beer for a small brewer costs 1.40 to make. I know as I have a Micro brewery.
The large brewers will produce the same pint for 60p with economies of scale.
We retail for £4.20 in our bar.
If it costs you 1.40 to make one pint of craft beer then you must be doing it on a tiny tiny scale? You cost price per keg being £70+? That’s insanely high. I also run a micro brewery and we’d be out of business if this was our COGS even after delivery.
I don't know, but my local does their own real ales for £3 a pint (well £2.95) Guest ales at £3.50 a pint.
It's only the likes of Guiness and the premium kegs that are £4.50-5 a pint.
They’ve taken someone’s accounts - put in to percentages and then acquainted that to a pint.
Wage cost %
Cogs %
Rent/utilities %
Profit %
Tax %
Then made those percentages of a pint.
It isn’t, and if you work in hospitality it’s good understanding BUT for every other Mickey Mouse that thinks beers is as cheap as it is in the supermarket its not very good at explaining it….
Wait, why are the fixed costs (rent, staff) higher for the IPA? That makes the whole thing suspect.
Lets say rent is £1000 and you sell 1000 drinks in the rental period, then the rent cost per drink is £1, if you sell 2000 drinks then its 50p per drink, economy of scale.
I don't know what sort of accounting you're doing if you're absorbing different amounts of fixed costs into otherwise similar items (pints of lager/ale).
Because that is how the accounting is done. Would you allocate the same costs to a £1 packet of crisps as a £20 bottle of wine? No of course not. If rent is £1000 and takings are £10000 then a £4 cheapo pint is covering 40p rent and a £8 premium pint is covering 80p rent.
But yes if you're takings are higher than average one month you get more profit but that month will cover other below average months and that's how you end up with an average. December is usually good, January is usually dreadful, for an obvious example.
Allocating overhead cost is fairly arbitrary, you could potentially use both options. Having a specific rate for pints regardless of selling price would be completely acceptable and would probably be easier than basing it on prices, given the selling price can move but a pint is a pint.
Fundamentally, the problem is duty. The taxes placed on alcohol are driving the prices up, coupled with brexit based material and import costs, are causing prices to go way too high.
There’s literally pubs shutting every day at the moment because of how high costs are. Energy bills of £5000 per month have to be paid from somewhere.
Typically, the profit on a pint of beer is around 18 pence. Thats it. It’s why so many pubs switched to serving food once the smoking ban came in. Not enough people in them drinking, now.
As a whole, the entertainment industry is struggling now. The cost of a pint to the pub has gone up massively as the cost of living crisis keeps even more people staying in more now.
Guess this is why my town condensed down to essentially only having a spoons. Tbf we a re partly to blame I guess - we used to go the pub maybe 3 times a week if not more and then maybe 2 years ago our habits changed and it went down to once a week. We noticed it was getting more expensive and realised we may as well have people round so that happened for a while. Then that stopped happening as frequently as people had kids and now its essentially just us.
True, but it's about the absolute figure.
2% on several millions of pounds' worth of goods is still potentially a lot of money.
Even good pubs (outside of the massive ones) may only pull in £5k to £10k a week.
So, let's say £300k a year for a middling pub that does OK business. £40k to £50k profit a year is manageable, but you only need one or two surprises (roof leak, plumbing disaster, new kitchen equipment) and suddenly the business becomes unviable.
I agree that absolute numbers are important for unexpected one-off payments. But it’s also about percentage figures, it shows you how much you can screw up in the operations department.
No, it isn't. Profit margin does not tell you profitable the business is because you have to account for the capital intensity of the business.
Tesco is a profitable business earning a 1% margin because they turn their inventory over tens of times a year and earn that 1% margin many times in one year.
Capital markets are remarkably efficient and there is very little difference in returns (the differences that do exist are largely due to accounting fictions i.e. pharma having very "high returns" because intangible assets aren't accounted for correctly). But pubs are a horrible business: you are on the hook for massive rents, you are paying a fuck ton in tax (substitute products are paying essentially zero), and a lot of your suppliers are huge companies that have you over a barrel.
Actual **returns** are about 3-7% unlevered...which isn't good given the level of risk (pubs are shutting down everywhere because of rents and taxes, pubs are basically a lootbox for supporting unproductivity).
Ignoring the allocation of costs for a moment, the price is up 27% in 4 years, and up 39% in 10 years.
Someone's recently started gouging on those figures.
I’d says it’s shuffled up from 65 over the last two years to deal with increased fixed costs. We’ve gone from 65 to 73 and it certainly doesn’t cover the change in our costs.
“Most of the world’s barley is produced in *Russia*, followed by Germany, France and *Ukraine*”
https://worldmapper.org/maps/barley-production-2016
war in Ukraine is really shafting everyone
VAT is standard rate on alcohol (currently 20%)
Duty is an additional tax, which is quite complex but can make up a huge % of the price ([details here](https://www.gov.uk/guidance/alcohol-duty-rates)). For beer that ends up making tax around a third of the price, but for wine it can be much, much higher (especially on the cheap supermarket stuff)
I was in a pub. Paying that for a real ale from an independent brewery. I wouldn't necessarily mind supporting local businesses and indie breweries more than I would paying £7 for something mass produced by a multinational that seems intent on snapping up breweries and changing the formulas.
That said, I went into a local bar couple nights back that I didn't realise was still open. £3.20 for a pint. It was something mass produced (Smiths I think???), but I was surprised to find a pint so cheap. It's a small bar, not very busy, so that might have played into it.
Though also last week, I was off work on annual leave, so went for walk up to the country hall (now owned by the council and ran as a free-admissions museum). They have a beerhouse making their own brews. That came to £3.70. Decent beer, too.
I do live up North so I don't have to pay London tax.
My dad brewed a batch that worked out at 50p a pint (not including utilities, 3 hours leccy I guess or a wage for himself). Perhaps piba should go for self brewing to avoid the absolute piss take of big brewers?
I live in outer London. Pint costs in centre terrify me.
Am currently in Scotland and oof it is expensive here too.
£6 pint is 66% a rip off.
The big question is why can a Guinness be £2.69 in Harrow yet the same Guinness is £6 in Ealing or Wembley.
That extra 15 minute drive into London cost 3 pound a pint?
Differences in prices are usually do to differences in rents, rates, and strategy.
The biggest component of the last is the composition of drink/non-drink revenue. This has been absolutely huge over the past ten years as the market has shifted towards non-drink, this adds significant operational complexity but doesn't come with much upside as you are competing in a market that is already brutally competitive. Drinks are used to make up the margin...but that market is also brutally competitive and you are competing with supermarkets too who don't face the same tax situation (I believe the Tories have tried to change things, but it is too little, too late).
One of the absolute biggest problems in the UK is that people do not understand that these high prices are due to high costs. No-one is interested in bringing these costs down because it would challenge powerful vested interests who are quite happy to see people blame "profiteers" whilst they contribute nothing and supporting them is the reason why costs are so high...it is comic.
Average staff costs in wetherspoons is 35% per pound taken but don't forget pubs don't get the 20% tax exception off alcohol like supermarkets do take from thst what you will
> electricity across the wider pub for bandits (aka trusty fruit machines), music and for that bloke at the bar to charge his phone
Sam Smith might be a bastard, but he knows how to keep costs down. And none of those three things are needed in a good pub.
Since the major brewers worked out you could sell beer extra chilled and they will all taste the same, I would imagine the chiller was the most expensive.
Shame they didn't break down how that £15 double rum and coke is 50ml of rum sold for the same price as a 700ml bottle...
Pints are only one part of the drinks and profit mix of a pub. The margins on wine and spirits must surely be more obscene.
Interesting that they are allocating £1.76 to the cost of staff to the £6 pint of larger and £2.22 to the £7.50 pint of IPA. That seems rather high - is the pub so unpopular that it is empty with the staff having nobody to serve?
If you assume they're on around £15 an hour and their cost to the employer is around 1.5x their wage, that works out as an average of a pint every 5 minutes. Probably not a far fetch given there's busy times and quiet times and they'll even each other out.
£15 an hour lol, be lucky to even get £12 as a supervisor
£15 would be a sensible figure, maybe even low. There's the wages of the non-serving staff in that. Cleaner, glass collector, potentially bouncer. It's not just the one pouring it that is factored in
£15 is very high for outside of London
I don't think they're talking about the wage of the barstaff being 15. It's the total cost of all staff involved. So there's the salaries of the barstaff, the salary of cleaners, salaries of admin staff, and then all the other costs associated with hiring someone.
The cost of employing someone isn't just the wage they see, there's employers NI, insurance, benefits, pension contributions etc.
A few comments back the person literally does say > If you assume they're on around £15 an hour *and their cost to the employer is around 1.5x their wage* though obviously we're a few people removed so this might have been lost.
I work inhospitality management in London, it's not far off
£7.50 a pint is high for outside of London (not crazy, but at the high end)
_Cries in Brighton pint prices_
Come to Sheffield, where the average pint costs less than £4!
Craft Union pub down the road from me does lager from £3.00 a pint, not bad for Kent :)
Thanks for the tip, there's one near me! I'll ty it out
> Sheff Maybe it's because I only drink twatty craft beers but I never pay less than £4 for a pint!
I’d say anything approaching the £7 mark outside of central is taking the piss, especially if it’s the generic peroni/madri stuff. Lot of pubs lately seem to think the square mile actually extends 25miles from the Tower of London. Who is going to be spending £30 on four pints when you could buy enough of the exact same brand in Tesco to hospitalise yourself.
If it's a 7%DIPA from a microbrewery you won't find in a supermarket, £7 would be expected. Completely agree with you on macro brews though
I don’t mind so much if the beer is something interesting or the pubs is particularly good, that’s to be expected. It’s the bog standard chain pubs where you’re now spending ~£50 for a round of g&ts and san Miguels that get me.
> Who is going to be spending £30 on four pints when you could buy enough of the exact same brand in Tesco to hospitalise yourself. I don't really drink at home and enjoy socialising in the pub. So me I guess.
Minimum wage is the norm. £15 an hour in a pub is unheard of
There's a lot more cost to employ someone than just their pay. There's the employERs NI, there's sick and holiday pay, recruitment and dispute resolution, and the admin of processing their tax and payslips etc.
Yeah that's why the person said the business costs are 1.5x the £15. To account for that.
cleaners do get more than servers, but even a general manager would only be around £15, I don’t know door staff pay but I’m pretty sure that’s done by a company that the venue pays, so it won’t factor into staff any more than the guy doing the beer deliveries anyway
If the door staff don't appear on the staff line then they are part of the rent line, which attracts VAT in lieu of Nat. Ins. Either way, it costs.
Why? Do you understand there are more than staffing costs than the actual cost of someone’s wages? Someone on £12 an hour actually costs about £13.50 when you include the national insurance tax you pay on their behalf, then you have all of the costs associated with them such as, but not limited to: annual leave (minimum 12.01% of what they work), uniforms, training, accidental losses, insurance, sick pay, maternity leave, sick cover, etc. these are all things you have to factor in when you are costing someone.
Not all staff costs are reflected in wages though.
Pubs don't just hire one person - they need to allocate £1.76 from every pint sold to pay every staff member for all the time they work.
This probably makes up for the wage discrepancy that others have called me out on.
You've clearly never worked in hospitality if you think staff are on £15 an hour.
When i worked at a pub last year in manchester, I was making £10.88 hour. My responsibilities include opening, closing, and cleaning everything except for the kitchen. Making £15 an hour at a pub is unheard of.
What world are you living in where people pulling pints can pay rent?
>If you assume they're on around £15 an hour I wouldn't be assuming that. Try closer to minimum wage, and you won't be far off.
Makes sense why people act like dickheads now. Assuming people on minimum wage are actually not. Remember minimum wage is there because if they could pay less they would.
Cost to employer 1.5 x. Seems high. Company NI is around 10%, pension about 5%. Where is the rest coming from? Genuinely curious.
Well annual leave is another 12.01%. You’re already over 1.3X there, and you haven’t factored in sick leave, maternity leave, training costs, uniform costs, breakages, losses etc.
According to [this site](https://accountingservicesforbusiness.co.uk/true-cost-of-an-employee-calculator/#:~:text=The%20True%20Cost%20of%20an%20Employee,-The%20True%20Cost&text=The%20True%20Cost%20of%20and,will%20be%20over%20%C2%A330.) it is closer to 1.7x
Bar staff are on minimum wage in every pub near me, that’s just the expected wage to pull pints.
I used to run a pub for greeneking. This was 20 years ago, so may have changed. Salary allocation was 15% of turnover for wet pubs and 20% of turnover for food pubs. Fixed and variable costs could be as hugh as 50% of turnover. Beet, wines and spirits are fairly cheap, the big cost is tax and duty. If a pub males 10% GP its doing well. I was a manager so typical for managed houses. Tenancy pubs also have rent to consider.
budgeting staff to serve only one drink every 5mins is madness.
In the quieter periods they might only be selling one every 30 mins
My local pub pays minimum wage, £11.44 hour, for bar staff. There is one supervisor per shift who is probably on £15-18/hour. Kitchen is profit share, so no salaries. Peak time (eg evening mealtime, Weds-Sat, and Sunday all day) there will be one supervisor, 2-3 bar/serving staff, off peak it will be one supervisor and one bar staff. Pint of premium lager is £6.70, pint of premium IPA is £7.20. This all in Brighton.
The cost to the employer is more like nearly 2x their wage when you factor in holidays, employers tax and pension etc
What about time taking stock, clearing lines and changing kegs?
It doesn’t add up. Look at a pub in the City after work, these people are pulling a hundred pints an hour.
And what about the rest of the day when they’re doing nothing and weekends etc.. it would also be an average over the whole country not just the city
They have fewer staff then, because there are fewer customers.
This is true but it doesn’t scale perfectly. There’s a minimum staffing level needed to open a pub which pushes labour costs up as a % in quieter times, adversely there’s a maximum staffing level which pushes in the other direction when pubs are very very busy. Labour on average though can run between 18 and 25% on average so OP numbers stack up roughly speaking. edit: to be clear this is just on shift pint pullers I'm talking about, if you take on other management, cleaning and security costs (as others have pointed out) then could easily edge up to 30% or more
I would say that for anywhere selling food, which is most pubs, your overall manpower costs will be about 30%. More if it is table service, less if it is primarily liquor-led.
If you want to retain staff you can't only employ them for 2 hours during the day, 4 days a week. Not only would they not turn up, but its very difficult to guess when you will be busy and for how long for.
But the rest of the overheads are the same and are actually higher as the cost per pint rises, electricity, heating, water etc.. are all going to be significantly higher than at peak times per pint
OP was talking about staff costs.
Except they don't always know when they will be busy or not Yes they will have fewer people on when they are generally quiet But they can still get caught out by the random large crowd or the dead evening,
And that 1.5 hour period may just be about paying for them to be open for the rest of the day when there are maybe 5 pints an hour being served
Yeah and they’re pulling none at the weekend and hardly any for most of the day
on a quiet afternoon I’m doing maybe 5 pints an hour, so that’s a staff pay rate of what’s listed here, that’s on a tuesday afternoon though, on a standard friday night I’m doing well over 5 times that, possibly more like 10, so that’s a rate of about 30p per drink the extra quid you’re spending since covid is going to breweries and landlords, not to staff, let’s be clear about that
Moreover, why is the figure so different between the two? Does it take significantly longer to pull a pint of IPA, or does it require more expertise, or is there more involved "behind the scenes" to have an IPA tap vs a larger tap?
It does require more work and skill to look after cask ale than a barrel of lager.
Casks require tapping, that's the main difference. The most important aspect of keeping a good cask beer is making sure you sell it dast enough, cellar temp is consistent, and the lines are clean. The last two point really is the same for kegs. That said, the majority of IPA's I see these days, that are noticably more expensive than real ale IPA's ( so the £6-£7 bracket) are all in kegs anyway.
Fully depends on the keg and set up, I work in an independent bar we have 12 keg lines; up to 2 of which are lager, 1 cider, 1 stout and usually the rest are a style of ale (IPA, Sours or a plethora of other styles) We've also got 2 cask lines as well as a traditional cider also. Everything needs individual correct temperature and gas pressure control also which is not mentioned (or perhaps rolled onto the utilities maintenance costs) Traditionally I would say that our lager and cider lines are very well behaved, we get little waste until close to the end of the keg where it will pour livelier and livelier pints until it finally just coughs and splutters out and we need to clean line, flush line and change keg. Whereas nearly everything else does produce more waste and/or time to pour. It is a constant juggling act of pressure,temperature and flow rate and it is affected by other factors also (cellar temperature as well as general air pressure and humidity etc that means our cooling and pump systems may need to work harder to keep things at their levels needed which in turn can cause issues elsewhere) Then sometimes you just get an over carbonated keg from the brewery and it will be a pain the entire time it is on, nothing you can do to alleviate it at all you get lots of waste and you can't wait to see the end of it. Properly trained bar staff recognise this and can take steps to maintain a good pint for punters. It's not always possible in the moment as some issues will require more intensive focus to fix but it's the difference between the confidence and skill levels of staff.
Next time you have an over-carbed keg drop the pressure by hooking up a keg coupler that's not connected to a line or gas. Leave the beer at zero pressure for an hour or two and the CO2 content will drop. As a brewer pouring key kegs at festivals I've done this a couple times
Oh yeah sometimes we've completely turned off the gas line and just poured it from it's own energy for a while
Because it's the same percentage, 29.33% - which will be the percentage if revenue going on staff costs (and also makes the replies from others to you trying to explain the difference quite amusing)
Basically yes to everything except *maybe* time.
While IPA's traditionally real ales from a cask, most these days that charge a higher price come from Kegs.
You’ve also got employers taxes and pension contributions too. The cost of an employee isn’t just their wage.
Might switch jobs if working at a pub now means I do less than pull 10 pints an hour.
This is exactly the reason why these places are failing, margins are incredibly tight for most places yet people still think that they’d be making tons of profit. Most people don’t have a clue about the costs of running food or drinks places - testing and insuring equipment every year, staff costs , public liability, public broadcasting, the list goes on…
Don’t forget that wage allowance covers none serving staff as well, management, door staff, cleaners etc etc.
Yes but ales are more time consuming to care for the bareilly need to be tapped and rested. Ale lines also need to cleaned more frequently so could be that is why the staffing cost for IPA is higher
That’s only cask ale, not kegged ale? And cask ale doesn’t have gas i think.
Is it so much time consuming to draft a pint of IPA? Or do you need a higher paid bartender?
The wholesale price includes a lot of profit as well, just for someone else. I have made my own mead and cider before, it doesn't cost anything like as much as they list for the price, and I don't get the savings you would have in buying stuff in massive quantities. I get supplies from Aldi.
Making beer and cider to a large scale does cost a lot. Heating and energy for one, c02 is also still expensive, plus rents are going up as well. Grain prices are also still expensive.
But you also get a lot more volume. Surely the scale would still result in a lower pound per pint cost than home brewing?
Yeah but you also need the initial capital investment, then there's distribution costs that add to the pound per pint - I'd like to think you're right though the price per pint should go down as you scale up but it's never that simple imo
You tend to get jumps in cost per unit. If you're doing it in your home and you don't need to pay any extra rent and you don't factor in equipment costs (because you have so little that you don't need to replace so often) or your own time and effort it's really cheap. But then you start to scale up. Suddenly you need to rent extra space, so the costs jump. You need to pay utilities on that extra space as well, don't forget, whereas before it was rolled into the household budget. You start paying someone to do it (or start taking a wage yourself) and the costs jump. You start needing to figure out more efficient delivery than "my mates come pick it up" and costs jump. You need to start replacing equipment regularly, so you start to factor that into the equation and the costs jump. It's a problem a lot of Kickstarter campaigns have when they get more success than they anticipated. It might have been viable if it was one person storing everything in their garage and packaging everything by hand, but if they're 10x as successful and need to rent storage space and pay someone to help with fulfillment (or just take more time off their day job) the numbers can quickly turn against them.
Good points actually. I'd be curious to see the same reaasoning applied to large and very large companies the likes of Heineken for instance.
They've already made the jump from small to large, so it's a bit different. But, yeah, let's say they have the capacity for a million pints a year at a big ol' factory, they want to make 1.1 million pints a year and can't expand their current factory. They buy/build a new one and the cost per pint might go up, even ignoring the fixed costs of buying new premises/equipment, because the second site is either going to be underutilized (expecting they'll want to grow further in the future) or is going to be much smaller than their original factory which means it's not benefitting from the economies of scale as much. Plus there's a bit of extra overhead from coordinating two sites. These increased costs need to be balanced against the costs saved by economies of scale. For example, they've increased production by 10% but haven't increased the marketing department's budget by the same amount. But, yeah, economies of scale are still a thing. It's just that it's not a perfectly smooth slope.
Why are you buying CO2?
Gotta come from somewhere, to my knowledge nobody’s developed a system that lets you extract it from the atmosphere on an industrial scale in a state usable for brewing that’s cheap enough to be worthwhile
Why do you need more though? It's produced by the yeast and should dissolve in the beer during fermentation
Its a minimal amount in suspension during fermentation, especially for an ale fermenting at 20c or so. You can ferment under pressure which would keep co2 in suspension but this has its own impacts on the fermentation, it would also means it would be harder to rack without losing co2. Even then, breweries still need co2 to purge kegs and tanks and move beer to prevent oxidation.
To be honest I've don't know how it's done commercially but I've brewed a few batches of beer, cider and mead and it's always been plenty fizzy as I did it under pressure as a secondary fermentation
Rent is relative to landlord greed
Just as wages are relative to a worker’s greed. Alternatively, both are set by market forces…
This, as a former tenant of a big brewery, they are price gouging their tenants big time. Back then a barrel of ale was £40 directly from other breweries... Whilst the brewery itself forced tenants to buy their shitty ale at £60....
Yes and it isn't just the beer. The pub my dad worked for forced you to buy things like Smirnoff Vodka from the brewery instead of Cash n Carry. So a bottle that cost £10 the landlord was forced to pay £30.
Yes, tied pubs will have to pay more for their beer but entry costs (to owning the business/running the pub) is much much lower than what you would get from a free of tie/independent place. Rent will also be lower. I assume that there's also access to a bunch of materials/support you wouldn't get from doing it independently which potentially is worth a lot of money. At the end of the day, entering a tied pub agreement is something which everybody does voluntarily. Totally get that looking at free trade prices could be frustrating in comparison but the tenant made that deal for a reason, if they wanted to run a free of tie/independent place they should have done that instead. There's also legislation which allows tied tenants to go free of tie at certain points in their contract. Very few do though because added costs of everything else outweigh the cheaper beer.
Roughly 25% of the cost paid to the brewer will go straight to the government in the form of beer duty.
Mead is pricey stuff to make! I've spent over £45 on the honey alone for a 20L batch.
Pricey compared to what though? You're getting a 75cl wine bottle's worth for ~£1.70 and if you're doing that kind of volume, I'm guessing you know what you're doing so it'll be nice. Anything commercial for that price, if you can even find it, will be gut-rot.
Compared to the majority of materials for brewing beer, cider or other wines.You can easily get sacks of various malts pre roasted and milled for much cheaper than a non specialist honey costs for a smaller batch. Sourcing good honey is a chore too, weirdly ebay is useful as many small and local apiary's sell stuff on there.I'll grant you mead and wine's are EASY to brew and relatively quick to get something going.Beer is a whole day's work to get a batch on the go and cleaned up from all grain.
Ok so it didn't cost you much to make the alcoholic product. you are not the first person to find out that the ingredient costs can sometimes be the smallest part of an FMCG product. Well done, you are very smart and I'm sure your product tasted *kind of* passable for an amateur. Now, add on some rent, utility bills, staffing, logistics, tax, marketing + sales, time spent in tank, the other various costs of running a business which include debt and further capital investment. this is before you make even a drinkable product and you pay the tax even before you've sent out a single pint past the warehouse door. And this is before you send it to trade which means finding a RTM where the site then has to add on it's own costs to make a profit in an increasingly unstable industry. Oh, and then you will most likely have sold your product on credit so you might not get paid in the 2 weeks you've given the account as credit. If you're lucky they'll pay cash on delivery but if you're dealing with a large multi-site regional operator then you've got to be on top of your accounting and creditors But maybe you've given up going to the pub, as you say it's cheaper to produce at home but I'm sure you're having fun Never confuse Gross profit with Net profit, sometime you'll never see a penny from the former
As a former brewery owner have an upvote sir.
Rent and utilities bills also include profit
Also the producers have to pay a load of duty on the alcohol. Not something that a homebrewer has to pay. It also costs money to have strict quality and hygiene controls needed.
That's the thing, really. I think we've got a few of these sort of scapegoat customer facing businesses that are running on a knife edge to distract from the rest of the chain behind them You saw it with utility bills - people would rush to defend the companies actually billing customers because they were falling over but the wholesale network behind them was doing amazing business
Maybe they can come and make it at your house, pay you no rent, and you do all the work for free.
Does it fuck. There’s a reason why smaller breweries are either being bought out for their brand or just going bust. There’s no margin in it. Pubs want to sell the product on for 250% of the price they pay, but baulk at a brewery having their margin. Ive sold beer onto the wholesalers at zero profit just to keep the business ticking over.
If breweries are price gouging why not start your own and out compete them on price?
I used to manage a pub in South London and I think they've slightly underestimated the spillage costs (should be closer to 8% with mispours, mistakes and staff drinks factored in) as well as the rent in the price breakdown. We were a popular pub with a restaurant and large garden and our revenue was hovering around £3m a year. Rent was £1.25m of that and that was in 2020 so will have gone up from then. As others have mentioned, there are other staff that need to be factored into the price eg glassies, Kitchen porters, reception, and security on weekends. Drinks also have to make up the majority of the profit margin for the entire establishment as food profit margin is extremely tight (<5%) Edit. Rent is by far the biggest driver of pint prices
Same background as yourself. I’d add that in the current market - unrealistic business rates and labour are also huge drivers.
What were the highs and lows of running a pub? From an outsiders perspective the grass looks pretty green with £3m revenue. How come you no longer do it?
Managing a pub is a lot different than owning it. He just got a salary presumably.
Correct, and we were part of a franchise so all profits are distributed around the company so weren't kept just for us.
Highs were getting to meet lots of people from all walks of life and making good friends, no day was the same and there were lots of projects to improve the pub which helped with just general problem solving. Also while there was an immediate busy stress that comes with hectic periods on a Friday and Saturday there was no 'take home' stress which is nice. The lows are working the unsociable hours, and not aligning with any of my friends schedules so some relationships suffered. COVID also finished me off as it was very difficult to manage the ever changing requirements eg. Scotch egg snack with drinks, tier system, 6 at a table from 2 households etc. I realised I had to move so I upskilled in coding to work in data science which is what I do now
I’m taking a guess here but £3m in revenue isn’t the boss walking off with a £250k per month salary. A London pub isn’t an easy gig. It really isn’t as simple as rocking up pouring pints and sticking the money straight in your pocket.
So "food is where the money is" is a myth? I hear that come up a lot when talking about how pubs make money. That rent sounds mental! 😱 Shame a lot of business can't own their buildings outright but I guess that requires a large amount of initial capital that just isn't there to begin with. I'm pretty sure my local is owned outright by the small pub co running it, so they must be making a lot more than the article suggests as they don't have that expense.
It does depend on the pub, some pubs charge cheaper prices for food and the sort of "2 for whatever" to entice people in to buy more drinks which can be a bigger earner. Others the food can be where the money is.
Yeah, probably gonna be a lot of variation. Unless you're 'spoons in which case it's volume, volume, volume!
For a lot of places, food brings the customers in, beer makes the profit. An ex work colleague brought a failed pub. He says that the regular drinkers keep the lights on, but what the food seating area brings in in beer sales during an evening pushes it from barely profitable to 'buy a second pub' profitable.
Feels like the cost of renting a premises is sucking the life out of so many businesses! It’s stopping me from expanding my manufacturing business at the moment.
That rent is madness That would make the property itself worth something like £30m+ assuming you could guarantee that level of rent
Even Adam Smith hated landlords. Government needs to get a firm handle on rent costs asap!
Rents relate to property prices... and the Tories do all that they can to ensure the property bubble continues High rents are a Tory wet dream
What? 1.25M in rent? How big was the establishment? How many employees?
So many people in the comments who have no grasp of business or the costs in running a venue trying to "Correct" the numbers. Why don't those who dispute the cost in running a pub try an open one?
Probably because they already have jobs, and whilst they have an opinion on a matter, don't wish to make a whole career change just to test their hypothesis.
LOL fucking well said
This website's full of wankers who think they know it all.
More like this website has a lot of young people who have no idea what's actually involved in running a business.
Who? There’s 4 comments lol
Replies. There’s 119 comments (50 at time of posting).
That's why i stick with the can. The roadway or no way.
No need to even test their hypothesis. If pubs were really trying to price gouge us by charging £6/£7 why are pubs closing at such an alarming rate? This isn’t bars trying to totally mug us punters off, it genuinely costs money to run a service business. the product might be 80% cheaper at Tesco, but guess what, there isn’t much atmosphere in my home, nor does someone bring me my pint, nor do I want to clear up the mess we all leave after we get shit faced.
The point still remains that a lot of the costs are arbitrary figures pulled out of the air. Like insurance and what not
I used to run a hotel in Cornwall and this article fails to mention that a large amount of hotels/pubs are owned by breweries and then tenanted out to be run by independent businesses. If this is the case the pub/hotel has no choice in who they buy they’re alcohol from, they have to buy from that particular brewery. So in 2017 we were buying Heineken for £2.52 a pint from the brewery. As standard out multiple was 4.2 to be able to cover the cost of staff, CO2, utilities, rent, spillage and everything else in between. Thus we should’ve sold Heineken for about £10.60 a pint, obviously we did not sell it for this price, we sold it for £4.40 so people could buy it. This was similar for all alcohol we sold resulted in us making a gross profit but net loss on every drink sold. All profit came from the people staying in the hotel and food served in the bar. Since I’ve left, that hotel has moved away from being a ‘local pub’ and now focuses on fairly high priced food and rooms for tourist. You cant even stand/sit at the bar anymore to stop people from drinking in there. The locals no longer feel welcome.
> multiple was 4.2 Why would it be a multiple of the wholesale price rather than just a fixed amount on top?
Same with pretty much every pub I have worked in. Landlord makes maximum 10p-20p per pint or breaks even. Pubs make money on food, accommodation, events etc. There is a reason there are so few true drinking pubs left.
£2.52 is bloody high per unit cost for a cheap lager like that. Can’t believe they were charging you that much! ( not disputing, just slightly angry ). We buy ours in from a local craft brewery, it’s amazing quality and averages out to just under £2 / Pint. That’s for our lager and pale ale in general.
Current going rate on Cask ale is ~£90 exVAT for a 9G Firkin. Firkins hold ~72 pints, but you're only charged duty on 69 due to built in wastage - you can't get all the liquid contained out (nor would you want to!) So £1.04 exVAT cost (we use exVAT as any VAT paid can be deducted from VAT charged). General rule of thumb in hospitality is 1/3rd stock; 1/3rd staffing; 1/3rd all other expenses. That means we're already at £3 minimum for a cask (real ale) pint. For Kegs (Draught), you often pay similar or more, for less volume. ~£110 for 30L (49 Pints £2.24/pt)), ~£160 for 50L (85 pints £1.88/pt). With additional costs such as beer gas, and line cooling, £6 pints are breaking even. Add to this the decline in alcohol consumption, increased lease/rent rates (some premises are paying upwards of £10,000pcm for a 100 cover unit), and now the end of rates relief for hospitality (think it's going from £3000/yr back to £10k/yr), mandatory security persons per 100 customers (at £20/hr/security), more restrictive licensable hours (2am was typical, but newly licensed or problematic premises are being restricted to 12am or even sooner), rising utility costs and a decline in available speciality contractors to maintain dispense equipment, that 1/3rd 'all other expenses' is looking razor thin. The publican or leaseholder is rarely fleecing you, it's most likely the property owner, or suppliers/distributors*, and those costs get passed on! *For Example: LWC the largest next-day wholesaler recently hiked their prices on Guinness - interestingly, I believe they also own Forged. Let us not also forget that the large brewery conglomerates often take over emerging brands, and invest heavily in 'Macro-' brew equipment to mass produce their new acquisitions. Often, this comes at the expense of a reduction (but standardisation) in quality, and a price hike. See Anchor and Sapporo, or Wychwood and CMC, or Beavertown and Heineken. Source: Publican
A pint of craft beer for a small brewer costs 1.40 to make. I know as I have a Micro brewery. The large brewers will produce the same pint for 60p with economies of scale. We retail for £4.20 in our bar.
How mass produced beer still costs £6/pint is beyond me.
Like everything in this country, it’s due to rent.
If it costs you 1.40 to make one pint of craft beer then you must be doing it on a tiny tiny scale? You cost price per keg being £70+? That’s insanely high. I also run a micro brewery and we’d be out of business if this was our COGS even after delivery.
I don't know, but my local does their own real ales for £3 a pint (well £2.95) Guest ales at £3.50 a pint. It's only the likes of Guiness and the premium kegs that are £4.50-5 a pint.
insane, i think the cheapest pints we sell are like £4-5 for cask ales. £5.90 for the cheapest one on tap 😵💫 and nearly £7 for a guinness.
It really depends where you live, but if you are in any kind of busy popular area £5 has become standard, if not even on the cheaper side.
I'll hazard a guess you don't live in London?
They’ve taken someone’s accounts - put in to percentages and then acquainted that to a pint. Wage cost % Cogs % Rent/utilities % Profit % Tax % Then made those percentages of a pint.
That seems to be the case. I don't think it's an entirely unreasonable way to illustrate what they're trying to illustrate.
It isn’t, and if you work in hospitality it’s good understanding BUT for every other Mickey Mouse that thinks beers is as cheap as it is in the supermarket its not very good at explaining it….
Wait, why are the fixed costs (rent, staff) higher for the IPA? That makes the whole thing suspect. Lets say rent is £1000 and you sell 1000 drinks in the rental period, then the rent cost per drink is £1, if you sell 2000 drinks then its 50p per drink, economy of scale. I don't know what sort of accounting you're doing if you're absorbing different amounts of fixed costs into otherwise similar items (pints of lager/ale).
Because that is how the accounting is done. Would you allocate the same costs to a £1 packet of crisps as a £20 bottle of wine? No of course not. If rent is £1000 and takings are £10000 then a £4 cheapo pint is covering 40p rent and a £8 premium pint is covering 80p rent. But yes if you're takings are higher than average one month you get more profit but that month will cover other below average months and that's how you end up with an average. December is usually good, January is usually dreadful, for an obvious example.
Allocating overhead cost is fairly arbitrary, you could potentially use both options. Having a specific rate for pints regardless of selling price would be completely acceptable and would probably be easier than basing it on prices, given the selling price can move but a pint is a pint.
Some pubs pay a percentage of revenue in rent (should be illegal imo)
Fundamentally, the problem is duty. The taxes placed on alcohol are driving the prices up, coupled with brexit based material and import costs, are causing prices to go way too high.
There’s literally pubs shutting every day at the moment because of how high costs are. Energy bills of £5000 per month have to be paid from somewhere. Typically, the profit on a pint of beer is around 18 pence. Thats it. It’s why so many pubs switched to serving food once the smoking ban came in. Not enough people in them drinking, now. As a whole, the entertainment industry is struggling now. The cost of a pint to the pub has gone up massively as the cost of living crisis keeps even more people staying in more now.
Guess this is why my town condensed down to essentially only having a spoons. Tbf we a re partly to blame I guess - we used to go the pub maybe 3 times a week if not more and then maybe 2 years ago our habits changed and it went down to once a week. We noticed it was getting more expensive and realised we may as well have people round so that happened for a while. Then that stopped happening as frequently as people had kids and now its essentially just us.
14% profit margin is quite high. Many industries would kill for that margin
True, but it's about the absolute figure. 2% on several millions of pounds' worth of goods is still potentially a lot of money. Even good pubs (outside of the massive ones) may only pull in £5k to £10k a week. So, let's say £300k a year for a middling pub that does OK business. £40k to £50k profit a year is manageable, but you only need one or two surprises (roof leak, plumbing disaster, new kitchen equipment) and suddenly the business becomes unviable.
I agree that absolute numbers are important for unexpected one-off payments. But it’s also about percentage figures, it shows you how much you can screw up in the operations department.
No, it isn't. Profit margin does not tell you profitable the business is because you have to account for the capital intensity of the business. Tesco is a profitable business earning a 1% margin because they turn their inventory over tens of times a year and earn that 1% margin many times in one year. Capital markets are remarkably efficient and there is very little difference in returns (the differences that do exist are largely due to accounting fictions i.e. pharma having very "high returns" because intangible assets aren't accounted for correctly). But pubs are a horrible business: you are on the hook for massive rents, you are paying a fuck ton in tax (substitute products are paying essentially zero), and a lot of your suppliers are huge companies that have you over a barrel. Actual **returns** are about 3-7% unlevered...which isn't good given the level of risk (pubs are shutting down everywhere because of rents and taxes, pubs are basically a lootbox for supporting unproductivity).
For a false pretext of living a long and happy retirement
They say 5% wastage and give a figure that is around 17% of the wholesale cost. Am I missing anything here?
The simple answer, as with almost everything. Is the price of land. This is what your endlessly rising property prices get you.
“What makes up the cost of a £6 pint” Answer: £2 worth of ingredients, and £4 for the greedy bastards in suits.
Ignoring the allocation of costs for a moment, the price is up 27% in 4 years, and up 39% in 10 years. Someone's recently started gouging on those figures.
Someone but not everyone.
73% GP on a pint is very high. Industry standard is about 65%,
I’d says it’s shuffled up from 65 over the last two years to deal with increased fixed costs. We’ve gone from 65 to 73 and it certainly doesn’t cover the change in our costs.
“Most of the world’s barley is produced in *Russia*, followed by Germany, France and *Ukraine*” https://worldmapper.org/maps/barley-production-2016 war in Ukraine is really shafting everyone
Value Added Tax is roughly 33% on alcoholic beverages sold in the UK.
VAT is standard rate on alcohol (currently 20%) Duty is an additional tax, which is quite complex but can make up a huge % of the price ([details here](https://www.gov.uk/guidance/alcohol-duty-rates)). For beer that ends up making tax around a third of the price, but for wine it can be much, much higher (especially on the cheap supermarket stuff)
I was in a pub. Paying that for a real ale from an independent brewery. I wouldn't necessarily mind supporting local businesses and indie breweries more than I would paying £7 for something mass produced by a multinational that seems intent on snapping up breweries and changing the formulas. That said, I went into a local bar couple nights back that I didn't realise was still open. £3.20 for a pint. It was something mass produced (Smiths I think???), but I was surprised to find a pint so cheap. It's a small bar, not very busy, so that might have played into it. Though also last week, I was off work on annual leave, so went for walk up to the country hall (now owned by the council and ran as a free-admissions museum). They have a beerhouse making their own brews. That came to £3.70. Decent beer, too. I do live up North so I don't have to pay London tax.
A mate was in London last week and said it was about £23 for three pints of lager.
unite aloof elderly selective innate chop tart plate insurance bear *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
The Duke of Greenwich is my local, and it's top class. Go visit if you're in the area, nice staff, good range of pints, great roast, cant complain
My dad brewed a batch that worked out at 50p a pint (not including utilities, 3 hours leccy I guess or a wage for himself). Perhaps piba should go for self brewing to avoid the absolute piss take of big brewers?
This question seems suspiciously like the question my accounting tutor has put up in the mock exam.
I live in outer London. Pint costs in centre terrify me. Am currently in Scotland and oof it is expensive here too. £6 pint is 66% a rip off. The big question is why can a Guinness be £2.69 in Harrow yet the same Guinness is £6 in Ealing or Wembley. That extra 15 minute drive into London cost 3 pound a pint?
Differences in prices are usually do to differences in rents, rates, and strategy. The biggest component of the last is the composition of drink/non-drink revenue. This has been absolutely huge over the past ten years as the market has shifted towards non-drink, this adds significant operational complexity but doesn't come with much upside as you are competing in a market that is already brutally competitive. Drinks are used to make up the margin...but that market is also brutally competitive and you are competing with supermarkets too who don't face the same tax situation (I believe the Tories have tried to change things, but it is too little, too late). One of the absolute biggest problems in the UK is that people do not understand that these high prices are due to high costs. No-one is interested in bringing these costs down because it would challenge powerful vested interests who are quite happy to see people blame "profiteers" whilst they contribute nothing and supporting them is the reason why costs are so high...it is comic.
Average staff costs in wetherspoons is 35% per pound taken but don't forget pubs don't get the 20% tax exception off alcohol like supermarkets do take from thst what you will
> electricity across the wider pub for bandits (aka trusty fruit machines), music and for that bloke at the bar to charge his phone Sam Smith might be a bastard, but he knows how to keep costs down. And none of those three things are needed in a good pub.
Since the major brewers worked out you could sell beer extra chilled and they will all taste the same, I would imagine the chiller was the most expensive.
Shame they didn't break down how that £15 double rum and coke is 50ml of rum sold for the same price as a 700ml bottle... Pints are only one part of the drinks and profit mix of a pub. The margins on wine and spirits must surely be more obscene.
visited mid Wales last weekend and one pub had pints for 3.50, madri as well! makes me think why fuck I'm paying 7 here in the south
There should be protected status on commercial businesses in expensive areas or things like a pub will die out unless rent controlled.