Pub Rent and Profit: The Real Numbers Behind Weekly Costs

Last updated: 24 April 2026

When a pubco tells you the rent is £450 per week, that number is a trap. Not because they’re lying—it’s accurate—but because it’s the only number you’ll see clearly. Everything else hides in smaller print, footnotes, and conversations with the business development manager that you’ll forget by next Tuesday.

I took on Teal Farm Pub in Washington NE38 three years ago on my birthday under a Marston’s CRP agreement, and the rent figure was the least surprising part of the conversation. What surprised me was how many other costs sat behind that headline number, and how differently weekly rent translates to actual profit depending on what you’re serving, how you’re staffed, and what the pubco includes—or doesn’t.

This article cuts through the confusion. You’ll learn how to read a rent quote, what costs hide behind the headline, how to calculate real profit from a weekly rent figure, and the questions you need to ask before you sign anything.

What Weekly Pub Rent Actually Covers

Let me be direct: weekly pub rent is the amount you pay to the pubco for the right to occupy and trade from their property, and nothing more. It does not include rates, utilities, insurance, repairs, or stock. Those are yours.

A typical rent quote of £450 per week (£23,400 per year) sounds straightforward. But here’s what most new licensees don’t realise: the rent alone is rarely the barrier to profitability. It’s the context around that rent that matters.

In a tied house agreement—which is what most Marston’s, Greene King, and Star Pubs tenancies are—your rent is usually fixed. It doesn’t move with inflation unless your lease agreement specifies an upward review clause, which it almost always does. This is actually one of the few predictable costs in pub operation.

What changes is everything else. Your utilities will spike in winter. Your insurance will rise every renewal. Your rates assessment might be reviewed. And your tied product costs—the beer, cider, spirits you’re forced to buy from the pubco—will climb annually.

The rent is fixed. The cost of running the pub is not. That’s the reality. And it’s why looking at rent in isolation is useless.

The Hidden Costs Hidden Behind Your Rent Quote

When I signed with Marston’s, the rent was one conversation. Everything else was a separate discussion, and I only pieced together the full picture weeks later when I started modelling my P&L.

Here are the costs that sit alongside your rent and drastically change whether a pub is viable:

Tied Product Pricing (The Real Killer)

Your rent quote is fixed. Your cost of goods is not. Most pubcos price tied products—lagers, bitters, spirits—at a wholesale rate that’s typically 5–15% higher than what a free house would pay to an independent distributor. Over a year, on an average community pub, this adds up to £8,000–£15,000 in lost margin.

I can buy the same bitter from Marston’s that costs me 40p a pint. A free house three villages over buys the exact product for 38p. The difference is negotiation power and contract terms. You don’t have it. The pubco does.

Budget 3–5% of your annual turnover as the premium you’ll pay for being tied. If your pub does £180,000 turnover (a 180-cover community pub), expect to lose £5,400–£9,000 to this premium compared to a free house.

Service Charges and Rent Adjustments

Some pubcos bundle services into the rent. Others charge separately. Marston’s, for example, may include business rates support, but they charge a separate service charge for things like BDM support, compliance advice, and access to training systems.

This isn’t always buried—it’s often in the agreement—but many new licensees skip over it because they’re focused on the rent number. Service charges typically run 10–15% of rent, so that £450 weekly rent becomes £490–£517 in reality.

Repairs and Maintenance (Your Problem, Mostly)

The pubco owns the building. You’re responsible for internal repairs and decorative maintenance. External structural work is usually theirs, but the line is often blurry.

I’ve had disputes over whether a leaking downpipe was my problem or theirs. (It was theirs. After two weeks of polite emails.) Budget 5–8% of rent for ongoing maintenance, or you’ll be caught out. A burst pipe, a failed boiler, or a faulty EPOS system can easily cost £2,000–£5,000.

Business Rates

Your local authority sets this, not the pubco. But it’s a significant cost that doesn’t show up in rent discussions. Typical community pubs pay £4,000–£8,000 annually in rates, depending on the rateable value of the building.

Some pubcos help with rate relief applications (particularly if you’re a small community pub), but you’ll still pay the balance. This cost is entirely separate from rent and can fluctuate with revaluations.

Utilities and Insurance

Again, these are yours to arrange, but they’re often omitted from the financial picture when someone quotes you rent. A 180-cover pub typically pays £15,000–£22,000 annually for gas, electricity, and water. Insurance runs £3,000–£7,000 depending on your claims history and stock cover.

That’s £18,000–£29,000 before you’ve paid rent or bought a single pint of beer. This is why the true cost to take on a pub is so much higher than the rent quote alone suggests.

How to Calculate Real Profit From Weekly Rent

To work out whether a pub at £X rent per week is actually profitable, you need to reverse-engineer the math. Start with the rent, then layer in realistic costs, and see what turnover you’d need to hit a target profit.

Step 1: Establish Your Fixed Costs

These don’t change month to month (until they do, because they always do):

• Weekly rent × 52 = annual rent
• Add 15% for service charges and adjustments = rent with costs built in
• Business rates (ask the pubco or the local authority)
• Utilities (estimate £18,000–£25,000 for a community pub)
• Insurance (estimate £4,000–£6,000)
• Professional fees—accountant, legal, compliance (estimate £1,500–£3,000)
• Maintenance buffer (5–8% of rent)

Add these up. For a 180-cover pub at £450 weekly rent, you’re looking at roughly £35,000–£42,000 in fixed costs before you’ve paid wages or bought a single product.

Step 2: Add Your Variable Costs

These scale with turnover:

• Cost of goods sold (typically 28–35% of turnover for a wet-led pub, 20–25% for food-heavy operators)
• Labour (this is crucial—I’ll cover this separately)
• VAT (if you’re VAT-registered, you’ll owe 20% on most sales, though you claim it back on costs)

Step 3: Calculate Your Breakeven Turnover

This is the number that matters. It’s the annual turnover you need to simply cover all costs and make zero profit. Once you hit this, every additional pound contributes to your actual take-home.

The formula is simple:

Breakeven Turnover = Fixed Costs ÷ (1 − Variable Cost Ratio)

If your fixed costs are £40,000 and your variable costs (COGS + labour) are 55% of turnover, then:

Breakeven = £40,000 ÷ 0.45 = £88,889

This means you need to turn over roughly £1,700 per week just to break even. If the pub is currently doing £1,500 per week, it’s losing money. If it’s doing £2,200, it’s making about £230 per week profit before tax (at your take-home level).

Use a pub profit margin calculator to stress-test different scenarios, but the core principle is non-negotiable: you need to know your breakeven number before you sign anything.

Step 4: Model Against Historical Data

Here’s where most prospective licensees fall short: they don’t ask for the previous tenant’s P&L or at least 12 months of till data.

You should. If the pub is currently trading and has been for more than a year, the pubco should be able to provide (or the outgoing licensee should be willing to share) evidence of actual turnover. This isn’t about nosiness—it’s about due diligence.

I had access to Teal Farm’s previous trading data, and it showed me exactly what was realistic. The pub had done £165,000 turnover in the year before I took over. I could then model: if I maintain that, plus add food service or events, where does my profit go?

If you’re being denied this data, ask yourself why. A legitimate pubco should have no issue showing you that a pub is viable—if it is.

Tied House vs Free House: Where Rent Becomes Irrelevant

Most of this article has assumed you’re taking on a tied house tenancy (Marston’s CRP, Greene King, Star Pubs, etc.). That’s the reality for 80% of prospective licensees, so it’s the frame I’m working in.

But the math changes completely if you’re buying a free house or a leasehold.

In a free house, there’s no weekly rent paid to a pubco. Instead, you either own the property outright, hold a long-term lease, or pay a mortgage. Your costs are completely different: property tax, structural repairs (you own the building), insurance (higher, because you own the asset), and utilities (still yours).

But here’s the thing: a free house profit margin is typically 30–40% higher than a tied house, because you’re not paying the tied product premium. The rent you “save” on a tied house is usually more than offset by the margin you lose on forced product pricing.

The rent quote is almost irrelevant to that comparison. What matters is total cost of operation and margin opportunity. A tied house at £400 weekly rent might be more profitable than a free house at £350 weekly rent, depending on the location, the product costs, and your ability to drive turnover.

This is why you need proper financial modelling, not just rent comparison. A working Pub Command Centre approach to understanding your numbers from day one makes this comparison crystal clear.

Questions You Must Ask Before Signing

When the pubco or the agent quotes you a rent figure, here’s exactly what you need to ask and push back on if you don’t get clear answers:

On Rent Itself

• Is the rent fixed for the entire term, or is there an upward review clause? If yes, what’s the review mechanism? (e.g., RPI inflation, fixed 3% increase, market rent assessment)
• Are there any service charges on top of the quoted rent? If yes, what’s included and what’s the annual cost?
• What happens to rent if the property is damaged or access is restricted (e.g., road works)? Is there a rent abatement clause?

On Product Costs

• What’s the markup on tied products versus industry wholesale rates? Ask to see recent invoices from comparable free houses if you can.
• Are there any exclusive brands I’m forced to stock? How much of my turnover must come from tied products?
• Can I bring in guest beers or soft drinks from other suppliers, or is everything forced?

On Costs You Might Not Expect

• Who pays for repairs to the roof, gutters, and external walls? Get this in writing—the distinction between “structural” (theirs) and “decorative” (yours) is often a legal grey area.
• What’s the insurance requirement? Do I have to use the pubco’s provider, or can I source my own?
• Are there any fees for BDM support, compliance training, or access to systems? If yes, how much?

On Historical Performance

• Can you provide 12 months of till data or P&L from the current or previous tenant? This is the only way to reality-check the rent quote.
• What’s the average weekly turnover? The average labour cost? The average COGS?
• Are there any seasonal fluctuations? (Most pubs do—winter is heavier on wet sales, summer can be lighter if there’s no garden.)

If a pubco won’t answer these questions clearly, or if they deflect and say “you’ll find out once you’re operating,” that’s a red flag. You’re about to commit to a 3–5 year lease in most cases. You need answers now, not surprises later.

A Real-World Rent-to-Profit Example

Let me walk you through the actual math from Teal Farm. The numbers are real, though I’ve rounded for clarity.

The Starting Point

When I took on the pub, the rent was £390 per week (£20,280 annually). The previous year’s turnover was £165,000. The pubco said the pub was “viable.” But “viable” and “profitable” are different things.

Building the Model

Fixed costs:

• Rent: £20,280
• Service charges: £3,200
• Business rates: £6,200
• Utilities: £19,000
• Insurance: £5,000
• Maintenance buffer: £2,000
• Total fixed: £55,680

Variable costs (as a % of turnover):

• COGS: 32% (tied product premium factored in)
• Labour: 15% (I was able to achieve this through careful scheduling; UK benchmark is 25–30%)
• Total variable: 47%

Breakeven turnover = £55,680 ÷ 0.53 = £104,906 annually, or £2,017 per week

The previous year did £165,000, which was £3,173 per week. So the pub had a healthy margin above breakeven.

Real Profit at Different Scenarios

If turnover stays at £165,000:

Gross profit (after COGS): £165,000 − (£165,000 × 0.32) = £112,200

Labour cost: £165,000 × 0.15 = £24,750

EBITDA: £112,200 − £24,750 − £55,680 = £31,770

Before tax and your own drawings, that’s roughly £31,770 profit on the business. Depending on your accountant’s treatment, you might take home £18,000–£24,000 personally (the rest goes to corporation tax, VAT settlement, and reinvestment).

Is that good? For a 180-cover community pub, yes. It’s liveable. It’s sustainable. It’s not going to make you rich, but you can pay yourself a wage and invest in the business.

But here’s the honest part: I achieved a 15% labour cost only because I was willing to work 65-hour weeks initially, train my team personally, and ruthlessly cut waste. Most new licensees don’t want to do that, and they shouldn’t have to. If you budget for 25% labour (the industry norm), your profit drops to roughly £8,000–£12,000 before tax.

That’s why the rent number alone is meaningless. It’s the entire operating picture that tells you if you’ll actually make money.

The Impact of Growth

In my best revenue year in 2025, Teal Farm turned over £189,000. Let’s see what that does to profit:

Gross profit: £189,000 − (£189,000 × 0.32) = £128,520

Labour (still 15%): £28,350

EBITDA: £128,520 − £28,350 − £55,680 = £44,490

An additional £24,000 of turnover added nearly £13,000 to EBITDA because my fixed costs didn’t move. This is why growth is so powerful in pubs—you’ve already covered the rent. Every extra pint is mostly margin.

But again: this only works if you understand the numbers upfront. If you’ve signed the lease without knowing your breakeven, you could be in trouble within six months.

A Critical Note on Labour Costs

I mentioned my labour cost is 15% against a UK benchmark of 25–30%. This needs context, because it’s the most important variable in your profit calculation and the easiest to get wrong.

My 15% is achievable in a community pub with:

• Careful scheduling (nobody over-staffed on quiet nights)
• Multi-skilled staff (bar, kitchen, cleaning, stock rotation all covered by the same small team)
• Strong systems and training (so less rework, less waste, fewer customer complaints requiring manager time)
• The owner working significant hours (I still spend 50–60 hours a week on the floor)

This is not typical for a new operator. Most community pubs run 20–25% labour cost because the owner is learning, the team is learning, and there’s more management overhead.

When you calculate your profit from a rent figure, use 23–25% as your labour assumption unless you have specific evidence you can do better. This keeps your model realistic.

Why This Matters for Rent Assessment

If the pubco or the previous tenant claims labour is only 18%, question it. Ask to see payroll records. A genuine 18% is possible, but it’s rare, and overly optimistic labour assumptions have sunk more pubs than any other single factor.

The rent number is honest. The labour cost assumptions in a pubco pitch are often not.

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Before you sign a tenancy agreement, before you commit to a lease, you need to understand the real total cost of running that pub. Weekly rent is one line item. Calculate pub profitability before you sign by stress-testing multiple scenarios: low growth, baseline growth, and optimistic growth. Build in realistic labour costs. Account for the tied product premium. Model different scenarios for COGS (you might negotiate better terms than the previous tenant—or worse).

If you don’t know these numbers, you’re signing blind. And the pubco is hoping you will.

For more information, visit pub profit margin calculator.

For more information, visit retail partner earnings calculator.

For more information, visit best pub EPOS systems guide.