Small wet-led outlets suffer as costs of running a pub increase

15-Nov-2012 - Last updated on 15-Nov-2012 at 09:04 GMT

Cost pressures: BBPA report shows that small wet-led pubs are bearing the brunt

Total operating costs of running tenanted and leased pubs increased significantly last year — with smaller, wet-led pubs bearing the brunt, according to the British Beer & Pub Association’s (BBPA’s) latest Running a Pub benchmarking survey of companies representing 14,000 pubs.

The average total weekly operating costs for a community pub with sales of around £5,000 a week rose 12.4% in 2011 to £1,501. This represented 33.8% of turnover, up from 31.2% in 2010, and led to a shrinking of the weekly divisible balance for such pubs by 3.1% to £746.

Small community pubs spent 4.7% of their turnover on utilities, 4% on business rates, 2.9% on marketing and 1.9% on repairs and renewals.

Operating costs increased by 9.1% to £2,320 a week on average for larger community pubs, and by 8.7% to £3,699 for food-led pubs.

The main cost drivers for all pubs were wages, which ranged from 11.7% of turnover for small community pubs to 22.4% of turnover for food-led pubs; the latter fuelling total food-led pub operating costs of 41.5% (up from 40.0% in 2010).

Gross profit on drink sales fell in 2011 for all categories of pub except larger community sites, but GP on food sales increased for all except rural character pubs.

BBPA chief executive Brigid Simmonds said: “There are tough cost pressures, and not all these bills can be brought down through cost-cutting by licensees. It is why we campaign so hard for fairer taxes and less costly regulation.”

The BBPA report is based on information provided by member companies for the year ending 31 December 2011.

It is the second year of the survey, launched to complement the Association of Licensed Multiple Retailers’ (ALMR’s) benchmarking survey, which puts pub operating costs at an average 46.5% of turnover. The key difference between the two is the BBPA’s report excludes a manager’s wage, amusement machines and entertainment such as Sky.

The ALMR’s strategic affairs director Kate Nicholls said: “The BBPA figures are in keeping with ours and reinforce the fact that the smallest, wet-led pub operators are the most vulnerable to external pressures.”

Simon Clarke, of Fair Pint, said: “I still believe the figures are an underestimate of what the average tenant would expect to pay.”