Average cost of running a pub has stabilised, says ALMR

The cost of operating Britain's pubs has stabilised for the first time since the smoking ban of 2007, according to the fifth benchmarking survey from the Association of Licensed Multiple Retailers (ALMR).

For the second year in a row, the average cost of running the average pub stands at 46% of turnover, with an additional 11.4% for rent across the leased sector.

The survey also shows that investment is back on track, with average CAPEX of 2.5% of turnover. The trend in like-for-like sales also continues to improve — up by 3% in the year to October 2010 compared with a fall of 1.8% in October 2008. Companies with fewer than 10 outlets recorded the highest levels of growth of 5% and over.

The survey reveals some inconsistency within the market, however. While food-led operators continue to drive forward, wet-led community outlets continue to struggle and like-for-like growth has flat-lined. Those operating under tied leases in particular struggled, reporting below average CAPEX, margins and growth and a significant increase in rental costs.

Kate Nicholls, ALMR strategic affairs director, said: "Taken as a whole these findings reinforce our messages to Government — we are an industry well able to generate jobs, invest in community facilities and play a full part in the 'Big Society'.

"The fact that small, niche operators continue to out-perform the market demonstrates we are the real engine of growth and the best barometer of business and consumer confidence. We have the potential; we need to be freed from red tape and punitive taxes to deliver in full."

The survey is approved by the Royal Institution of Chartered Surveyors for use in rent setting and valuations.