How much does it cost to run a pub?

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The Dojo Business Team

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What does the typical monthly cost to run a pub look like?

Most pubs spend between $30,000 and $60,000 monthly to operate, though costs can range from $23,850 to over $109,250 depending on size and location.

The two biggest expenses are inventory (20-25% of sales) and payroll (25-35% of revenue), which together form your prime costs. A medium-sized pub typically spends $10,000-$20,000 monthly on these combined expenses alone.

Fixed costs add another layer of expenses: rent averages $5,000-$15,000 in urban areas, utilities run $1,000-$3,000, and insurance costs $400-$1,000+ monthly. Marketing and entertainment typically require 10-15% of revenue, or about $1,000-$5,000 monthly.

Don't forget about equipment maintenance ($500-$2,500), cleaning services ($500-$2,000), and a reserve fund for repairs and improvements ($400-$1,250). These smaller expenses add up quickly and can impact your bottom line if not properly budgeted.

Smart pub owners track these costs closely and adjust their pricing and operations accordingly to maintain healthy profit margins.

How much do pubs spend monthly on drinks and restocking the bar?

Beverage inventory typically costs pubs between $5,000 and $30,000 monthly, representing 20-25% of beverage sales.

A small neighborhood pub might spend $5,000-$8,000 monthly on beer, wine, spirits, mixers, soft drinks, and garnishes. Medium-sized establishments usually budget $10,000-$15,000, while high-volume sports bars or nightclubs can reach $20,000-$30,000 in monthly beverage purchases.

Your specific costs depend on several factors: the variety of brands you carry, whether you focus on premium spirits or well drinks, local versus imported beers, and your customer volume. Craft cocktail bars with extensive spirit collections typically have higher inventory costs than beer-focused pubs.

Efficient inventory management is crucial - most successful pubs maintain 2-3 weeks of stock on hand. Over-ordering ties up cash and risks spoilage, while under-ordering leads to stockouts and lost sales.

You'll find detailed inventory management strategies in our pub business plan, updated every quarter.

What's the monthly payroll for pub staff including all positions?

Monthly payroll costs for pub staff typically range from $6,000 to $35,000, accounting for 25-35% of total revenue.

For a typical pub with 10-20 staff members mixing full and part-time positions, total monthly payroll often lands between $10,000 and $20,000. This includes base wages but not tips, which significantly supplement income for bartenders and servers.

Remember to factor in employer costs beyond base wages: payroll taxes, workers' compensation insurance, and any benefits you offer. These typically add 15-25% to your base payroll costs, so a $15,000 monthly payroll actually costs closer to $17,250-$18,750.

How much does rent or mortgage cost monthly for pub premises?

Monthly rent for pub premises typically ranges from $3,000 to $15,000, with significant variation based on location and size.

Urban pubs in major cities face the highest costs, often paying $8,000-$15,000 monthly for prime locations with good foot traffic. Retail spaces suitable for pubs average $24-$33 per square foot annually, meaning a 3,000 square foot pub could pay $6,000-$8,250 monthly in rent.

Suburban and rural locations offer more affordable options, typically ranging from $3,000 to $8,000 monthly. These areas may have less foot traffic but benefit from lower overhead and often larger spaces for the same price.

If purchasing rather than renting, mortgage payments often run similar to or slightly higher than rent, typically $5,000-$18,000 monthly depending on down payment, interest rates, and property value. However, ownership builds equity and provides more control over the space.

Location is everything in the pub business - a higher rent in a bustling area often generates more revenue than savings from a cheaper, remote location.

What are typical monthly utility costs for operating a pub?

Monthly utility expenses for pubs typically range from $1,000 to $3,000, covering all essential services needed to operate.

Electricity represents the largest utility cost, often $400-$1,200 monthly, driven by refrigeration, lighting, kitchen equipment, and HVAC systems. Pubs with extensive draft beer systems or large kitchens tend toward the higher end of this range.

Water and sewer services add another $200-$500 monthly, with costs varying based on local rates and usage. High-volume establishments washing thousands of glasses daily see higher water bills than smaller neighborhood pubs.

Gas for heating and kitchen equipment typically costs $150-$400 monthly, though this varies seasonally and by region. Internet service, essential for POS systems and customer Wi-Fi, adds $100-$200 monthly for business-grade service.

This is one of the strategies explained in our pub business plan.

How much goes toward food supplies and kitchen ingredients monthly?

Pubs typically spend $5,000 to $15,000 monthly on food supplies, though gastropubs and those with extensive menus can reach $50,000.

Food costs generally run 25-35% of food sales, so a pub generating $20,000 in monthly food revenue would spend $5,000-$7,000 on ingredients. The exact amount depends on your menu complexity, portion sizes, and supplier relationships.

Simple pub menus focusing on burgers, wings, and appetizers typically have lower food costs than establishments offering full dinner service. Pre-made items like frozen appetizers carry higher per-unit costs but require less labor, while scratch kitchens have higher labor costs but better ingredient margins.

Smart purchasing makes a significant difference - joining a buying group, negotiating with suppliers, and minimizing waste can reduce food costs by 5-10%. Many successful pubs also adjust their menus seasonally to take advantage of lower-cost ingredients.

Proper inventory management and portion control are essential to maintaining food cost targets and maximizing profitability.

What's the monthly budget for equipment maintenance and bar supplies?

Monthly costs for equipment maintenance, barware, glassware, and kitchen tools typically range from $500 to $2,500 for most pubs.

1. Regular maintenance contracts for refrigeration, draft systems, and kitchen equipment cost $200-$800 monthly, preventing costly emergency repairs
2. Glassware replacement runs $100-$400 monthly due to inevitable breakage - budget for replacing 10-15% of your glassware inventory each month
3. Bar tools and supplies like shakers, strainers, pourers, and cutting boards add $50-$200 monthly in replacement costs
4. Kitchen equipment repairs average $150-$500 monthly, covering everything from oven repairs to dishwasher maintenance
5. Draft beer system maintenance requires $100-$300 monthly for line cleaning, CO2, and component replacement to ensure quality pours

Preventive maintenance saves money long-term - a $300 monthly maintenance contract prevents a $5,000 compressor failure. Well-maintained equipment also operates more efficiently, reducing utility costs.

How much does pub insurance cost monthly or yearly?

Comprehensive pub insurance typically costs $400 to $1,000+ monthly, or $5,000 to $12,000+ annually, covering multiple essential policies.

General liability insurance, the foundation of pub coverage, costs $42-$69 monthly for basic protection against customer injuries and property damage. However, pubs need additional coverage beyond this base policy.

Liquor liability insurance is mandatory in most states and adds $115-$276 monthly, protecting against alcohol-related incidents. Workers' compensation, required when you have employees, costs $45-$121 monthly depending on your state and claims history.

Property insurance for your building, equipment, and inventory typically adds another $100-$300 monthly. Many pub owners bundle these coverages into a Business Owner's Policy (BOP) for better rates and comprehensive protection.

It's a key part of what we outline in the pub business plan.

What are the monthly costs for licenses, permits, and compliance?

Monthly licensing and compliance costs for pubs average $50 to $500, though annual fees can spike these amounts significantly.

The liquor license represents the biggest regulatory expense, costing $500 to $10,000 annually depending on your state and license type. Some states charge modest fees while others, particularly for full liquor licenses in limited-license states, can reach six figures on the secondary market.

Additional permits include health department licenses ($250-$500/year), music licensing for live entertainment or recorded music ($300-$800/year), and outdoor seating permits where applicable ($200-$1,000/year). Fire department permits and signage licenses add smaller but necessary costs.

Don't forget about renewal fees and compliance costs - many licenses require annual renewals, training certifications for staff, and periodic inspections. Budget extra for legal assistance with applications and compliance issues.

Setting aside $200-$500 monthly ensures you're prepared for both regular renewals and unexpected regulatory requirements.

How much should pubs budget for cleaning and waste disposal?

Monthly cleaning and sanitation costs for pubs typically range from $500 to $2,000, covering both services and supplies.

Many pubs combine in-house cleaning during operating hours with professional deep cleaning services 2-3 times weekly. This hybrid approach balances cost control with maintaining high cleanliness standards that customers expect and health departments require.

What's the typical monthly marketing and entertainment budget?

Successful pubs allocate $1,000 to $5,000 monthly for marketing, advertising, entertainment, and promotional events - typically 10-15% of revenue.

Digital marketing forms the foundation, costing $300-$1,000 monthly for social media management, targeted ads, and email campaigns. Facebook and Instagram advertising effectively reaches local customers, while Google Ads capture people searching for "pubs near me."

Live entertainment significantly boosts revenue but requires investment - solo musicians cost $200-$500 per night, while bands command $500-$2,000. Weekly trivia nights, costing $150-$300 per event, create regular customer traffic with lower investment.

Promotional events and specials require budget allocation for reduced margins on featured items. Happy hour discounts, while reducing per-drink profit, drive traffic during slow periods and often increase total revenue.

Traditional marketing still works - local print ads, sponsoring community events, and branded merchandise collectively cost $200-$800 monthly but build strong neighborhood connections essential for pub success.

How much should be reserved for repairs and unexpected expenses?

Pubs should set aside $400 to $1,250 monthly for repairs, unexpected expenses, and long-term improvements - roughly 2-5% of revenue.

Equipment failures happen without warning - a broken refrigerator compressor ($2,000-$5,000), failed dishwasher ($3,000-$8,000), or HVAC problems ($1,000-$10,000) can devastate cash flow without reserves. Even smaller issues like plumbing leaks or electrical problems typically cost $500-$2,000 to fix.

Beyond emergency repairs, this fund covers facility improvements that keep your pub competitive. Updating décor, replacing worn furniture, upgrading sound systems, or refreshing restrooms maintains customer appeal and prevents larger renovation needs later.

The 2-5% guideline scales with your business - a pub generating $50,000 monthly should reserve $1,000-$2,500, while smaller operations might set aside $400-$800. Building this reserve during profitable months provides crucial cushioning during slower periods.

Consider this fund non-negotiable - pubs without adequate reserves often face closure when major repairs coincide with seasonal slowdowns.

Conclusion

Running a pub requires careful financial planning and constant attention to costs across multiple categories. While monthly expenses typically range from $23,850 to $109,250, most successful pubs operate in the $30,000 to $60,000 range by carefully managing their prime costs and maintaining efficient operations. Understanding these costs before opening helps set realistic revenue targets and pricing strategies. Regular monitoring and adjustment of expenses, combined with strong inventory management and cost controls, creates the foundation for a profitable pub business that can weather both busy seasons and slower periods.

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. FinModelsLab - Bar Operating Costs
2. Sculpture Hospitality - Bar Inventory Management
3. BackBar - Liquor Cost for Bars
4. Zarla - How to Open a Bar
5. Flavour Blaster - Cost to Run a Bar in USA
6. Reddit - Monthly Cost of Running a Bar
7. Business Plan Templates - Bar Running Costs
8. Insureon - Bar Insurance Costs
9. TouchBistro - Liquor License Guide
10. Toast - Bar Monthly Expenses