Reading Your Pub P&L: What Every Licensee Must Know

Last updated: 24 April 2026

Most pub licensees don’t understand their own P&L until something goes wrong—and by then it’s usually too late to fix it. I’ve watched good operators walk away from profitable pubs because they misread their numbers, and I’ve seen struggling pubs turn around the moment their tenant finally grasped what the profit and loss statement was actually saying. If you’re thinking about taking on a pub, or you’re already running one and feeling blind to your real financial position, this is the conversation you need to have right now.

A pub profit and loss statement isn’t a mystery document written in accountant code. It’s a map of where your money comes in and where it goes out—and when you learn to read it properly, it tells you whether you’re actually making money or just moving cash around.

In this article, I’ll walk you through every line of a pub P&L statement in plain English, show you what the numbers mean in real terms, explain the benchmarks you should be hitting, and give you the red flags that mean something needs to change immediately. By the end, you’ll be able to look at your own profit and loss account and know exactly what it’s telling you about your pub’s financial health.

What Is a Pub P&L Statement?

A pub P&L statement is a monthly or annual financial document that lists every pound that came into your pub and every penny that went out, ending with a single figure: profit or loss.

Think of it as a report card for your business. Your EPOS system records every drink poured and meal sold. Your bank account shows every supplier payment, wage, and bill. The P&L pulls all of that together and tells you the story: did this month make money, or did it drain it?

Your pubco will produce one. Your accountant will produce one. You should be reading it every single month—not waiting until the year-end accounts arrive and you’re shocked at what you owe in tax.

The P&L is divided into three main sections:

• Revenue — everything you sold (wet sales, food, other)
• Costs — the price of the stock you sold, plus wages, rent, utilities, and other running expenses
• Profit or Loss — what’s left when you subtract costs from revenue

That’s genuinely it. Everything else on the P&L is either a detail inside one of those three buckets, or a calculation that helps you understand what the numbers mean.

Revenue: Understanding Your Total Sales

The first line on your P&L is the easiest to understand: total sales, also called turnover.

This is the sum of every pound your pub took in a given period. Your EPOS system breaks this down by category—wet sales (beer, wine, spirits), food, and other (quiz machines, charity, etc.). This breakdown matters because different products have different costs and different margins.

Most UK pubs generate 70–80% of revenue from wet sales and 20–30% from food, though this varies widely based on your venue type and trading model. A community wet-led pub like Teal Farm runs differently from a food-focused gastropub, and your P&L will reflect that.

When you’re reviewing your revenue line, ask yourself:

• Is this increasing month-on-month, or flat? If it’s flat for three months, something is wrong.
• Are wet sales and food sales moving proportionally, or is one dragging the other down?
• Does this match what you see in the till? (It should. If the P&L shows £12,000 sales but you only count £10,500 in notes and card transactions, you have a problem.)

Your revenue line is the foundation of everything that follows. If you’re not confident in your sales figures, you can’t trust the rest of the P&L.

Cost of Goods Sold (COGS) and Your Gross Profit

COGS is the wholesale price you paid for the drinks and food you sold. If you sold a pint of lager for £4.50, your COGS might be £1.20. The difference between the selling price and the COGS is your gross profit on that pint.

Your COGS as a percentage of revenue is called your cost of sales ratio, and it’s one of the most important numbers on your P&L because it tells you immediately whether you’re pricing correctly or losing money to wastage and theft.

For most UK wet-led pubs, COGS should sit between 25% and 35% of revenue. For food-led operations, it might run higher—35% to 40%—because food has lower margins than alcohol. If your COGS is creeping above these benchmarks, the culprits are usually:

• Wastage (over-pouring, spillage, customer walkouts)
• Theft (staff or customer theft—it happens more than you’d think)
• Incorrect pricing (you’re selling at cost or below)
• Supplier contract creep (your tied supply contract prices have risen)

To calculate your gross profit, you subtract COGS from revenue. If you sold £15,000 and your COGS was £4,200, your gross profit is £10,800. This is the money left to pay your wages, rent, rates, utilities, and keep as profit.

Gross profit margin is gross profit as a percentage of revenue. In that example, it’s 72% (£10,800 ÷ £15,000). That’s healthy. If your gross profit margin drops below 60%, you have a serious cost of goods problem and you need to investigate immediately.

Use a pub profit margin calculator to work through your numbers if you’re unsure. The maths is straightforward, but the interpretation matters.

Operating Expenses: The Money That Leaves the Till

Operating expenses are everything else: staff wages, rent, business rates, utilities, insurance, marketing, cleaning, repairs, and professional fees. These are the fixed and semi-fixed costs that run your pub whether you sell 50 pints or 200.

Your P&L should list these separately so you can see which ones are eating into your profit. Common categories include:

• Labour costs — staff wages, payroll tax, pension (usually your single biggest operating expense)
• Rent and business rates — typically lumped together as occupancy costs
• Utilities — gas, electric, water
• Professional services — accountancy, legal, payroll
• Repairs and maintenance — equipment, fabric, outside area
• Insurance — public liability, building, stock
• Marketing and promotions — not all pubs track this separately, but you should
• Depreciation and finance costs — equipment loans, if applicable

The trap most new licensees fall into is thinking of these as “fixed”—that is, unchangeable. In reality, several of these are moveable. You can reduce utilities by fixing leaks and servicing heating systems. You can cut repairs by maintaining equipment properly rather than letting it break. And you can absolutely control labour costs, which brings us to the next section.

Labour Costs and Why They Matter More Than You Think

Labour is the enemy of pub profit. It’s also essential to running a good pub. This is the tension every licensee lives with.

Labour costs should typically sit between 15% and 30% of your revenue, depending on your model. A wet-led community pub with minimal food might comfortably run at 15–20% labour. A food-focused pub with table service might run at 25–30%. If you’re at 35% or above, you’re paying too many staff, your staff aren’t productive enough, or you’re not pricing correctly.

At Teal Farm, we’ve achieved a labour cost of 15% against the UK benchmark of 25–30%, and I’ll tell you exactly why: we run tight rotas tied to trading patterns, we’ve trained staff to work efficiently, and we don’t employ people just because we like them. That sounds harsh, but the maths is honest. If your labour costs are running high, you can’t afford to keep the doors open long-term, and your staff will be made redundant anyway.

Your labour cost percentage is calculated by dividing total wages (including employer’s National Insurance and pension contributions) by your total revenue, then multiplying by 100. If you paid £3,000 in wages in a month and your revenue was £15,000, your labour cost is 20%.

When reviewing your labour line, look for:

• Is it consistent month-to-month, or does it spike and dip unpredictably?
• Does it match your planned rota? If you budgeted £2,800 and actual wages are £3,400, you need to know why.
• Are you including all employer costs—National Insurance, pension, apprentice levy—or just gross wages? If you’re only counting the latter, your real labour cost is higher.

Labour is also where new operators bleed money without realising it. You’re lonely at first, so you hire extra staff for company. You feel guilty cutting hours, so you overstay on the rota yourself (and pay yourself nothing). You don’t want to fire underperformers, so you keep them on. All of that is expensive, and all of it shows up as a bloated labour line on your P&L.

Read more about pub wage cost benchmarks and how to hit them in our detailed pub wage costs guide.

Reading Your Bottom Line: Are You Actually Profitable?

Now we get to the number that matters: profit or loss. This is revenue minus all costs.

Your net profit margin is your profit expressed as a percentage of revenue, and it’s the single best indicator of whether your pub business is worth doing.

Here’s the reality: if your net profit margin is below 10%, your pub tenancy is not sustainable. You’re working 60-hour weeks, you’re stressed, and you’re earning less than minimum wage. If it’s 10–15%, you have a viable business. If it’s 15% or above, you’re running a genuinely profitable pub.

Let me give you real numbers. If your pub does £15,000 revenue in a month and your net profit is £1,500, that’s a 10% margin. That’s the bare minimum to make the business worth doing as a full-time operator. Below that, you’re essentially subsidising your pubco.

The challenge is that many new licensees don’t see this until month 4 or 5 when the accountant’s figures arrive. By then, it’s often too late to adjust. That’s why Pub Command Centre exists: to give you real-time visibility into your labour %, VAT liability, and cash position from day one. You can’t fix a problem you don’t see coming.

When you’re reading your bottom line, look at the trend. Is profit growing, shrinking, or flat? One bad month means nothing. Three months of declining profit means you need to act. Common causes of profit erosion include:

• Revenue drop (fewer customers, lower average spend)
• COGS creep (prices gone up, wastage gone up)
• Labour spike (seasonal staffing, unexpected absences)
• Unexpected costs (emergency repairs, one-off professional fees)

Identify which one it is, then fix it. If revenue is down, are you trading quieter times or have you lost market share? If COGS is up, where—wet sales, food, or both? If labour is up, is it temporary or structural? Once you know the problem, you can solve it. But only if you’re reading the P&L regularly.

Use a pub profit margin calculator to project what your net profit could be at different revenue and cost levels. This is genuinely useful when you’re assessing whether a pub is worth taking on, or whether changes you’re planning will actually improve the bottom line.

Reading Beyond the Numbers: Context and Red Flags

A P&L statement tells you what happened, but it doesn’t always tell you why. That’s where context matters.

If your revenue dropped 15% last month, was that because you were closed for refurbishment, or because you lost customers? If your COGS jumped, was it one big food order that inflates that month’s ratio, or a real increase in your cost per unit? If your labour cost spiked, was it holiday cover or permanent extra headcount?

The most dangerous reading of a P&L is the surface reading, where you compare this month to last month without understanding what actually changed in the business. Context transforms a number from a fact into useful intelligence.

Red flags on a pub P&L include:

• Revenue declining for three consecutive months without explanation
• COGS above 40% of revenue (investigate wastage and pricing immediately)
• Labour cost above 35% (you have too many staff or they’re not productive)
• Rent + rates above 15–20% of revenue (you may have signed a bad lease)
• Net profit margin below 5% (the pub is not economically sustainable)
• Cash position and P&L profit not matching (you’re generating profit on paper but not converting it to cash)

That last one is sneaky. A pub can show paper profit but have a negative cash position because money is tied up in stock, customer tabs (if you run credit), or simply timing differences in when invoices are paid versus when they’re recorded. Your P&L is accrual accounting; your bank statement is reality. Always reconcile the two.

Putting It Together: A Real Example

Let me walk you through a real example using typical numbers from a 180-cover community pub like Teal Farm.

Monthly Revenue: £15,000

• Wet sales: £11,500 (77%)
• Food: £3,000 (20%)
• Other (gaming, charity): £500 (3%)

Cost of Goods Sold: £4,050 (27% of revenue)

• Wet purchases: £3,200
• Food purchases: £850

Gross Profit: £10,950 (73% margin)

Operating Expenses:

• Labour: £2,250 (15%)
• Rent: £1,500 (10%)
• Business rates: £600 (4%)
• Utilities: £400 (2.7%)
• Insurance: £250 (1.7%)
• Repairs & maintenance: £300 (2%)
• Professional services: £150 (1%)
• Marketing: £200 (1.3%)
• Other: £150 (1%)

Total Operating Expenses: £5,800 (38.7% of revenue)

Net Profit: £5,150 (34.3% margin)

That’s a healthy pub. The margin looks high because the numbers are clean, but here’s the thing: that 34.3% figure is your operating profit, not your take-home. From that, you still owe corporation tax, and you may have owner drawings, loan repayments, or capital investment that comes out before you see a penny.

Now adjust the scenario. Labour rises to 25% (£3,750) because you add a full-time employee. COGS rises to 32% (£4,800) because food sales increase and food has higher cost. Revenue stays the same at £15,000.

New gross profit: £10,200. New operating expenses: £6,550 (assuming labour is the only variable). New net profit: £3,650 (24.3% margin).

That’s still solid, but you’ve cut your profit by 29% by making two operational changes. That’s why reading your P&L matters. Every decision shows up on that page.

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