How to Calculate Pub Gross Profit in 2026

Last updated: 2 May 2026

Most pub licensees think they know their margins until they sit down with a proper accountant and realise their EPOS is showing them turnover, not profit. Gross profit calculation sounds like basic maths, but it’s where the gap between a struggling pub and a profitable one actually opens up. You can turn over £300,000 a year and still lose money if your cost of goods is wrong. I’ve seen it. I’ve nearly lived it. This guide walks you through exactly how to calculate pub gross profit, why the numbers matter more than you think, and the mistakes that cost licensees money every single week.

What is Pub Gross Profit?

Gross profit is the money left over after you pay for every drink, pint, and meal that walks out the door. It is not net profit. It is not what you take home. It’s the gap between what customers give you and what you had to buy to serve them.

Here’s the critical distinction most pub landlords get wrong: your EPOS will tell you that you turned over £5,000 on a Saturday night. That’s revenue. Gross profit is what’s left after you subtract the cost of every pint, every bottle of wine, every spirit measure, and every food item that went into that £5,000.

If your gross profit margin is 68%, that means for every pound of sales, you keep 68 pence and spend 32 pence on stock. The remaining 68 pence has to cover your rent, rates, staff, electricity, insurance, and everything else. That’s why gross profit matters more than turnover. A pub doing £8,000 a week with a 62% margin might actually be making less money than a pub doing £6,000 a week with a 70% margin.

In a tied pub like mine at Teal Farm, the pubco sets the retail prices but they also set the cost to you. That’s both protection and constraint. You know exactly what your cost of goods is because the pubco invoices you for it. Free of tie pubs have more flexibility but also more responsibility to negotiate supplier prices. The principle is identical though: gross profit = revenue minus cost of goods sold.

The Formula That Actually Works

The basic formula is simple. The execution is where most pubs fall down.

Gross Profit = Total Revenue − Cost of Goods Sold (COGS)

Gross Profit Margin % = (Gross Profit ÷ Total Revenue) × 100

So if your weekly turnover is £5,000 and your cost of goods is £1,500, your gross profit is £3,500 and your margin is 70%. That’s a healthy margin. But here’s what happens in reality.

You run the till. The EPOS says turnover is £5,000. But what was your actual cost of goods? Most licensees guess. They look at their invoices from the pubco or supplier and think “that looks about right.” That’s not a calculation. That’s a hope.

The correct way to measure COGS in a pub is using the stock sheet formula:

Opening Stock + Purchases − Closing Stock = Cost of Goods Sold

This is not fancy. This is not hard. But it requires you to actually count your stock, know what it cost, and do the maths every single week. When I took on Teal Farm three years ago on my birthday, the previous licensee had been running on estimates for eighteen months. We did a proper stocktake on day one. The actual margin was 4 percentage points lower than they thought. That’s not a rounding error. That’s £2,000 a month in unaccounted cost.

If you’re using a best pub EPOS systems guide to choose your till system, make sure it can integrate with your stock counts. Most standard EPOS systems cannot. They show you sales. They don’t show you COGS automatically. You have to feed the numbers in.

How to Calculate Your Cost of Goods

This is where the abstraction becomes real.

Step 1: Count Your Opening Stock

On the day you want to measure (usually a Monday morning), physically count everything in your cellar, behind the bar, and in the store. Every bottle. Every keg. Every tin. Record the quantity of each item.

Step 2: Find the Cost Price of Every Item

This is easier if you’re tied. Your pubco invoice tells you what you paid. If you’re free of tie, look at your supplier invoices or your last purchase receipt for each item. You need the cost price, not the retail price you charge customers.

Step 3: Record All Purchases in the Period

Every delivery from your supplier goes into a log. Date, item, quantity, cost. This has to be accurate. One missing delivery and your COGS calculation is wrong. If you’re using deliveries from Marston’s CRP like I am, there’s a system in place. If you’re negotiating with independent suppliers, you need to keep paper records or a simple spreadsheet.

Step 4: Count Your Closing Stock

At the end of the week (or month, depending on your reporting cycle), count everything again. Same methodology. Every bottle. Every cask. Every tin.

Step 5: Do the Maths

Opening stock value + Purchases value − Closing stock value = Your cost of goods for that period.

Divide that by your revenue for the same period. That’s your actual margin.

I do this every Monday morning at Teal Farm. It takes forty minutes. I use a simple spreadsheet with a cellar list. I’ve got 180 covers most nights, a quiz night, sports fixtures, and food service running simultaneously. If I can make time for it, it’s not an workload excuse. It’s a priority choice.

Why Your EPOS Numbers Might Be Wrong

Your till is a brilliant tool for one thing: recording what you’ve sold and to whom. It is not a tool for measuring profit. But most pub landlords treat it like it is.

Here’s why EPOS data alone will mislead you:

• It doesn’t know what you paid for stock. The EPOS records that you sold a pint of Stella for £4.50. It doesn’t record that Stella cost you £1.85 per pint. You have to tell it that. Most systems don’t bother.
• It doesn’t account for waste. When you pour a pint down the sink because the line wasn’t clean, or because a customer sent it back, or because you spilled it during service, the EPOS doesn’t record that as a cost. But it is a cost. It’s stock you paid for that generated zero revenue.
• It doesn’t measure shrinkage. In an honest pub, shrinkage should be 1–1.5% of stock value per month. In most pubs, it’s 2–4% because of over-pouring, staff mistakes, or things that go missing. The EPOS doesn’t tell you this is happening.
• It doesn’t separate wet from dry. If you serve food alongside drinks, your food cost is typically much lower margin (35–45%) than your wet sales (70%+). Your EPOS might show an overall margin of 62%. But that masks the fact that your food is losing money and your drinks are keeping you alive.

This is why a Pub Command Centre that sits on top of your EPOS data is actually essential, not optional. Your EPOS tells you what sold. A proper P&L system tells you whether you made money. The difference is material. In 2025, I had my best revenue year. I also had the cleanest margin picture because I finally separated wet sales from food, and I finally had real-time visibility into which days were actually profitable.

Common Calculation Mistakes Licensees Make

I’ve made most of these. Here’s what costs you money:

Mistake 1: Including Staff Meals in COGS

Your staff meal is not cost of goods sold. It’s a wage benefit. It should come out of labour budget, not COGS. If you’re including the cost of staff meals in your COGS calculation, your margin looks worse than it actually is. More importantly, you’re not measuring the real problem — which is probably that you’re not paying staff enough, not that your COGS is too high.

Mistake 2: Forgetting to Account for Opening Stock When You Start

When you take on a pub, there’s stock in the cellar. If you don’t count it, your opening stock is £0. Your first week’s COGS calculation includes all that inherited stock as “purchased.” Your margin looks terrible. It’s not. You just didn’t measure the opening position correctly. This is especially critical if you’re taking on a pub mid-lease or if the previous licensee left a full cellar.

Mistake 3: Mixing Cash and Credit Purchases

If you buy a case of wine on credit, it’s a purchase on the day you receive it, not the day you pay the invoice. Your COGS is measured by when the stock entered your premises, not when the money left your bank. Get this wrong and you’ll think your month’s margin is better than it actually was.

Mistake 4: Not Adjusting for Damaged or Expired Stock

When you count closing stock, do you count the broken bottles, the expired cans, or the flat kegs? You shouldn’t. They’re a loss, but they’re not COGS because they never generated revenue. Record them separately so you can see shrinkage for what it is: a real cost that should be reduced through better handling or staff training.

Mistake 5: Calculating Margin at the Wrong Level

If you have multiple revenue streams — wet sales, food, machine income, function hire — you might calculate one overall margin and think you’re measuring profit. You’re not. You’re masking problems. A pub that gets 60% margin on food because the chef is expensive but 72% on drinks needs to know that imbalance. An overall margin of 70% hides it. Use a pub profit margin calculator to break it down by category. Knowing what’s actually making money is the only way to fix what isn’t.

Getting Real Numbers from Your Pubco

If you’re in a tied pub like I am, you have an advantage and a constraint. Your pubco knows your cost of goods because they invoice you for it. But you have to ask for the data in the right way.

When you sign a Marston’s CRP agreement or any tied tenancy, your business development manager should give you transparency on cost. In my experience, this doesn’t happen automatically. You have to ask. I asked my BDM for a breakdown of my cost of goods by category. Took three emails. But then I could measure actual margin against tied wholesale price. That’s when I realised I had a staff over-pouring problem that was costing me £1,200 a month. The pubco’s numbers made that visible.

If you’re free of tie, you have more control but also more complexity. You negotiate with multiple suppliers. Your cost varies by volume and timing. You might get a better price on lager if you buy a pallet instead of two cases. That flexibility is good for cashflow negotiation but bad for predictability. The only way to manage it is weekly stock counting and a simple spreadsheet that tracks cost price, not just supplier name.

What to ask your pubco or supplier for:

• Itemised invoice showing cost price, not just line total
• Cost breakdown by category (lager, cider, spirits, wine, soft)
• Confirmation of your cost price if you move volume up or down
• Written confirmation of any introductory pricing or promotional cost reductions

Before you sign anything with a pubco, know your numbers. Get the cost schedule in writing. Calculate what your margin will be at different turnover levels. A Pub Command Centre gives you real-time financial visibility from day one so you’re not making assumptions based on estimates. £97 once. No monthly fees. That’s less than one pint’s worth of margin error.

For more information, visit pub profit margin calculator.

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