How to Read a Pub Business Plan: What Numbers Mean

Last updated: 24 April 2026

Most business plans you’ll be shown when considering a pub tenancy contain numbers that don’t match the reality of what actually happens in week one. You’re being sold a story, not a forecast. I’ve spent 15 years in pubs, taken on a tied house under a Marston’s CRP agreement, and watched plenty of operators sign deals based on spreadsheets that look nothing like their P&L by month three. The problem isn’t that the numbers are lies—it’s that they’re built on assumptions nobody bothers to explain, assumptions that collapse the moment your opening weekend doesn’t hit forecast.

When you’re evaluating whether to take on a pub, reading a business plan matters more than most people think, yet almost nobody teaches you how to do it properly. You need to know not just what the numbers say, but what questions they’re avoiding. This guide walks you through every major section of a UK pub business plan, shows you what each figure actually means, and explains the gaps the pubco is quietly stepping over.

By the end of this article, you’ll understand how to stress-test a business plan, spot the assumptions that will sink you, and know exactly which questions to ask your Business Development Manager before you sign anything.

Why Business Plans Fail: The Opening Reality

A business plan is a pubco sales document first and a financial forecast second. It’s designed to convince you that the pub is viable—not to give you an honest assessment of the risk.

This isn’t malice. It’s math. If the pubco showed you the actual numbers—a new licensee’s likely revenue in months 1–3, the real training and settling-in period, the quiet weeks that happen every year—the deal wouldn’t look attractive. So instead, business plans show you a “mature trading” scenario: the pub running at full capacity with a loyal customer base, experienced staff, and zero ramp-up time.

When I took on Teal Farm Pub three years ago on my birthday, the business plan forecast £18,000 a week in sales. By week two, we were doing £7,200. Not because the location was bad or the plan was fraud—but because I wasn’t the previous landlord, the regulars hadn’t shown up yet, and it takes time to establish systems. By month four, we were at £14,500 weekly. By year two, we hit £16,800. The profit in year one was nothing like the forecast. Year two was closer. Now, in 2026, we’re at our best revenue year ever. But if I’d panicked in month three because I wasn’t hitting the business plan, I’d have missed the actual opportunity.

Understanding a pub business plan means understanding what it’s really telling you: this is what the pub can do if everything works. Not what you’ll do on opening day. Not what you’ll definitely make. What’s possible.

Revenue Assumptions: How They Get It Wrong

Every business plan starts with a revenue forecast. It usually looks like this:

• Average covers per week
• Average spend per cover
• Number of trading days
• Calculation: covers × spend × trading days = weekly revenue

The problem isn’t the math. It’s the inputs. And every single one of them is optimistic.

Average Covers Per Week

A business plan might say: “Based on 180 seats and 85% occupancy, the pub averages 150 covers per day.” Teal Farm has 180 covers capacity. In reality, we do closer to 60–80 covers on a quiet Thursday, and 180+ on quiz night or match day. Averaged across the week, hitting 120 per day is realistic for us—and that took two years to achieve.

The question you need to ask: On what data is this “85% occupancy” based? Historical trading data from the previous licensee? An assumption? A hope? If the previous pub underperformed because of a bad landlord, the location might be capable of more. If it underperformed because it’s a quiet area, no business plan will fix that.

The pubco will tell you: “This is based on three years of historical trading from the previous operator.” What they won’t tell you: the previous operator was terrible, or new housing opened down the road, or a competitor closed, or a competitor opened. Context matters. Historical data without context is just a number.

Average Spend Per Cover

A business plan might assume £18 spend per cover (drinks + food + games). This is calculated by taking total revenue from the previous year and dividing by estimated covers. Again, optimistic.

The calculation assumes everyone who visits spends the same. It doesn’t account for the customer who has one pint and leaves (£4.50) versus the table of four having food, bottles of wine, and desserts (£80+). It also doesn’t account for seasonal variation: your summer garden in July doesn’t exist in January.

Real talk: When you’re new, your spend per cover often drops. You might be busier because people are curious, but they’re nursing one drink while they check the place out. True regular spend per cover builds over time as you establish a customer base who trusts you.

What You Actually Need to Know

Before you sign anything, ask the pubco for:

• The actual weekly revenue figures for the last 24 months from the previous operator (not averaged—week by week)
• A breakdown of revenue by day of the week and by season
• Confirmation of whether figures include staff meals, comps, or only paid sales
• Information about local events that drive revenue (festivals, race days, sports fixtures) that might not be regular

Then reduce the forecast revenue by 20% in your head. Ask yourself: If I only do 80% of this revenue in year one, can I still cover my rent and stay solvent? If the answer is no, this isn’t a business—it’s a gamble that requires luck.

Cost of Goods Sold (COGS) and Margins: Where Operators Stumble

COGS is the cost of the products you sell: the price you pay for beer, spirits, wine, soft drinks, coffee, food, and anything else that gets rung through the till. It appears on the business plan as either a total cost or a percentage of revenue.

Most pub business plans show COGS at 28–32% of revenue. This is industry standard and it’s also the number that will destroy you if you don’t understand what it actually means.

What COGS Percentage Really Means

If you do £100,000 in revenue and your COGS is 30%, you spent £30,000 on products. You’re left with £70,000 to cover everything else: rent, rates, staff, utilities, insurance, maintenance, and your own income. This is called your “gross profit” or “gross margin.”

The business plan assumes you’ll buy stock at the pubco’s negotiated rates and sell at the recommended prices. If you negotiate better terms with suppliers (which some operators do), your COGS improves. If you discount aggressively to drive customer count, your COGS gets worse because you’re selling at lower prices while buying at the same cost.

The Hidden Reality of COGS

The business plan COGS percentage assumes:

• You sell the product mix the previous operator sold (60% wet, 40% food, for example)
• You don’t waste stock (spillage, breakage, theft)
• You don’t overpour or give away free drinks
• Your staff don’t drink on shift (many pub leases allow staff one free drink per shift)
• You manage par levels perfectly—not over-stocking, not running out

New operators often see COGS creep up by 2–4% in their first year because they’re learning the stock rotation system, the team’s wastage habits, and the real customer demand mix. That sounds small until you realise a 2% increase on £100,000 revenue is £2,000 you weren’t expecting to lose.

Using a Pub Profit Margin Calculator

Before you commit to a pub, use a pub profit margin calculator to model different scenarios. Adjust the COGS percentage upward by 3%, reduce revenue by 20%, and see if the pub still breaks even. If it doesn’t, you’re looking at a business that only works if everything goes perfectly.

Labour Costs: The Number That Changes Everything

Labour is almost always the biggest manipulated figure in any pub business plan, and it’s the one that catches new operators off guard most often.

A business plan might show labour at 20% of revenue. Across UK pubs, the benchmark is 25–30% of revenue. That gap—5–10%—is the difference between comfort and crisis.

How the Pubco Calculates Labour

The business plan labour forecast usually looks like this:

• Manager salary: £28,000 per year
• Full-time bar staff (2 FTE): £24,000 per year
• Part-time staff (hours as needed): £12,000 per year
• Total: £64,000 per year on a £300,000 revenue pub = 21%

This sounds efficient. It’s also incomplete.

What the Pubco Doesn’t Tell You

The figures above don’t include:

• Employer’s National Insurance: On top of wages, you pay roughly 10–15% more. A £64,000 wage bill becomes £72,000 with employer’s NI.
• Payroll costs and compliance: Accountant fees, payroll software, holiday pay above the statutory minimum, training courses—another 2–3%.
• Staff turnover and training: New staff need paid training hours before they’re productive. High turnover means constant recruitment and induction costs.
• Ramp-up period: The business plan assumes you can run the pub with skeleton crew from day one. Reality: you need extra staff for the first 4–8 weeks while everyone learns your systems.
• Sick cover and holidays: If your manager takes two weeks off, you either cover the shift yourself (no income to you) or pay overtime to staff (higher costs).

The real labour cost is closer to 28–32% of revenue when you account for all of these factors. I run Teal Farm with labour at 15% of revenue—which is significantly better than the UK benchmark—but that’s after three years of establishing systems, keeping experienced staff, and being hands-on. In year one, I was closer to 24%.

The most dangerous assumption in any business plan is that you can run a pub short-staffed. You can’t. Your customers won’t come back, your staff will leave, and you’ll end up working 70-hour weeks with nothing to show for it.

Questions to Ask About Labour Costs

• What wage rates are assumed for manager, full-time, and part-time staff?
• Does the forecast include employer’s National Insurance?
• How many staff are assumed for different trading days (quiet Tuesday vs busy Friday)?
• Is there a ramp-up period built in for month 1–2, or does the plan assume full efficiency from opening day?

Rent, Rates, and Fixed Costs: What Actually Stays Fixed

The business plan lists fixed costs—rent, business rates, insurance, utilities—as fixed because they don’t change month to month. This is true on paper. In reality, very little stays fixed.

Rent: Not as Fixed as You Think

Your rent is tied to a lease. The lease might include a rent review clause every three years, often with a rent increase built in. The business plan shows your current rent, not rent in year four or year seven. If you’re planning to stay for five years, you need to factor in at least one rent increase.

Additionally, if you fall behind on rent—which can happen if revenue drops sharply—the pubco can increase pressure, charge late fees, or even initiate forfeiture of your lease. The business plan doesn’t price in the stress or the cost of that negotiation.

Business Rates

Business rates are set by the local council and reviewed periodically. The business plan shows the current rate bill. In 2026, many councils are reassessing rates, and increases are common. This is out of your control and often not factored into forecasts.

Utilities and Other Variable “Fixed” Costs

Electricity and gas are listed as fixed costs in the business plan, usually based on the previous operator’s annual bill. If you change opening hours, add a kitchen, or have unusually cold winters, your utilities bill rises. Water and waste disposal can also increase if your trading volume increases (more customers = more toilets flushed, more waste).

Insurance and Professional Fees

The business plan includes public liability insurance. It might not include:

• Accountancy fees (£1,500–£3,000 per year)
• Legal advice (tenancy advice, lease interpretation)
• Compliance training (training courses, professional body memberships)
• Licensing applications and renewals

These add up to 2–3% of revenue over a year.

The Bottom Line: Profit or Loss, and Why It Matters

The business plan profit is calculated by taking revenue, subtracting COGS, subtracting labour, subtracting all fixed costs, and what’s left is net profit. This is the money that goes to you as the operator.

A typical business plan might show:

• Revenue: £300,000
• COGS: £90,000 (30%)
• Labour: £60,000 (20%)
• Fixed costs (rent, rates, insurance, utilities): £100,000
• Net profit: £50,000 (17%)

This looks attractive. On paper, you’re making £50,000 a year (or roughly £1,000 a week). The reality is more complicated.

What Profit Actually Means

Net profit is what’s left after all costs. But this profit needs to:

• Pay your personal income tax and National Insurance: £50,000 profit doesn’t mean £50,000 in your bank account. You’ll pay self-assessment tax on this, plus National Insurance. You’ll take home maybe £35,000–£38,000.
• Cover maintenance and repairs: The business plan assumes the pub is in good condition. Real pubs break down. A new dishwasher is £2,000–£3,000. A new ice machine is £1,500–£2,500. Plumbing repairs can be £500–£2,000. In year one especially, there’s almost always a surprise.
• Build a cash buffer: If revenue drops in a quiet month (December, August), you still need to pay rent and staff. That £50,000 profit is supposed to cover the shortfall. In reality, you’ll use most of it.
• Account for your working hours: You’re working 60–70 hours a week as a new licensee. That £50,000 profit is £1,000 a week before tax, for working 70 hours. That’s roughly £14 per hour—less than minimum wage.

This is why the business plan profit number is almost meaningless to you as a starting operator. What matters is: Is there enough cash flow to cover the essentials, and is there headroom for things to go wrong?

Stress-Testing the Bottom Line

Before you sign anything, stress-test the profit. Here’s how:

• Reduce revenue by 20% (realistic for year one ramp-up)
• Increase COGS by 3% (realistic for a new operator learning the business)
• Increase labour by 25% (realistic to cover training, ramp-up, and all the hidden costs)
• Recalculate the profit

Using the example above: revenue becomes £240,000. COGS becomes 33% (£79,200). Labour becomes 25% (£60,000). Fixed costs stay at £100,000. Net profit is now £800. That’s not sustainable.

If stress-testing the business plan turns profit into loss or near-breakeven, you need to ask hard questions before you proceed.

Red Flags in Any Business Plan

Certain things in a business plan should immediately trigger caution:

1. No Breakdown by Month or Season

A responsible business plan shows revenue by month, accounting for seasonal variation. If the plan shows a flat line—same revenue every single month—it’s unrealistic. August is quieter than summer holidays. January is quieter than Christmas. A plan that doesn’t acknowledge this is aspirational, not realistic.

2. Labour Costs Below 20% of Revenue

This is only realistic in very high-volume venues or with unpaid family labour. For a standard community pub, labour below 20% is a red flag that staffing needs are underestimated.

3. No Contingency or Tolerance Built In

A good business plan has a 10–15% margin for error. If revenue drops 15%, the pub should still be profitable. If it doesn’t, there’s no room for reality.

4. Profit Margins That Match National Averages Exactly

If the plan shows 25% net margin and all the major UK pub chains report 22–25% net margin, the plan was probably built from a template, not from this specific pub’s data. Every location is different.

5. No Recognition of Customer Acquisition Cost

The business plan assumes the customer base exists. A new operator needs to invest in marketing, events, and customer outreach to build that base. The plan should account for this cost or explicitly acknowledge that you’re taking on an existing customer base.

6. The Previous Operator’s Exit Reason Is Vague

If the pubco can’t clearly explain why the previous operator left, that’s a warning. Legitimate reasons: retirement, relocation, change of career. Vague reasons: “personal circumstances,” “wanted to pursue other interests.” Those often mean the business underperformed or the operator burned out.

How to Read the Numbers Like a Working Operator

Start by asking your Business Development Manager for the detailed P&L from the previous 24 months, not just the summary. Get weekly data if possible. Then:

1. Plot out the actual revenue by week and month. Look for seasonal patterns.
2. Calculate the previous operator’s actual labour cost percentage (total wages ÷ revenue).
3. Identify months where profit dipped below £2,000. Ask why.
4. Compare the business plan forecast to the actual historical data. Where are the biggest differences?
5. Ask your BDM to justify every number in the business plan based on actual historical data, not assumptions.

The business plan is a starting point, not gospel. Your job as a prospective licensee is to understand the gap between the forecast and the likely reality. That gap is where your risk lives.

If you’re seriously considering taking on a pub for the first time, you also need to understand the broader financial context. Learn about what qualifications you need to run a pub UK, and review the lifestyle reality of running a UK pub so you know exactly what you’re signing up for. Both matter more than you might think.

Reading a pub business plan properly means reading between the lines. You’re looking for the financial viability of the location, yes—but you’re also looking for the assumptions the pubco is betting on, the gaps they’re not mentioning, and the headroom you have if things don’t go perfectly.

Before you commit to any figures, before you sign any lease, take time to understand what the actual cash flow will be if revenue is 20% lower than forecast and labour costs 25% higher. Pub Command Centre gives you real-time financial visibility once you’re trading, so you’ll know exactly where you stand from day one. At £97 once, it’s the cheapest insurance policy for a licensee who wants to actually understand their numbers. But the first step is reading that business plan with eyes wide open, asking hard questions, and not signing until you truly understand what you’re walking into.

For more information, visit retail partner earnings calculator.

For more information, visit best pub EPOS systems guide.