Pub Break Even Calculation 2026

Last updated: 2 May 2026

Most people taking on a pub have no idea what their break-even point actually is — and that’s exactly how they end up underwater within six months. You can have a busy bar, good food scores, and happy staff, but if you don’t know the minimum revenue you need to cover your costs, you’re flying blind. The break-even calculation isn’t complicated, but it requires brutal honesty about your numbers. This article walks you through exactly how to work out your pub break-even point, what costs actually matter, and how to use that figure to evaluate whether a pub tenancy is worth taking on. By the end, you’ll know whether that deal the BDM is selling you stacks up financially.

What Break-Even Actually Means for a Pub

Break-even is the revenue point where your total income exactly equals your total costs — you make neither profit nor loss. For a pub, this is the minimum level of sales you need every week to keep the doors open without bleeding money. Below break-even, you’re losing cash. Above break-even, you’re making profit. It’s the most important number you need to know before you sign a tenancy agreement.

The reason most first-time licensees fail is not because they’re bad operators — it’s because they never calculated whether break-even was realistic given the pub’s location, size, and market. A busy 200-cover pub in a town centre might hit break-even on a quiet Tuesday. A 80-cover rural pub might need a packed Saturday to get there. If you don’t know which one you’re inheriting, you can’t make an informed decision.

I took on Teal Farm Pub three years ago on a Marston’s CRP tenancy. Before I signed, I calculated my break-even point based on realistic takings data the BDM provided. That number told me exactly how many quiet nights I could afford, how much headroom I had for a quiet month, and whether the rent and tie were survivable. Knowing that figure changed everything about how I negotiated the deal.

Fixed Costs: The Bills That Don’t Change

Fixed costs are expenses that stay the same every week regardless of whether you do £500 or £5,000 in sales. These are your non-negotiable outgoings, and they’re what create the minimum revenue target you need to hit.

The main fixed costs for a UK pub are:

• Rent or tie rent. This is the biggest one. Whether you’re on a free house, a Marston’s CRP agreement, or a traditional tie, your monthly rent obligation doesn’t change if trade is quiet.
• Business rates. Pub business rates in the UK vary by location and rateable value, but they’re fixed annual costs. Calculate this monthly.
• Utilities (electricity, gas, water). There’s some flexibility here — you use less in quiet weeks — but the standing charge doesn’t change. Budget conservatively.
• Insurance. Employers’ liability, public liability, contents insurance. This is fixed annual cost, divide by 52 weeks for your weekly burn rate.
• Base staff wages. At minimum, you need a manager and some cover staff. These are fixed even in quiet weeks. Don’t assume you can cut below this without closing days.
• Loan repayments or finance agreements. If you borrowed for a refurb or stock, this obligation is fixed.
• Professional fees. Accountancy, compliance, licensing advice. Fixed annual costs.

When you add these up weekly, you get your fixed cost baseline. This is what you need to cover just to stay operational, before making a single pound of profit.

Variable Costs: What Changes With Sales

Variable costs are expenses that change in direct proportion to your sales volume. The more you sell, the higher they go. As a percentage of revenue, they’re often expressed as a cost ratio.

The main variable costs are:

• Cost of goods sold (COGS). This is stock — beer, spirits, soft drinks, food, mixers. For wet sales in a typical pub, COGS is 25–35% of revenue. For food, it’s typically 28–35%. Your pubco tie might dictate much of this.
• Stock waste and breakage. Spillage, damaged stock, stolen stock, date-expired product. Most pubs underestimate this. Budget 2–3% of revenue minimum.
• Delivery charges. If your pubco charges per delivery or per case, this comes out of margin.
• Card payment processing fees. If you’re on a tied cash tie or restricted EPOS, your payment processor fees might be higher than retail standard — often 2–3% versus 1.5–2%.
• Casual staff wages. Hours that expand or contract with covers. If you’re busy 100 covers, you need an extra bar staff member. If you’re quiet at 30 covers, you don’t.
• Consumables (cleaning, glass wash, paper towels). These scale roughly with sales volume.

When I audit my own numbers every week using pub profit margin calculator tools, I’m usually more conservative on COGS than the pubco accounts suggest I should be. Reality on the ground is messier than the spreadsheet says. Waste happens. Staff pour heavy. Stock goes out of date. Real variable cost percentage is typically 5–10% higher than theory predicts.

How to Calculate Your Break-Even Point

The break-even formula for a pub is straightforward:

Break-Even Revenue = Fixed Costs ÷ (1 − Variable Cost Percentage)

Here’s how to use it:

1. Add up all your weekly fixed costs. (If you have monthly costs, divide by 4.33 to get weekly.)
2. Calculate your variable cost percentage as a decimal. (If COGS is 30% and other variable costs are 5%, total is 35%, which is 0.35 as a decimal.)
3. Subtract that decimal from 1. (1 − 0.35 = 0.65.)
4. Divide fixed costs by that result.

Example:

Fixed costs per week = £1,500
Variable cost percentage = 35% (0.35)
Break-even revenue = £1,500 ÷ (1 − 0.35) = £1,500 ÷ 0.65 = £2,308 per week

This pub needs to do £2,308 in sales every single week just to break even. That’s roughly £329 per day. Below that, it’s losing money.

The figure that changes everything is your gross profit percentage (GP). This is 1 minus your variable cost percentage. In the example above, GP is 65%. The lower your GP, the higher your break-even point, because every pound of sales covers fewer costs. Conversely, the higher your GP, the lower your break-even. This is why tied pub terms matter so much — a low tie can crush your GP and push break-even to unrealistic levels.

Real Example: 180-Cover Community Pub

Let me walk through a real scenario using Teal Farm Pub as a reference. This is a 180-cover community pub in Washington, serving wet sales, dry sales, quiz nights, and match day events simultaneously.

Fixed costs per week:

• Rent (Marston’s CRP) = £400
• Business rates (divided weekly) = £220
• Utilities (conservatively estimated) = £160
• Insurance = £80
• Base staff wages (manager + 1 cover, part-time) = £450
• Professional fees, licensing, compliance = £50
• Total fixed = £1,360 per week

Variable costs:

• COGS (food and wet) = 32% of revenue
• Waste and breakage = 2%
• Payment processing = 1.5%
• Casual staff wages = 8% of revenue (for covers-dependent hours)
• Total variable = 43.5% of revenue

Calculation:

GP = 1 − 0.435 = 0.565 (56.5%)
Break-even = £1,360 ÷ 0.565 = £2,407 per week

Teal Farm needs to do £2,407 per week (roughly £344 per day) just to break even. With 180 covers and mix of quiet and busy days, that’s achievable — but there’s no margin for error. A £400 week below that starts eating into whatever cash reserves you have.

However, here’s what’s important: I estimated variable costs at 43.5%. The real number? It’s closer to 48% when you factor in genuine waste, staff pour patterns, and delivery inefficiencies. That pushes break-even to £2,630 per week. That’s a £220 weekly gap between theory and reality. Over 52 weeks, that’s £11,440 in unbudgeted cost. This is why knowing your actual numbers matters before you sign.

Using Break-Even to Evaluate a Tenancy Deal

The reason you calculate break-even is to answer one brutal question: Is this achievable?

Before you sign a tenancy agreement, ask the BDM or landlord for historical takings data from the previous two operators. Not the best weeks or “average” weeks — actual till rolls. Then:

1. Calculate your estimated break-even based on realistic cost assumptions.
2. Compare it to the historical takings pattern. How many weeks hit break-even? How many fall below?
3. Ask yourself: Can I operate this pub profitably if 20% of weeks are below break-even? How many cash reserves do I need?
4. Model what happens if takings drop 10–15% (they often do when a new operator starts).

If the pub’s historical takings are consistently below your calculated break-even, the deal isn’t viable, no matter how good the location looks or how confident the BDM sounds. This is not cynicism — it’s maths. Marston’s CRP tenancies are good business for the right pub in the right location. But if break-even is unrealistic, you’re borrowing trouble.

When I evaluated Teal Farm, the previous operator had averaged £2,200–£2,600 per week over three years. My calculated break-even was £2,407. That meant roughly 60% of weeks were profitable, 40% were break-even or losing. With decent cash reserves and the events programme generating uplift, it was viable. A pub averaging £1,800 per week with that same break-even point would not be.

Before you sign anything, know your numbers. Pub Command Centre gives you real-time financial visibility from day one — labour percentages, GP split, VAT liability, and weekly P&L. At £97 once, it’s the cheapest insurance policy you’ll buy. Most pub failures don’t happen because operators are bad at hospitality. They happen because operators never properly understood their break-even point, variable costs, or cash runway. Don’t be that licensee.

For more information, visit retail partner earnings calculator.

For more information, visit best pub EPOS systems guide.