Royal Blenheim landlord Steven Lyne helps to explain what the true cost of a pint is and why we are seeing so many different prices across the country
It’s been an interesting few months in Oxford for pub regulars, with many venues raising prices to combat the recent impact of new taxes and regulations. It’s a sobering thought to now see prices across Oxford hitting the £5 average pint barrier for real ale in many venues. None of us wants to see these prices go up much further, but recent increases have been essential in ensuring that pubs continue to trade viably as their punishingly slim profit margins are squeezed even further.
With these challenging times for the hospitality industry we are continuing to push forward, trying to provide the wonderful community spaces and essential jobs that our local pubs offer. With prices hitting new highs, though, I’ve had many people ask why pints are so expensive today and why we are seeing some wildly different prices in venues only a few doors away from each other. To help add some context as to what pubs are dealing with, let’s try and look at a simplified breakdown of the true cost of a pint in the UK.
This encompasses not only the price you pay at the bar, but also the various taxes and costs associated with it. More than a third of the price of a pint goes towards taxes. Alcohol duty, VAT and business rates all contribute to this heavy hitting blow for pubs. Reforms to alcohol duty came into effect in February 1 this year, which is when plenty of pub operators first had to look at potential price increases.
I’m sure many of you remember seeing this on the news with the government waxing lyrical on how this will equate to a 1p tax cut on the average strength pint. However, with many other tax changes also being implemented at the same time which impacted operating costs even further, sadly 1p is not the salvation our humble friendly local needed.
The second highest expense tends to be staff wages accounting for around 15 to 20% of the cost of a pint. Having great, well-trained staff behind bars is essential for running a good pub. When customers enter a venue, staff tend to be the first interaction that they will have and really can make or break an opinion of a pub.
In a previous article I’ve spoken about the magic of pubs and what truly makes them work, as having friendly, engaging and attentive staff can really separate a good pub from a bad pub. There’s nothing worse than being served by a staff member who looks like they have no interest in being there!
Staff wages have seen significant increases over the past few years and labour is always a difficult cost for operators to keep under control, especially with the cost-of-living crisis causing less predictable trade compared to years gone by. With the minimum and real living wages increases in April, pubs are feeling the squeeze even more with trying to keep staff employed and once again, the price of a pint had to creep a little higher.
With over 50% of the cost of a pint now taken up, what else is driving price rises? Well, this might be obvious but it’s the cost of running the pub itself! There will be some variations from pub to pub, but these costs could be anything from rent and utility bills to TV subscriptions and bank charges. As many punters know, several of these areas have seen prices hikes due to inflation and even Brexit!
We can also see how geographical challenges can be introduced into the mix. Running a city centre pub in Oxford, I would be looking at totally different figures compared to a quaint country pub in a small village or town. With many of these costs increasing to higher levels every month, it can become quite the juggling act of managing costs across the year.
Another side of operating costs is ensuring that the products we get in are still of high quality. And in most cases, high quality means higher prices! The best pubs can manage this balance well, sourcing high-quality beers and working directly with breweries to ensure customers are getting their money’s worth at their locals.
This is no easy task and can be quite time consuming for businesses already feeling the pinch. Yet the venues that are getting these costs under control are balancing this fine act of hospitality gymnastics as best they can. They are the ones that are still smiling serving every pint and keeping the spark of their venues alive.
And after all the hard work getting that pint into your hand, pubs are not seeing much profit out of that pint glass at all these days. A good profit margin for a pub would be around 7.5% if things are going well. However, as with all good pubs, compromises must be made in order to keep the business viable and frequent visitors coming back. As the dust settles on the most recent price increases, punters will be ever more vigilant seeing which venues are striking these compromises best.
The true cost of a pint
Royal Blenheim landlord Steven Lyne helps to explain what the true cost of a pint is and why we are seeing so many different prices across the country
It’s been an interesting few months in Oxford for pub regulars, with many venues raising prices to combat the recent impact of new taxes and regulations. It’s a sobering thought to now see prices across Oxford hitting the £5 average pint barrier for real ale in many venues. None of us wants to see these prices go up much further, but recent increases have been essential in ensuring that pubs continue to trade viably as their punishingly slim profit margins are squeezed even further.
With these challenging times for the hospitality industry we are continuing to push forward, trying to provide the wonderful community spaces and essential jobs that our local pubs offer. With prices hitting new highs, though, I’ve had many people ask why pints are so expensive today and why we are seeing some wildly different prices in venues only a few doors away from each other. To help add some context as to what pubs are dealing with, let’s try and look at a simplified breakdown of the true cost of a pint in the UK.
This encompasses not only the price you pay at the bar, but also the various taxes and costs associated with it. More than a third of the price of a pint goes towards taxes. Alcohol duty, VAT and business rates all contribute to this heavy hitting blow for pubs. Reforms to alcohol duty came into effect in February 1 this year, which is when plenty of pub operators first had to look at potential price increases.
I’m sure many of you remember seeing this on the news with the government waxing lyrical on how this will equate to a 1p tax cut on the average strength pint. However, with many other tax changes also being implemented at the same time which impacted operating costs even further, sadly 1p is not the salvation our humble friendly local needed.
The second highest expense tends to be staff wages accounting for around 15 to 20% of the cost of a pint. Having great, well-trained staff behind bars is essential for running a good pub. When customers enter a venue, staff tend to be the first interaction that they will have and really can make or break an opinion of a pub.
In a previous article I’ve spoken about the magic of pubs and what truly makes them work, as having friendly, engaging and attentive staff can really separate a good pub from a bad pub. There’s nothing worse than being served by a staff member who looks like they have no interest in being there!
Staff wages have seen significant increases over the past few years and labour is always a difficult cost for operators to keep under control, especially with the cost-of-living crisis causing less predictable trade compared to years gone by. With the minimum and real living wages increases in April, pubs are feeling the squeeze even more with trying to keep staff employed and once again, the price of a pint had to creep a little higher.
With over 50% of the cost of a pint now taken up, what else is driving price rises? Well, this might be obvious but it’s the cost of running the pub itself! There will be some variations from pub to pub, but these costs could be anything from rent and utility bills to TV subscriptions and bank charges. As many punters know, several of these areas have seen prices hikes due to inflation and even Brexit!
We can also see how geographical challenges can be introduced into the mix. Running a city centre pub in Oxford, I would be looking at totally different figures compared to a quaint country pub in a small village or town. With many of these costs increasing to higher levels every month, it can become quite the juggling act of managing costs across the year.
Another side of operating costs is ensuring that the products we get in are still of high quality. And in most cases, high quality means higher prices! The best pubs can manage this balance well, sourcing high-quality beers and working directly with breweries to ensure customers are getting their money’s worth at their locals.
This is no easy task and can be quite time consuming for businesses already feeling the pinch. Yet the venues that are getting these costs under control are balancing this fine act of hospitality gymnastics as best they can. They are the ones that are still smiling serving every pint and keeping the spark of their venues alive.
And after all the hard work getting that pint into your hand, pubs are not seeing much profit out of that pint glass at all these days. A good profit margin for a pub would be around 7.5% if things are going well. However, as with all good pubs, compromises must be made in order to keep the business viable and frequent visitors coming back. As the dust settles on the most recent price increases, punters will be ever more vigilant seeing which venues are striking these compromises best.
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