23 data to include in the business plan of your pub establishment

This article was written by our expert who is surveying the industry and constantly updating the business plan for a pub establishment.

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Ever pondered what the ideal beverage cost percentage should be to ensure your pub remains profitable?

Or how many pints need to be poured during a bustling Saturday night to meet your revenue goals?

And do you know the optimal staff-to-patron ratio for a thriving pub environment?

These aren’t just trivial figures; they’re the metrics that can determine the success or failure of your establishment.

If you’re crafting a business plan, investors and lenders will scrutinize these numbers to gauge your strategy and potential for success.

In this article, we’ll explore 23 crucial data points every pub business plan needs to demonstrate your readiness and capability to thrive.

Keep beverage cost below 20% of revenue to ensure profitability

Keeping beverage costs below 20% of revenue is crucial for a pub's profitability because it ensures that a significant portion of sales contributes to covering other expenses and generating profit.

In a pub, there are numerous costs such as staff wages, rent, utilities, and marketing, which need to be covered by the remaining 80% of revenue. If beverage costs exceed 20%, it can squeeze the margins, making it difficult to cover these expenses and still make a profit.

However, this percentage can vary depending on the type of pub and its location.

For instance, a high-end pub offering premium beverages might have slightly higher beverage costs but can offset this with higher pricing and a focus on quality. Conversely, a pub in a competitive area might need to keep costs even lower to offer competitive pricing and attract more customers.

Staff wages should account for 25-35% of total sales, with bartenders often earning higher due to tips

In a pub establishment, it's common for staff wages to account for 25-35% of total sales because this range helps maintain a balance between profitability and fair compensation.

Staff wages are a significant part of operating costs, and keeping them within this range ensures that the business can cover other expenses like rent, utilities, and supplies. Bartenders often earn higher wages due to tips, which are a substantial part of their income and can sometimes exceed their base pay.

This percentage can vary depending on factors like the pub's location, size, and the level of service offered.

For instance, a high-end pub in a busy urban area might have higher wage costs due to the need for more experienced staff and a higher volume of customers. Conversely, a smaller, local pub might have lower wage costs because of fewer staff and a more relaxed service style.

Expect a staff turnover rate of around 80%, necessitating a robust training program

In the pub industry, it's common to see a staff turnover rate of around 80%, which means having a strong training program is crucial.

This high turnover can be attributed to the seasonal nature of the business, where many employees are students or part-timers who leave after a short period. Additionally, the work can be physically demanding and involve late hours, which might not suit everyone in the long term.

Because of these factors, pubs need to invest in continuous training to ensure new staff can quickly get up to speed and maintain service quality.

However, turnover rates can vary depending on the location and size of the pub, as well as the management style. For instance, a well-managed pub in a busy urban area might retain staff longer due to better career opportunities and higher tips, while a rural pub might struggle more with retention.

60% of pubs fail within the first three years, often due to poor location choice or management issues

Many pubs struggle to survive beyond three years, often due to challenges like poor location choices and management issues.

Choosing a poor location can significantly impact a pub's success, as it may not attract enough foot traffic or the right clientele. Additionally, management issues such as inadequate financial planning or lack of experience can lead to operational inefficiencies and financial losses.

These factors can vary greatly depending on the specific circumstances of each pub.

For instance, a pub in a highly competitive area might struggle more with location issues, while one in a less competitive area might face different challenges. Similarly, a pub with a strong management team might overcome initial hurdles more effectively than one with inexperienced leadership.

Aim to reach the break-even point within 12 months to establish financial stability

Aiming to reach the break-even point within 12 months is crucial for a pub to establish financial stability.

Achieving this milestone means that the pub is generating enough revenue to cover its operating expenses, which is a strong indicator of its viability. It also provides a buffer against unforeseen challenges, such as economic downturns or seasonal fluctuations, which are common in the hospitality industry.

However, the timeline to reach the break-even point can vary depending on factors like location, target market, and initial investment.

For instance, a pub in a high-traffic urban area might reach this point faster due to higher footfall, while one in a rural setting might take longer. Additionally, pubs with a unique concept or strong brand identity might achieve financial stability quicker than those without a clear differentiation strategy.

Alcohol sales should constitute at least 70% of total revenue for a successful pub

Alcohol sales should make up at least 70% of a pub's total revenue because they typically have the highest profit margins compared to other offerings.

While food and non-alcoholic beverages can attract a diverse crowd, they often come with higher costs and lower margins, making them less profitable. Pubs that focus on alcohol sales can maximize their profit potential by capitalizing on the high demand for drinks, especially during peak hours.

However, this percentage can vary depending on the pub's location and target audience.

For instance, a pub in a tourist-heavy area might see a higher percentage of revenue from food sales due to the demand for local cuisine. Similarly, a pub that brands itself as a family-friendly establishment might prioritize a more balanced revenue mix to cater to different customer needs.

Prime cost (beverage and labor) should remain under 55% of revenue for optimal financial health

In a pub establishment, keeping the prime cost—which includes both beverage and labor expenses—under 55% of revenue is crucial for maintaining optimal financial health.

This percentage ensures that the pub has enough gross profit to cover other operating expenses like rent, utilities, and marketing, while still leaving room for a reasonable net profit. If the prime cost exceeds this threshold, it can squeeze the pub's profit margins and make it difficult to sustain operations in the long run.

However, this 55% benchmark can vary depending on the specific circumstances of the pub, such as its location, target market, and pricing strategy.

For instance, a pub in a high-rent area might need to aim for a lower prime cost percentage to compensate for higher fixed expenses. Conversely, a pub with a strong brand and loyal customer base might afford a slightly higher prime cost if it can command premium pricing on its beverages.

Allocate 1-2% of revenue annually for bar equipment maintenance and upgrades

Allocating 1-2% of revenue annually for bar equipment maintenance and upgrades is crucial for ensuring the smooth operation and longevity of a pub's assets.

Regular maintenance helps prevent unexpected breakdowns, which can lead to costly repairs and lost revenue. Upgrading equipment periodically ensures that the pub stays competitive by offering high-quality service and keeping up with industry standards.

The specific percentage allocated can vary depending on factors such as the age of the equipment and the volume of business the pub handles.

For instance, a pub with older equipment might need to allocate closer to 2% to cover more frequent repairs. Conversely, a newer establishment with state-of-the-art equipment might find that 1% is sufficient to maintain and upgrade their assets.

A successful pub should aim for a table turnover rate of 2 times during peak hours

A successful pub should aim for a table turnover rate of 2 times during peak hours because it maximizes revenue potential while maintaining a lively atmosphere.

During peak hours, such as evenings and weekends, pubs experience high demand, and a turnover rate of 2 ensures that more customers can be served, leading to increased sales. Additionally, a higher turnover rate helps maintain a vibrant and dynamic environment, which is attractive to patrons looking for a social experience.

However, this target can vary depending on the pub's size, location, and concept.

For instance, a small, cozy pub in a rural area might focus more on customer retention and experience, aiming for a lower turnover rate to encourage longer stays. Conversely, a bustling city pub might prioritize quick service and high turnover to accommodate the fast-paced lifestyle of its clientele.

Inventory turnover for kegs and spirits should occur every 10-14 days to maintain freshness and variety

Inventory turnover for kegs and spirits in a pub should occur every 10-14 days to ensure both freshness and variety for customers.

Frequent turnover helps maintain the quality of the beverages, as kegs can lose their optimal taste if they sit for too long. Additionally, rotating stock regularly allows the pub to offer a diverse selection of drinks, keeping the menu exciting and appealing to patrons.

However, the ideal turnover rate can vary depending on the pub's location and customer base.

A high-traffic pub in a bustling city might need to rotate inventory more frequently to meet demand, while a smaller, local pub might find a slightly longer turnover period more feasible. Ultimately, understanding the specific needs and preferences of the pub's clientele is key to determining the best inventory strategy.

Expect to lose 2-4% of revenue due to spillage, theft, or over-pouring

In a pub setting, it's common to anticipate a loss of 2-4% of revenue due to factors like spillage, theft, or over-pouring.

Spillage can occur when drinks are accidentally knocked over or when bartenders are not precise in their pouring, leading to unintentional waste. Theft, on the other hand, might involve employees or patrons taking drinks without paying, which directly impacts the pub's bottom line.

Over-pouring happens when bartenders serve more than the standard measure, often to please customers or due to lack of training, which can significantly reduce profit margins.

The extent of these losses can vary depending on factors such as the experience level of staff and the type of establishment. For instance, a high-end cocktail bar might experience more over-pouring due to complex drink recipes, while a busy sports bar might see more spillage during peak hours.

Rent should not exceed 8% of total revenue to maintain financial viability

In the pub industry, it's often recommended that rent should not exceed 8% of total revenue to ensure financial stability.

This guideline helps pubs maintain a healthy balance between fixed costs and other expenses, such as staffing and inventory. If rent takes up too much of the revenue, it can squeeze the budget for these other crucial areas, potentially impacting the quality of service and customer experience.

However, this percentage can vary depending on factors like location, size, and the specific business model of the pub.

For instance, a pub in a prime city location might have higher rent but also benefit from increased foot traffic and sales, allowing for a slightly higher rent percentage. Conversely, a smaller pub in a rural area might need to keep rent even lower than 8% to remain viable, as their revenue streams might be more limited.

Implement upselling strategies to increase average drink size by 15-25%

Implementing upselling strategies in a pub can significantly increase the average drink size by 15-25% because it encourages customers to opt for larger or premium options, enhancing their overall experience and boosting sales.

For instance, bartenders can suggest a larger pint or a premium cocktail when customers are ordering, which not only increases the drink size but also the revenue per transaction. This approach works well because customers often appreciate the suggestion of a better or more substantial option, especially if it’s presented as a value deal.

However, the effectiveness of these strategies can vary depending on the type of pub and its clientele.

In a high-end pub, customers might be more inclined to try premium options, while in a casual neighborhood bar, larger sizes might be more appealing. Tailoring the upselling approach to match the customer demographics and preferences is crucial for maximizing the impact of these strategies.

The average profit margin for a pub is 8-12%, with higher margins for those focusing on craft or premium offerings

The average profit margin for a pub is typically between 8-12%, but those that focus on craft or premium offerings often see higher margins.

This is because craft and premium products usually have a higher perceived value, allowing pubs to charge more for them. Additionally, these offerings often attract a more affluent customer base willing to spend extra for quality.

However, the profit margin can vary significantly depending on the pub's location, target market, and operational efficiency.

For instance, a pub in a high-traffic urban area might have higher overhead costs but also more customers, potentially balancing out the margin. On the other hand, a rural pub might have lower costs but also fewer customers, which could affect its profitability.

Average spend per customer should increase by 4-6% annually to counteract inflation and rising costs

In a pub setting, it's crucial for the average spend per customer to increase by 4-6% annually to keep up with inflation and rising costs.

Inflation naturally increases the cost of goods and services, meaning that the price of ingredients, utilities, and wages will likely rise over time. If the average spend per customer doesn't increase, the pub might struggle to maintain its profit margins.

However, this percentage increase can vary depending on factors like the pub's location and target demographic.

For instance, a pub in a high-income area might be able to increase prices more easily than one in a more price-sensitive neighborhood. Additionally, pubs that offer unique experiences or premium products may find it easier to justify higher price increases to their customers.

Maintain a current ratio of 1.5:1 to ensure liquidity and financial health

Maintaining a current ratio of 1.5:1 is crucial for a pub establishment to ensure it has enough current assets to cover its current liabilities.

This ratio indicates that for every dollar of liability, the pub has $1.50 in assets, providing a comfortable buffer to handle unexpected expenses or downturns in business. A pub, with its fluctuating cash flow due to seasonal changes and varying customer turnout, benefits from this ratio as it helps maintain financial stability.

However, the ideal current ratio can vary depending on the specific circumstances of the pub, such as its size, location, and customer base.

For instance, a pub in a high-traffic tourist area might operate successfully with a lower ratio due to consistent cash flow, while a smaller, rural pub might need a higher ratio to cushion against unpredictable revenue. Ultimately, the key is to balance liquidity with operational needs, ensuring the pub can meet its obligations without tying up too much capital in non-productive assets.

Effective drink menu design can boost sales by 12-18% by promoting high-margin cocktails

Effective drink menu design can significantly boost sales by 12-18% in a pub setting by strategically promoting high-margin cocktails.

By highlighting these cocktails, pubs can guide customers towards choices that are more profitable, thus increasing overall revenue. This is achieved through visual appeal and strategic placement on the menu, which draws attention to these items.

Additionally, using descriptive language and creative names can make these cocktails more enticing, encouraging customers to try them.

However, the impact of menu design can vary depending on factors such as the target audience and the pub's location. For instance, a pub in a trendy urban area might benefit more from a menu that emphasizes craft cocktails, while a traditional pub might see better results with classic drinks. By tailoring the menu to the specific preferences of their clientele, pubs can maximize the effectiveness of their drink offerings.

Allocate 0.4-0.6 square meters of bar space per customer to ensure efficient service

Allocating 0.4-0.6 square meters of bar space per customer is crucial for ensuring efficient service in a pub setting.

This range allows bartenders to move freely and serve drinks without unnecessary delays, which is essential for maintaining a smooth workflow. Additionally, it provides customers with enough personal space to enjoy their drinks comfortably, enhancing their overall experience and satisfaction.

However, this allocation can vary depending on the specific layout and design of the pub.

For instance, a pub with a more open layout might require less space per customer, while a more crowded or uniquely shaped bar might need more. Ultimately, the goal is to balance customer comfort with operational efficiency to create a welcoming and enjoyable atmosphere.

Health and safety scores should consistently be above 85% to maintain customer trust and foot traffic

Maintaining health and safety scores consistently above 85% is crucial for a pub establishment to ensure customer trust and steady foot traffic.

When patrons visit a pub, they expect a clean and safe environment where they can enjoy their time without concerns about hygiene. A score below 85% might raise red flags about the establishment's commitment to maintaining basic health standards.

High scores reassure customers that the pub is diligent about food safety and cleanliness, which are essential for a positive experience.

However, the importance of these scores can vary depending on the pub's location and target audience. For instance, a pub in a tourist-heavy area might face more scrutiny and thus needs to maintain even higher standards, while a local neighborhood pub might rely more on word-of-mouth and community trust, which can sometimes be more forgiving.

Pubs in urban areas should allocate 4-6% of revenue for live entertainment or event hosting

Pubs in urban areas should allocate 4-6% of revenue for live entertainment or event hosting because it can significantly enhance their appeal and draw in more customers.

In bustling city environments, competition among pubs is fierce, and offering unique experiences like live music or themed events can set a pub apart from its competitors. By investing in entertainment, pubs can create a vibrant atmosphere that encourages patrons to stay longer and spend more, ultimately boosting overall revenue.

However, the exact percentage of revenue allocated can vary depending on factors such as the pub's size, location, and target demographic.

For instance, a pub located in a trendy neighborhood with a younger crowd might benefit more from frequent live events, justifying a higher allocation within the 4-6% range. Conversely, a pub in a quieter area with an older clientele might find that occasional events suffice, allowing them to allocate closer to the lower end of the spectrum.

Marketing, including social media and local partnerships, should take up 4-6% of revenue

Marketing, including social media and local partnerships, should take up 4-6% of revenue for a pub because it ensures a balanced investment in attracting and retaining customers without overspending.

For a pub, this percentage allows for effective use of resources in promoting events, special offers, and creating a strong community presence. By allocating this budget, pubs can engage with their audience through targeted social media campaigns and strategic local partnerships, which are crucial for building a loyal customer base.

However, this percentage can vary depending on the pub's location, competition, and target demographic.

For instance, a pub in a highly competitive urban area might need to spend more on marketing to stand out, while a well-established pub in a small town might spend less due to strong word-of-mouth and a loyal local clientele. Ultimately, the key is to adjust the marketing budget based on specific needs and goals, ensuring that the pub remains both visible and profitable.

Seasonal drink offerings can boost sales by up to 30% by attracting new and repeat customers

Seasonal drink offerings can significantly boost sales in a pub by up to 30% because they attract both new and repeat customers.

These special drinks create a sense of exclusivity and urgency, encouraging patrons to visit the pub before the limited-time offer ends. Additionally, they often tap into festive or cultural themes, making them more appealing during certain times of the year.

For example, a pumpkin spice cocktail in the fall or a refreshing summer mojito can draw in crowds looking for a unique experience.

However, the impact of these seasonal offerings can vary depending on factors like the pub's location and target demographic. A pub in a tourist-heavy area might see a larger boost from seasonal drinks compared to a local neighborhood bar, where regulars might prefer their usual choices.

Achieving a beverage cost variance below 4% month-to-month indicates strong inventory management and control.

Achieving a beverage cost variance below 4% month-to-month in a pub establishment is a strong indicator of effective inventory management and control.

This low variance suggests that the pub is accurately forecasting demand and efficiently managing its stock levels, minimizing waste and overstocking. It also indicates that the establishment is maintaining consistent pricing and portion control, which are crucial for profitability.

When a pub can keep its beverage cost variance this low, it demonstrates a high level of operational efficiency and attention to detail.

However, this benchmark can vary depending on factors such as the size of the pub, the variety of beverages offered, and seasonal fluctuations in demand. For instance, a larger pub with a more extensive menu might experience slightly higher variances due to the complexity of managing a broader range of products, while a smaller pub with a limited selection might find it easier to maintain a low variance.