9 ms·

There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks). Because priority becomes food over drin

There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks). Because priority becomes food over drink, people are willing (and able) to drive further for a better pub. Competition increases and you don't need a 'local' for every village or part of town anymore. Less pubs can serve more people because rather than regulars "propping up the bar" 3-5 nights a week for an extended session, you get restaurant-esque table turnover. This is desirable for landlords - they often live above their pubs - profit from food service means you can shut earlier, you don't have regular fights or trouble from drunk customers and general toil is lower. But some publicans just won't (or can't) adapt. They won't or can't invest in kitchen and chef. They can't or won't learn how to market and attract new, younger customers. Inflation, energy pricing, COVID shutdowns et al have all just accelerated the demise of the "pub pub". The old "pub pub" crowd are now well served by the Wetherspoons, who have the advantage of controlling their margins in ways Brewery landlords can't compete with (mass purchasing, pre-prepared food, all their pubs are "new" buildings that don't have the insane maintenance and insurance overheads of a 200+ year old pub building etcetc). We may be at a record low, but I suspect we'll be setting new lows for some years to come yet. src: family of publicans from 193Xs ~> 200X. Tried to buy a pub at the 'end' of COVID restrictions.

bavent 4y ago
Wow, this is complete opposite of America. I have run several bars/restaurants and most of our money came from alcohol sales. Food was still profitable, but much tighter margins. A lot more labor goes into the food side of the business too, and we couldn't get away with marking things up 4x like you can with wine. I think as you get into Michelin-starred places, the name of the chef and the quality of the food is enough to allow you to charge more, and also to cheap out on labor - some of the top restaurants in Chicago collude to pay their cooks $10-12/hr, for example.
- heavyset_go 4y ago
  I was under the impression that margins on alcohol were huge. At least where I am, proprietors trip over themselves to get alcohol licenses, and those licenses go for hefty premiums.
  - bavent 4y ago
    They are - usually a place will charge 3-4x, sometimes 5-6x depending on the type of liquor and brand, what they paid for the product. You lose a bit to labor if you're making craft cocktails, as there can be a lot of prep behind those. Having a good wine list usually means have a sommelier or wine steward who will get paid a bit more than the rest of the serving staff. But for the most part the labor costs for front-of-house are nothing ($2.13/hr in a lot of states) compared to the cooking staff.
  - browningstreet 4y ago
    I have a friend who owns a popular bar and a popular coffee shop. He says he makes far more profit off the coffee shop (which has baked goods and sandwiches and salads) than the bar. Might be different in disparate places.
  - ransom1538 4y ago
    "I wish I had opened a bar" - every restaurant owner I have met.
- algorias 4y ago
  I'd think those low wages are also partly explained by the desirability of working at a top place (good for your CV and for acquiring actual skills). Pretty similar to how the game industry attracts talent out of proportion to the monetary compensation they pay.
  - bavent 4y ago
    They're 100% explained by that, not just partially. At all of the top-rated restaurants in every city I've cooked in, all the chefs are buddies. It's very common for there to be a tacit agreement to just not pay more than $X, that way they can all keep labor costs down.
    - throwawaycuriou 4y ago
      do you have any sourced examples for this collusion? a friend of mine bailed the craft after being offered minimum wage and a 60 hour requirement in the kitchen of a Michelin star restaurant in NYC
      - bavent 4y ago
        It's me, I'm the source. I worked in a lot of those Michelin-starred places in quite a few cities. I also bailed. The pay and hours were a large part of it. But I did it for years and years.
        throwawaycuriou 4y ago
        has there been any attempt to pursue this legally?
        bavent 4y ago
        I know there have been some higher-profile suits filed against some famous and semi-famous chefs for unpaid wages/stolen tips (Mario Batali, Tom Douglas, Charlie Trotter, a few others), but it's hard to directly challenge collusion like this when it's very unofficial. And a quick way to end your career and get blacklisted from any other high end restaurant.
benbristow 4y ago
> The old "pub pub" crowd are now well served by the Wetherspoons, who have the advantage of controlling their margins in ways Brewery landlords can't compete with (mass purchasing, pre-prepared food, all their pubs are "new" buildings that don't have the insane maintenance and insurance overheads of a 200+ year old pub building etcetc). Bit untrue on your last statement. Wetherspoons have a habit of occupying traditional/landmark buildings. For all the negative they do against the independent pub trade by outpricing with their brewery deals they do a cracking job in preservation by using & maintaining old buildings that would otherwise go to ruin. Just in Glasgow for example you've got The Counting House (George Square) which was an old premises of the Bank Of Scotland in the late 19th century and The Crystal Palace also built in the 19th century which houses one of the oldest lift/elevator installations in the UK.
- toyg 4y ago
  whetherspoons don't have "habits", they have corporate strategies. If they think they need a marquee building in a given area (typically to achieve a higher degree of brand acceptance, or to disguise), they'll occupy an old one; if they don't, they'll happily go for a recent build. They don't have values or habits, they are only interested in what makes them money. In my neck of the woods (NW England), most Wetherspoons are in new buildings, except in the city centre. Not that it makes any difference to me: I have not stepped in one since it became very clear in 2016 that the owner is a racist piece of work.
KennyBlanken 4y ago
> There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks). In the US, the exact opposite is true. Alcohol sales are where the money is made (and yes, soft drink sales, but there's usually far less of that in an actual bar.) Food has nowhere near the profit margin. Multiple restaurant owners have told me this for years. Why is it the opposite in the UK?
- smcl 4y ago
  The food in many of these pubs is of very low quality and is designed to be quickly prepared (reheated) at scale with no complex steps involved. After a short time in the UK you can quickly tell what sort of food you can expect in a given pub, so I think most Brits know what they're getting. Personally, I think this (plus the fact that a large amount of the population take pride in enjoying shit food) give the UK a bad reputation re food. And you'd actually be surprised how much soft drinks are served in pubs. They're very low wastage - so if your company budgets that X% will be lost for some reason, you'll very likely undershoot that and have only X/2% wasted. Additionally you can adjust the syrup/carbonated water mix so that your margins for each serving are higher. The dodgy pub I worked at as a student frequently used soft drinks as a way to balance stock in case of wastage (or in the case of a corrupt assistant manager, theft). Towards the end of a given stock-keeping period (monthly?) we'd often be told something like "Tennent's is down, ring it up in the tills as 3 small diet cokes" - meaning that there is less of a given beer in the stock room than expected when accounting for how much we ordered and how much we sold, and to correct for this we'd use take advantage of the surplus of coke stock (after a price adjustment) to try to counteract this. God help you if anyone asked for a receipt and accused you of swindling them ...
  - SoftTalker 4y ago
    Why on earth would you do this rather than expensing the missing beer and trying to figure out why it happened? I.e. who is walking out the back door with it?
    - CydeWeys 4y ago
tamade 4y ago
Having invested in this business before, the margin is entirely in alcohol. Typical drink costs <50p and sold for >20x. Food has nowhere near those margins given the labor and materials required.
- jimjambw 4y ago
  Not saying I don't believe you but why would a Brit leave out the 'u' in labour?
  - epicureanideal 4y ago
    Maybe adapting to internationalized (American at this point) English. Also, what they say is what I’ve heard anecdotally several times and it makes sense when comparing even retail prices vs per drink prices.
    - thaumasiotes 4y ago
      One obvious theory is that 'tamade' never learned British English; the username appears to be Chinese. I doubt you're required to be a British national in order to invest in British pubs.
      - seanmcdirmid 4y ago
        Tamade doesn’t sound in anyway like a Chinese username (maybe Japanese phonetically, but that could easily be a coincidence), but I would let them speak for themselves.
        thaumasiotes 4y ago
        > Tamade doesn’t sound in anyway like a Chinese username Context is pretty much everything; the only Chinese username I can more or less reel off from memory is '基妮真特么老油条... sabibibi', and I may be forgetting parts of it, but certainly there's plenty of swearing.
        4y ago
workingon 4y ago
This is so strange, and the exact opposite of America. In America margins on drink are 100-200%+ while margins on food are much less when you take into account untipped workers fixing it. It must be the tipping difference, since bartenders are basically free labor in America.
- jhugo 4y ago
  It sounds strange because it's just false. The vast majority of the margin in UK pubs comes from alcohol sales. I've worked and invested in the industry and it would be a very very unusual pub where this was not the case. As an aside, this is classic HN: very authoritative sounding comment, voted right to the top, spouting complete nonsense.
  - rossriley 4y ago
    There does need to be a little nuance though, since the vast majority of pub owners are actually on a wet lease then the pub itself doesn't get all of the margin, the breweries normally take 20-25% of that margin. So an example from a recent wholesale catalogue, 1 30L keg which you can probably sell 58 pints out of will cost around £150 so that gets your cost price of around £2.58 / plus VAT and beer duty and you're up to cost price of over £3.00 / pint So margins are variable but as you can see if you want to sell at around the average price around the country which is £4 / pint then you're not talking about a massive margin. The reason why food is a popular option for bar owners is that the breweries don't take any of the margin so the owner takes all the profit from food sales, plus in many ways, the food is extra income from people that would be taking up the space to drink too.
    - trollied 4y ago
      Yeah, I was thinking the same. A large proportion of uk pubs are leased by the likes of Star (Heineken), Punch, Enterprise etc, and they really do screw their landlords on alcohol ties. Free houses basically procure alcohol at 1/2 the price. Food GP is much better in these pubs as a result.
yodsanklai 4y ago
> The margin is in food Interesting, I've always been told than margin was in alcohol (esp. in high end restaurants).
- toyg 4y ago
  Restaurants and pubs, despite recent convergence, are in different markets. Restaurants rely on turnover, pubs on repeated orders.
  - kman82 4y ago
    Repeated orders are turnover. Same thing.
nly 4y ago
My local pub does the best burgers I've ever eaten. Absolutely phenomenal. Stone baked pizzas as well. I'd go there for food with my partner, say a Sunday lunch, but I'd never go there just to drink. I can't think of anything more boring.
anitil 4y ago
In NSW (a state in Australia) a bar/pub is often just an excuse for a poker machine license, with all the actual revenue coming from gambling
astrange 4y ago
Note “landlord” doesn’t mean the same thing it does in the US, it means the person who actively operates the pub.
- oneoff786 4y ago
  Do they not own the land and building?
  - lmm 4y ago
    Not necessarily. A pub landlord and a property landlord are completely separate concepts. Of course the same person might be both.
  - astrange 4y ago
    Traditionally they did but it’s not required. It’s like if you called property managers landlords whether or not they actually are one.
  - rossriley 4y ago
    Not any more, the majority are owned by the brewery groups and leased to the landlords. If you see an independent pub in the UK it will be labelled as a 'Free House' that means it is independent of a brewery and can sell any beers it likes.
    - M2Ys4U 4y ago
      Even pubs that are free of tie don't necessarily own the land/building, they'll lease it from a property company (usually one specialising the hospitality).
    - oneoff786 4y ago
      I would imagine that’s raised prices by a lot then
seanmcdirmid 4y ago
Strange. In the USA, many restaurants barely break even on food and make up their profit on alcohol drinks. They live and die by their liquor license. Is it because they go for pricier drinks in the states?
- toyg 4y ago
  A lot has to do with alcohol prices outside pubs, i.e. supermarkets and shops, as well as taxation levels.
monk_e_boy 4y ago
I work in post 16 education. The number of young adults who have never had a drink is crazy high. A lot of them just don't drink, don't go out much and haven't ever been to a pub. Covid. Lock down. Being fucking skint. Not having access to a car or bus service (remember the old days when a mate would drive 7 or 8 of you and your mates to a local for a skin full? Doesn't happen any more)
- sudosysgen 4y ago
  As a young adult I just don't see drink as much fun to be quite honest.
ransom1538 4y ago
" There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks)." Lol. Try a simple experiment. 1) Pour me a beer. 2) Make me a steak dinner. Task: Find out which takes an entire cooking staff, dish washers, grills, linens, produce, deep freezers, meat bills, gas bills, .... OH! Medium rare please.

bavent 4y ago

Wow, this is complete opposite of America. I have run several bars/restaurants and most of our money came from alcohol sales. Food was still profitable, but much tighter margins. A lot more labor goes into the food side of the business too, and we couldn't get away with marking things up 4x like you can with wine. I think as you get into Michelin-starred places, the name of the chef and the quality of the food is enough to allow you to charge more, and also to cheap out on labor - some of the top restaurants in Chicago collude to pay their cooks $10-12/hr, for example.

heavyset_go 4y ago
I was under the impression that margins on alcohol were huge. At least where I am, proprietors trip over themselves to get alcohol licenses, and those licenses go for hefty premiums.
- bavent 4y ago
  They are - usually a place will charge 3-4x, sometimes 5-6x depending on the type of liquor and brand, what they paid for the product. You lose a bit to labor if you're making craft cocktails, as there can be a lot of prep behind those. Having a good wine list usually means have a sommelier or wine steward who will get paid a bit more than the rest of the serving staff. But for the most part the labor costs for front-of-house are nothing ($2.13/hr in a lot of states) compared to the cooking staff.
- browningstreet 4y ago
  I have a friend who owns a popular bar and a popular coffee shop. He says he makes far more profit off the coffee shop (which has baked goods and sandwiches and salads) than the bar. Might be different in disparate places.
- ransom1538 4y ago
  "I wish I had opened a bar" - every restaurant owner I have met.
algorias 4y ago
I'd think those low wages are also partly explained by the desirability of working at a top place (good for your CV and for acquiring actual skills). Pretty similar to how the game industry attracts talent out of proportion to the monetary compensation they pay.
- bavent 4y ago
  They're 100% explained by that, not just partially. At all of the top-rated restaurants in every city I've cooked in, all the chefs are buddies. It's very common for there to be a tacit agreement to just not pay more than $X, that way they can all keep labor costs down.
  - throwawaycuriou 4y ago
    do you have any sourced examples for this collusion? a friend of mine bailed the craft after being offered minimum wage and a 60 hour requirement in the kitchen of a Michelin star restaurant in NYC
    - bavent 4y ago
      It's me, I'm the source. I worked in a lot of those Michelin-starred places in quite a few cities. I also bailed. The pay and hours were a large part of it. But I did it for years and years.
      - throwawaycuriou 4y ago
        has there been any attempt to pursue this legally?
        bavent 4y ago
        I know there have been some higher-profile suits filed against some famous and semi-famous chefs for unpaid wages/stolen tips (Mario Batali, Tom Douglas, Charlie Trotter, a few others), but it's hard to directly challenge collusion like this when it's very unofficial. And a quick way to end your career and get blacklisted from any other high end restaurant.

benbristow 4y ago

> The old "pub pub" crowd are now well served by the Wetherspoons, who have the advantage of controlling their margins in ways Brewery landlords can't compete with (mass purchasing, pre-prepared food, all their pubs are "new" buildings that don't have the insane maintenance and insurance overheads of a 200+ year old pub building etcetc). Bit untrue on your last statement. Wetherspoons have a habit of occupying traditional/landmark buildings. For all the negative they do against the independent pub trade by outpricing with their brewery deals they do a cracking job in preservation by using & maintaining old buildings that would otherwise go to ruin. Just in Glasgow for example you've got The Counting House (George Square) which was an old premises of the Bank Of Scotland in the late 19th century and The Crystal Palace also built in the 19th century which houses one of the oldest lift/elevator installations in the UK.

toyg 4y ago
whetherspoons don't have "habits", they have corporate strategies. If they think they need a marquee building in a given area (typically to achieve a higher degree of brand acceptance, or to disguise), they'll occupy an old one; if they don't, they'll happily go for a recent build. They don't have values or habits, they are only interested in what makes them money. In my neck of the woods (NW England), most Wetherspoons are in new buildings, except in the city centre. Not that it makes any difference to me: I have not stepped in one since it became very clear in 2016 that the owner is a racist piece of work.

KennyBlanken 4y ago

> There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks). In the US, the exact opposite is true. Alcohol sales are where the money is made (and yes, soft drink sales, but there's usually far less of that in an actual bar.) Food has nowhere near the profit margin. Multiple restaurant owners have told me this for years. Why is it the opposite in the UK?

smcl 4y ago
The food in many of these pubs is of very low quality and is designed to be quickly prepared (reheated) at scale with no complex steps involved. After a short time in the UK you can quickly tell what sort of food you can expect in a given pub, so I think most Brits know what they're getting. Personally, I think this (plus the fact that a large amount of the population take pride in enjoying shit food) give the UK a bad reputation re food. And you'd actually be surprised how much soft drinks are served in pubs. They're very low wastage - so if your company budgets that X% will be lost for some reason, you'll very likely undershoot that and have only X/2% wasted. Additionally you can adjust the syrup/carbonated water mix so that your margins for each serving are higher. The dodgy pub I worked at as a student frequently used soft drinks as a way to balance stock in case of wastage (or in the case of a corrupt assistant manager, theft). Towards the end of a given stock-keeping period (monthly?) we'd often be told something like "Tennent's is down, ring it up in the tills as 3 small diet cokes" - meaning that there is less of a given beer in the stock room than expected when accounting for how much we ordered and how much we sold, and to correct for this we'd use take advantage of the surplus of coke stock (after a price adjustment) to try to counteract this. God help you if anyone asked for a receipt and accused you of swindling them ...
- SoftTalker 4y ago
  Why on earth would you do this rather than expensing the missing beer and trying to figure out why it happened? I.e. who is walking out the back door with it?
  - CydeWeys 4y ago

tamade 4y ago

Having invested in this business before, the margin is entirely in alcohol. Typical drink costs <50p and sold for >20x. Food has nowhere near those margins given the labor and materials required.

jimjambw 4y ago
Not saying I don't believe you but why would a Brit leave out the 'u' in labour?
- epicureanideal 4y ago
  Maybe adapting to internationalized (American at this point) English. Also, what they say is what I’ve heard anecdotally several times and it makes sense when comparing even retail prices vs per drink prices.
  - thaumasiotes 4y ago
    One obvious theory is that 'tamade' never learned British English; the username appears to be Chinese. I doubt you're required to be a British national in order to invest in British pubs.
    - seanmcdirmid 4y ago
      Tamade doesn’t sound in anyway like a Chinese username (maybe Japanese phonetically, but that could easily be a coincidence), but I would let them speak for themselves.
      - thaumasiotes 4y ago
        > Tamade doesn’t sound in anyway like a Chinese username Context is pretty much everything; the only Chinese username I can more or less reel off from memory is '基妮真特么老油条... sabibibi', and I may be forgetting parts of it, but certainly there's plenty of swearing.
      - 4y ago

workingon 4y ago

This is so strange, and the exact opposite of America. In America margins on drink are 100-200%+ while margins on food are much less when you take into account untipped workers fixing it. It must be the tipping difference, since bartenders are basically free labor in America.

jhugo 4y ago
It sounds strange because it's just false. The vast majority of the margin in UK pubs comes from alcohol sales. I've worked and invested in the industry and it would be a very very unusual pub where this was not the case. As an aside, this is classic HN: very authoritative sounding comment, voted right to the top, spouting complete nonsense.
- rossriley 4y ago
  There does need to be a little nuance though, since the vast majority of pub owners are actually on a wet lease then the pub itself doesn't get all of the margin, the breweries normally take 20-25% of that margin. So an example from a recent wholesale catalogue, 1 30L keg which you can probably sell 58 pints out of will cost around £150 so that gets your cost price of around £2.58 / plus VAT and beer duty and you're up to cost price of over £3.00 / pint So margins are variable but as you can see if you want to sell at around the average price around the country which is £4 / pint then you're not talking about a massive margin. The reason why food is a popular option for bar owners is that the breweries don't take any of the margin so the owner takes all the profit from food sales, plus in many ways, the food is extra income from people that would be taking up the space to drink too.
  - trollied 4y ago
    Yeah, I was thinking the same. A large proportion of uk pubs are leased by the likes of Star (Heineken), Punch, Enterprise etc, and they really do screw their landlords on alcohol ties. Free houses basically procure alcohol at 1/2 the price. Food GP is much better in these pubs as a result.

yodsanklai 4y ago

> The margin is in food Interesting, I've always been told than margin was in alcohol (esp. in high end restaurants).

toyg 4y ago
Restaurants and pubs, despite recent convergence, are in different markets. Restaurants rely on turnover, pubs on repeated orders.
- kman82 4y ago
  Repeated orders are turnover. Same thing.

nly 4y ago

My local pub does the best burgers I've ever eaten. Absolutely phenomenal. Stone baked pizzas as well. I'd go there for food with my partner, say a Sunday lunch, but I'd never go there just to drink. I can't think of anything more boring.

anitil 4y ago

In NSW (a state in Australia) a bar/pub is often just an excuse for a poker machine license, with all the actual revenue coming from gambling

astrange 4y ago

Note “landlord” doesn’t mean the same thing it does in the US, it means the person who actively operates the pub.

oneoff786 4y ago
Do they not own the land and building?
- lmm 4y ago
  Not necessarily. A pub landlord and a property landlord are completely separate concepts. Of course the same person might be both.
- astrange 4y ago
  Traditionally they did but it’s not required. It’s like if you called property managers landlords whether or not they actually are one.
- rossriley 4y ago
  Not any more, the majority are owned by the brewery groups and leased to the landlords. If you see an independent pub in the UK it will be labelled as a 'Free House' that means it is independent of a brewery and can sell any beers it likes.
  - M2Ys4U 4y ago
    Even pubs that are free of tie don't necessarily own the land/building, they'll lease it from a property company (usually one specialising the hospitality).
  - oneoff786 4y ago
    I would imagine that’s raised prices by a lot then

seanmcdirmid 4y ago

Strange. In the USA, many restaurants barely break even on food and make up their profit on alcohol drinks. They live and die by their liquor license. Is it because they go for pricier drinks in the states?

toyg 4y ago
A lot has to do with alcohol prices outside pubs, i.e. supermarkets and shops, as well as taxation levels.

monk_e_boy 4y ago

I work in post 16 education. The number of young adults who have never had a drink is crazy high. A lot of them just don't drink, don't go out much and haven't ever been to a pub. Covid. Lock down. Being fucking skint. Not having access to a car or bus service (remember the old days when a mate would drive 7 or 8 of you and your mates to a local for a skin full? Doesn't happen any more)

sudosysgen 4y ago
As a young adult I just don't see drink as much fun to be quite honest.

ransom1538 4y ago

" There isn't sufficient margin in drink to float a pub. The margin is in food (and to an extent, dispensed soft drinks)." Lol. Try a simple experiment. 1) Pour me a beer. 2) Make me a steak dinner. Task: Find out which takes an entire cooking staff, dish washers, grills, linens, produce, deep freezers, meat bills, gas bills, .... OH! Medium rare please.