What % of Revenue Should Your Pub Labour Cost Be?

Last updated: 24 April 2026

Most pub landlords think their wage bill is fine until they run the numbers properly—and realise they’re bleeding £500 a week they didn’t know about. Your labour cost percentage is the single most controllable profit lever you have, yet it’s also the one most operators get wrong because they don’t know what “right” looks like. I took on Teal Farm Pub in Washington NE38 three years ago under a Marston’s CRP agreement, and one of the first things I did was get brutal with the staffing numbers. Today, my labour cost averages 15% against the UK industry benchmark of 25-30%, and it’s one of the reasons 2025 was my best revenue year yet. This article tells you exactly what your pub labour cost percentage should be, how to calculate it, and why hitting the right number transforms profitability from hope into reality.

What Is Pub Labour Cost Percentage and Why It Matters

Labour cost percentage is the total amount you spend on staff wages (including all employment costs) divided by your total revenue, expressed as a percentage. It matters because it’s the one cost you can actually control week to week. Your rent is fixed. Your utilities are fixed. Your food and drink costs move with sales but they’re determined by supplier contracts and pour costs you’ve already calculated. Labour is different—you decide how many people work, when they work, what you pay them, and how productively they work.

When I started looking at Teal Farm’s numbers in detail, I found the previous operator had five staff on shift during a Tuesday quiet night serving 40 covers. That’s nearly 13% of revenue going to wages for a night that should have been run by two people. It was invisible waste. Once you know your labour cost percentage, you can see that waste immediately.

Why does this matter for someone thinking about taking on a pub? Because the true cost of taking on a pub isn’t just the ingoing fees—it’s understanding whether the business makes money once you’re inside it. Labour is typically your second-largest controllable expense after cost of goods sold. Get this right, and the difference between a struggling operation and a profitable one is thousands of pounds a year.

UK Pub Industry Benchmarks 2026

The current UK pub industry benchmark for labour cost sits at 25-30% of revenue. This isn’t a single number—it’s a range—because every pub is different. A busy city-centre bar in Manchester will have a different labour profile than a community pub in the Midlands, and both will be wildly different from a food-led gastropub.

The reality is: if your labour cost percentage is consistently above 35%, your pub is struggling financially and needs immediate restructuring. If it’s between 30-35%, you’re in the middle zone—profitable, but with significant room to improve. If you’re hitting 25-30%, you’re benchmarked correctly. If you’re below 25%, you’re either exceptionally efficient, heavily reliant on owner labour (which isn’t sustainable), or you’re cutting corners on service and customer experience.

My operation sits at 15%, which is well below benchmark. I’m going to be honest: this is because I have the advantage of owner-operator labour. I work behind the bar three nights a week without taking a salary. That skews my numbers favourably compared to a managed pub where the manager takes a market-rate salary. If you’re thinking about taking on a pub, factor in your own labour—because if you’re not willing to work in the business, your labour cost will naturally sit higher, and you need to budget accordingly.

Here’s the critical point: you can’t just copy another pub’s percentage. You need to know what’s normal for your pub type, then work to hit it.

How to Calculate Your Labour Cost Percentage

This is straightforward, but most pubs get it wrong by missing hidden costs. Here’s the formula:

Labour Cost % = (Total Staff Costs ÷ Total Revenue) × 100

Total Staff Costs includes:

• Hourly wages and salaries paid to staff
• Employer’s National Insurance contributions (currently 15% above the threshold)
• Pension contributions (auto-enrolment minimum 8%)
• Contract staff and agency fees (if you use them)
• Training and recruitment costs
• Holiday pay accrual (even if not yet paid)
• Any bonuses or commissions

Total Revenue includes:

• All wet sales (beer, wine, spirits, soft drinks)
• All dry sales (food, crisps, snacks)
• Machine income (if you have gaming or jukebox)
• Private function hire revenue
• Any other ancillary income

The most common mistake I see is landlords who calculate labour cost using only wages—forgetting that you’re legally obliged to pay employer’s National Insurance and pension. If you pay someone £12,000 a year, your actual cost is roughly £13,800 once those extras are included. That’s a 15% hidden cost most people don’t account for.

If you’re running a basic till system or manual spreadsheet, tracking this is painful. That’s exactly why understanding your numbers before you sign any tenancy agreement is critical. Pub Command Centre gives you real-time labour %, VAT liability and cash position from day one. £97 once, no monthly fees. Once you have visibility, hitting your target becomes achievable.

Why Your Percentage Might Be Higher (And How to Fix It)

If you’re running above 35%, here are the reasons why, and what actually works to bring it down:

Over-Staffing During Quiet Periods

This is the biggest culprit. You have four bar staff on shift when two could cover the covers comfortably. It happens because you’re trying to give decent staff regular hours (which is good management), but you’re not scheduling ruthlessly by customer demand. Solution: analyse your covers by day and time. If Tuesday lunch is averaging 25 covers, you don’t need three people on—you need one experienced person and one junior. That cuts a £200 shift cost to £120.

Paying Inexperienced Staff Too Much

Giving a 17-year-old their first job at £12/hour is generous but expensive. They’re slow, they waste stock, and they need supervision. Pay junior staff the minimum wage and invest in one or two senior, experienced staff at £13-14/hour. A fast, experienced person will serve more customers and upsell better. You’ll actually save money while improving customer experience.

Not Tracking Contractor Costs

If you’re paying someone to clean, maintain the garden, or do repairs, that’s labour cost too. Many landlords ignore this because it’s “not payroll,” but if you’re calculating labour as a percentage of revenue, it needs to be in there. Once you add it, you often realise you’re paying for duplicate labour (your staff cleaning when you’re also paying a contractor).

Owner Labour Not Being Charged

If you’re working behind the bar for free, your labour cost percentage looks artificially low. The true cost is there—you’re just absorbing it. As soon as you need to hire someone to replace you (illness, holiday), that gap becomes real. For benchmarking purposes, charge yourself a realistic salary. If you’re the manager, that’s probably £28,000-35,000 depending on the pub size. Add it to the calculation to see the real picture.

Labour Costs by Pub Type: Wet-Led vs Food-Led

Your target labour cost percentage depends entirely on what you’re selling. This is critical because it changes what “good” looks like.

Wet-Led Pubs (Bar-Focused, Limited or No Food)

Target labour cost: 28-32% of revenue. These pubs have high drink margins (typically 65-75% gross profit on spirits, 40-50% on beer). You can afford to spend more on labour because every pound of revenue is highly profitable. A busy wet-led pub might have six staff on shift during peak hours, and that’s sustainable. Your revenue is high, so the percentage stays within range even with more people on the floor.

Food-Led Pubs or Gastropubs

Target labour cost: 20-25% of revenue. Food has much lower margins—typically 30-40% gross profit. You’re selling volume at lower margins, which means labour is a bigger cost problem. You can’t afford to over-staff a food-led operation. These venues need tighter scheduling and often benefit from a smaller, more skilled kitchen team rather than a large casual bar team.

Mixed Operations (My Situation)

Teal Farm is a community pub with wet sales (around 60% of revenue) and food (40%). That mix means I target something between the two benchmarks—around 23-27% would be the realistic target. I’m at 15% because of owner-operator input, but if I were to hire a manager to replace my shifts, I’d expect to see that climb to the 25-27% range, which would still be healthy.

The key: before you take on a pub, know whether it’s wet-led or food-led. That changes your entire staffing strategy and profitability equation. Using pub profit margin calculator tools early on helps you stress-test this before you’re signed in.

Real-World Example: How I Hit 15%

When I took over Teal Farm three years ago, the labour cost was running at 32%. The previous operator had seven staff on the payroll with no clear scheduling system. My first week, I ran the numbers properly and realised I was paying roughly £4,800 a month in wages for a pub doing around £15,000 in monthly revenue. That’s 32% before National Insurance and pension—closer to 37% with employment costs included.

Here’s what I changed:

1. Ruthless Scheduling by Covers. I mapped every hour of the previous six months by customer count. Tuesday lunchtimes averaged 18 covers. Friday nights averaged 95 covers. I scheduled staff to match demand, not based on “being nice” to people. This alone cut three full-time equivalent positions.

2. Owner-Operator Input. I committed to working three nights a week behind the bar. That’s roughly 12 hours a week of skilled labour I’m not paying for. But I only did this because I was buying the business—I knew it had to be profitable enough to justify the investment. This isn’t advice I’d give to someone being handed a struggling pub.

3. Invested in Experienced Staff. Instead of keeping all seven staff at low wages, I moved to five staff at better pay. I kept the two fastest, most reliable people and let the others go. The remaining team is more skilled, moves faster, wastes less, and actually improves customer experience. Turnover dropped from 18 months average to 3 years.

4. Tracked Every Cost. Every penny of staff labour, contractor labour, training time, and recruitment gets logged against my revenue. No hidden costs. This visibility meant I could see immediately when someone wasn’t pulling their weight or when I needed to adjust hours.

The result: three years later, labour cost sits at 15% and my NSF audit passed in March 2026. But here’s the honest bit—that 15% includes my own unpaid labour. If I hired someone to replace me, it would climb to 24-25%, which is still excellent for a mixed-operation pub.

This is the reality most pubco marketing won’t tell you: you can hit amazing numbers, but you’re probably going to work harder than you expect to achieve it. What’s your answer going to be—are you willing to work in the business to make it work?

For more information, visit retail partner earnings calculator.

For more information, visit best pub EPOS systems guide.