This article was written by our expert who is surveying the industry and constantly updating the business plan for a pub.
Running a profitable pub requires understanding the balance between revenue streams and operational costs.
The typical pub generates substantial income from drinks (with 70-80% profit margins) while food sales provide volume but lower margins (30-35%). Success depends on managing fixed costs like rent and utilities, controlling variable costs such as beverage wholesale prices and food ingredients, and optimizing labor scheduling during peak hours (6-9 pm on weekends).
If you want to dig deeper and learn more, you can download our business plan for a pub. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our pub financial forecast.
A typical pub generates monthly revenues of approximately $40,500, with drinks producing the highest margins at 70-80% and food contributing 50% of total sales at 30-35% margins.
Fixed costs including rent, utilities, insurance, and licenses typically consume 10-20% of revenue, while labor represents 25-35% of total revenue and variable costs for beverages and food run at 20-35% of respective sales.
| Financial Metric | Typical Range | Key Details |
|---|---|---|
| Monthly Revenue | $40,500 ($486,000/year) | Based on 100-150 customers daily spending $75 per visit on average |
| Drinks Profit Margin | 70-80% | Beverage cost of goods sold runs 20-30% with markups of 400-500% on cocktails |
| Food Profit Margin | 30-35% | Food typically represents 50% of revenue but lower margins than drinks |
| Fixed Costs (Monthly) | $4,225-$8,575 | Rent (5-10% revenue), utilities (3-5%), insurance ($1,000-$2,500), licenses ($200-$2,000) |
| Labor Costs | 25-35% of revenue | Includes wages, taxes, benefits; efficient scheduling critical during peak hours |
| Overall Net Profit Margin | 2-6% | Tight margins require careful cost control and revenue optimization |
| Peak Revenue Hours | 6-9 pm, Fri-Sat | Peak periods generate 3x average hourly revenue; weekends see 30-50% higher traffic |
What are the total monthly revenues for a pub broken down by drinks, food, and other services?
A typical full-service pub generates approximately $40,500 in monthly revenue, with drinks and food representing the primary income sources.
Alcoholic beverages deliver the highest profit margins at around 80%, with pour costs typically running 20-30% of beverage revenue. Cocktails command particularly strong markups of 400-500%, making them especially profitable menu items. The average customer spends $33.15 on drinks per visit.
Food sales often constitute 50% or more of total pub revenue depending on the concept and menu offerings. While food generates substantial volume, profit margins are lower than drinks, typically landing in the 30-35% range. The average customer spends $41.96 on food per visit, bringing the combined average spend to approximately $75 per visit.
Additional services such as catering, private events, or specialized offerings can provide 5-20% supplementary revenue depending on what the pub offers beyond standard food and drink service.
What are the fixed monthly costs for running a pub, including rent, utilities, insurance, and licenses?
Fixed monthly costs for a pub typically range from $4,225 to $8,575, representing essential expenses that remain relatively constant regardless of sales volume.
Rent usually accounts for 5-10% of monthly revenue, which translates to approximately $2,025-$4,050 for a pub generating $40,500 monthly. Location significantly impacts this cost, with urban venues commanding higher rates than suburban or rural locations.
Utilities including electricity, water, gas, and waste management typically consume 3-5% of revenue, resulting in monthly costs of $1,200-$2,025. Energy-efficient equipment can reduce these expenses over time. Insurance costs range from $1,000-$2,500 per month depending on property value, location, coverage scope, and local regulations.
Licensing fees represent a critical fixed expense for pub operators. Alcohol licenses, music licensing, food handling permits, and general business licenses can total $200-$2,000+ per month when averaged out. Initial liquor licenses can require substantial upfront investment ranging from $50,000-$300,000 in some jurisdictions, though ongoing permit fees and compliance costs add hundreds monthly to operational budgets.
What are the variable costs per unit for beverages, food ingredients, and consumables in a pub?
Variable costs in a pub scale directly with sales volume and represent the direct cost of goods sold for each revenue category.
Beverage costs typically run 20-30% of beverage revenue, meaning for every dollar earned from drink sales, 20-30 cents goes toward the wholesale cost of the alcohol, mixers, and ingredients. This cost percentage varies based on drink type, with beer and wine often at the lower end and specialty cocktails potentially higher depending on ingredient costs.
Food ingredients represent 25-35% of food sales as cost of goods sold (COGS). This percentage fluctuates based on menu complexity, ingredient sourcing, supplier relationships, and seasonal availability. Pubs with simpler menus featuring standardized items typically achieve better cost control than those with complex, chef-driven offerings.
Consumables add an additional 5-10% to product costs and include items like napkins, straws, garnishes, toothpicks, cleaning supplies, and other disposable items necessary for service. While individually inexpensive, these items accumulate significantly over monthly operations and require careful inventory management to prevent waste.
You'll find detailed market insights in our pub business plan, updated every quarter.
What is the average customer spend per visit, and how many customers does a typical pub serve daily and weekly?
The average customer spends approximately $75 per visit at a typical pub, with $41.96 allocated to food and $33.15 to drinks.
A mid-sized pub typically serves 100-150 customers per day, translating to roughly 700-1,050 customers per week. These numbers represent steady-state operations and fluctuate based on day of week, seasonality, and local events. Weekend traffic often exceeds weekday volumes by 30-50%.
Customer count varies significantly by pub type and concept. Sports pubs may see higher volumes during game days, while gastropubs focusing on upscale dining might serve fewer customers but command higher average checks. Urban pubs in high-traffic areas generally serve more customers than suburban or rural establishments.
Understanding your customer traffic patterns and average spend allows you to accurately forecast revenue and staff appropriately. These metrics also help determine capacity utilization and identify opportunities to increase table turnover during peak periods or attract more customers during slower times.
What are the peak hours and days for a pub, and how does customer traffic fluctuate seasonally?
Peak hours for pubs typically occur between 6-9 pm, known as the "golden hours," when revenue can reach three times the average hourly rate.
The dinner rush represents the most profitable period of the day, with customers arriving for after-work drinks and dinner. During these three hours, pubs experience the highest customer density, table turnover, and per-customer spending. Efficient staffing during this window is critical to maximizing profitability.
Weekend traffic, particularly Friday and Saturday evenings, generates 30-50% higher revenue than weekday periods. These nights command premium attention for staffing, inventory preparation, and promotional activities. Sunday traffic patterns vary by location, with some markets showing strong brunch and afternoon business while others see lighter volumes.
Seasonal fluctuations significantly impact pub profitability throughout the year. Summer months and holiday periods can boost sales by 15-30% compared to baseline months. Outdoor seating areas, if available, substantially increase capacity and revenue during warm weather. Conversely, winter months or off-peak seasons may see sales declines of similar magnitude, requiring careful cash flow management and potentially adjusted operating hours or promotional strategies to maintain steady traffic.
This is one of the strategies explained in our pub business plan.
What pricing strategy should a pub use for drinks, food, and promotions, and how does it compare with competitors?
Most successful pubs employ a tiered pricing approach that balances gross margin targets with perceived customer value and competitive positioning.
Standard drinks typically price around $8, premium offerings at $12, and super-premium selections at $16 or higher. This tiered structure allows customers to choose based on their budget while encouraging upselling to higher-margin premium products. Cocktails with higher perceived value due to presentation, ingredients, or complexity command premium pricing and deliver the strongest profit margins.
Food pricing requires balancing cost recovery with market competitiveness. Pubs typically use cost-plus pricing for food items, calculating the ingredient cost and applying a multiplier of 3-4x to achieve the target 30-35% food cost percentage. Menu psychology techniques like removing dollar signs, using descriptive language, and strategic placement of high-margin items influence customer choices.
Promotional strategies including happy hours, combination deals, and value-based pricing help pubs compete effectively and drive traffic during slower periods. Happy hours offering discounted drinks and appetizers from 4-6 pm can increase off-peak revenue by 15-25%. These promotions should be carefully designed to attract customers without cannibalizing peak-hour sales or training customers to only visit during discount periods.
What are the labor costs for a pub, including wages, taxes, and benefits, and how can staff be scheduled efficiently?
Labor costs represent one of the largest expenses for pub operators, typically consuming 25-35% of total revenue including wages, payroll taxes, and benefits.
This percentage encompasses bartenders, servers, kitchen staff, managers, hosts, and support staff. Urban markets with higher minimum wages and competitive labor markets push labor costs toward the higher end of this range. Benefits including health insurance, paid time off, and meal allowances add additional costs beyond base wages.
Efficient scheduling is critical to controlling labor costs while maintaining service quality. Labor management software helps operators forecast staffing needs based on historical traffic patterns, upcoming events, and seasonal trends. The key principle involves scheduling more staff during peak periods (6-9 pm and weekends) and reducing headcount during slower times to align labor expense with revenue generation.
Best practices include cross-training staff to handle multiple roles, using part-time and on-call workers for flexibility, and implementing performance metrics to ensure productivity. Careful scheduling can reduce labor costs by 3-5% of revenue while improving service quality by having the right number of staff at the right times. Overstaffing during slow periods unnecessarily inflates costs, while understaffing during busy periods damages customer experience and limits revenue potential.
What is the current profit margin by category and overall for a pub, and how has it trended over the last 12 months?
| Category | Profit Margin | Key Factors |
|---|---|---|
| Alcoholic Beverages | 70-80% | Highest margin category driven by low pour costs (20-30%) and premium pricing on cocktails with 400-500% markups |
| Food Sales | 30-35% | Lower margins due to higher ingredient costs (25-35% COGS), labor intensity, and waste considerations |
| Beer | 75-80% | Strong margins on draft beer with efficient portion control and lower waste compared to other categories |
| Wine | 70-75% | Solid margins with opportunity for premium pricing on high-end selections |
| Spirits/Cocktails | 80-85% | Highest margin category with creative cocktails commanding premium prices and perceived value |
| Non-Alcoholic Beverages | 85-90% | Extremely high margins on sodas, juices, and specialty non-alcoholic drinks |
| Overall Net Profit | 2-6% | After all operating expenses, most pubs operate on tight margins requiring disciplined cost management |
Over the last 12 months, pub profit margins have experienced pressure from rising costs including wages, food inflation, and increased utility expenses. Successful operators maintain margins through strategic price adjustments, menu engineering, and rigorous cost controls. Pubs that actively manage their product mix to emphasize high-margin drinks and efficiently control labor and inventory typically sustain margins at the higher end of the range despite inflationary pressures.
What marketing and promotional strategies work best for pubs, and what is their measurable impact on revenue?
Effective marketing strategies for pubs focus on driving traffic during off-peak hours and building customer loyalty for consistent revenue streams.
Happy hour promotions remain one of the most effective tactics, increasing off-peak sales by 15-25% during typically slow afternoon periods. These promotions work best when they offer genuine value on both drinks and appetizers, creating an attractive package that draws customers who might otherwise stay home or visit competitors. The key is structuring promotions that drive incremental traffic without simply discounting sales that would have occurred anyway.
Social media marketing and targeted digital advertising provide measurable returns for pubs. Platforms like Instagram and Facebook allow precise targeting of local audiences with minimal cost. Posts featuring food photography, drink specials, and event announcements generate engagement and drive foot traffic. Paid advertising campaigns for special events can deliver 3-5x return on ad spend when properly targeted.
Loyalty programs encourage repeat visits and increase customer lifetime value. Digital loyalty systems track customer behavior and allow personalized promotions. Regular customers who join loyalty programs typically increase visit frequency by 20-30% and spend 10-15% more per visit.
Seasonal promotions and themed events can double revenue during specific periods. Super Bowl parties, St. Patrick's Day celebrations, trivia nights, and live music events create excitement and draw crowds. These events require careful planning and staffing but generate substantial incremental revenue while building community engagement and brand awareness.
What is the level of inventory turnover for drinks and food in a pub, and how should stock losses be managed?
Inventory turnover rates vary significantly between beverage and food categories, with drinks typically turning over more slowly than perishable food items.
Optimal inventory turnover for perishable food items occurs every 1-2 weeks, ensuring freshness while minimizing waste. Fresh produce, dairy, and prepared ingredients require tight inventory control and just-in-time ordering to prevent spoilage. Higher turnover reduces storage costs and capital tied up in inventory while improving food quality.
Beverage inventory, particularly spirits, turns over more slowly with optimal cycles around monthly for most items. Beer and wine require more frequent turnover due to freshness concerns, while spirits can remain viable for longer periods. Fast-moving items like popular beers should turn weekly, while premium spirits may turn quarterly or less depending on sales velocity.
Stock losses from theft, waste, spillage, and over-pouring significantly impact profitability if not carefully managed. Regular stocktaking using inventory management software identifies shrinkage patterns and highlights problem areas. Industry best practices include conducting weekly inventory counts for high-value items, implementing portion control systems for drinks, training staff on proper pouring techniques, and using security systems to deter theft.
Variance between expected and actual inventory levels should remain below 2-3% for well-managed pubs. Higher variance indicates problems with theft, waste, or accounting that require immediate attention. Implementing standardized recipes, using measured pour spouts, and cross-checking sales data against inventory consumption helps identify and eliminate sources of loss.
We cover this exact topic in the pub business plan.
What are the main regulatory or compliance costs that could affect a pub's profitability?
Regulatory and compliance costs represent significant financial obligations for pub operators beyond basic business expenses.
Alcohol licensing fees constitute the largest regulatory expense, with initial liquor licenses ranging from $50,000-$300,000 depending on jurisdiction, license type, and local restrictions. Annual renewal fees typically cost several thousand dollars. Some markets operate quota systems limiting available licenses, driving costs even higher. Transfer fees for purchasing existing licenses add substantial one-time expenses.
Music licensing requires separate agreements with performance rights organizations (PROs) including ASCAP, BMI, and SESAC. These licenses cost $300-$2,000+ annually depending on venue size, music usage, and whether live performances occur. Failure to maintain proper music licenses exposes operators to substantial copyright infringement penalties.
Health department permits and regular inspections ensure food safety compliance. Initial health permits cost $100-$1,000 depending on jurisdiction, with annual renewals required. Failed inspections can result in fines, mandatory corrections, or temporary closure—all impacting profitability. Staff food handler certifications add ongoing training costs.
Minimum wage compliance and employment regulations create escalating labor costs as jurisdictions increase wage floors. Many markets now require paid sick leave, predictive scheduling, and additional employee benefits. Non-compliance risks penalties, lawsuits, and reputational damage. Staying current with evolving labor laws requires ongoing attention and potentially legal consultation to avoid costly violations.
What are the opportunities to increase revenue or reduce costs in a pub without harming customer experience?
Revenue optimization and cost reduction strategies can significantly improve pub profitability when implemented thoughtfully.
Upselling and menu engineering represent immediate revenue opportunities without capital investment. Training staff to suggest premium spirits, appetizers, and desserts increases average check size by 10-20%. Menu design using psychological principles guides customers toward high-margin items. Strategically placed signature cocktails with strong storytelling command premium prices while enhancing brand identity.
Expanding service offerings creates new revenue streams. Adding delivery and takeout through third-party platforms or direct channels captures customers who prefer off-premise dining. Private event hosting for parties, corporate functions, and celebrations generates substantial incremental revenue, often at higher margins than regular service. Brunch service taps into underutilized daytime capacity and attracts different customer segments.
Supplier negotiations and purchasing optimization reduce cost of goods sold without affecting quality. Consolidating suppliers increases purchasing power and leverage for volume discounts. Seasonal menu adjustments take advantage of ingredient availability and lower prices. Direct sourcing from local producers often provides better quality at competitive prices while supporting community relationships.
Energy efficiency investments deliver ongoing savings. LED lighting, programmable thermostats, Energy Star appliances, and regular HVAC maintenance reduce utility costs by 15-30%. While requiring upfront investment, these improvements typically pay back within 2-3 years through reduced operating expenses.
Waste reduction through better inventory management, proper storage, and staff training decreases food costs by 2-5%. Implementing first-in-first-out (FIFO) systems, proper portioning, and creative use of ingredients minimizes spoilage. Many pubs successfully repurpose ingredients across multiple menu items to reduce waste while maintaining quality.
Conclusion
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.
Successfully operating a profitable pub requires balancing multiple financial levers while maintaining excellent customer experience.
The data and strategies outlined in this guide provide a roadmap for new pub operators to understand revenue opportunities, control costs, and build a sustainable business in the competitive hospitality industry.
Sources
- Lightspeed: Complete Guide to Restaurant Profit Margins
- 7shifts: Restaurant Revenue Streams
- Diageo Bar Academy: Guide to Managing Costs for Your Bar
- SSCO Global: Fixed and Variable Costs in F&B Accounting
- Dojo Business: Per Day Restaurant Revenue
- Mad Mobile: The Golden Hour
- Wisk: Tips to Boost Sales for Seasonal Restaurants
- Epos Now: Bar Pricing Guide
- Staffany: Ultimate Guide to Restaurant Costs
- CGA Strategy: Food Spending Climbs While Drink Budgets Tighten