How much profit does a pub make on a pint ?

Jumboman

minidazzler wrote: »

And that's at the very very very very low end of the scale, given you're not taking into account licence fee's, electricity, gas, garnishes, straws, napkins, maintenance, never mind out of trading hours work that needs to be done.

If pubs are always selling their drink for 3.50 etc, It's likely an old mans pub that has a very steady stream of regulars, is well established, the premises owned and the staff small, longterm and handy with fixing everything they have. You just can't expect the same out of a pub in Temple Bar, they do have to profit. (Though personally I'd never pay more than 5.20 for a pint in Ireland.... even that hurts emotionally :pac: )

What do you do when you have already ordered a pint then you find out how expensive it is ?

I ordered a pint last week in Dublin city centre and got hit for 5.70 I was shocked at the price but at the same time I was not going to walk away it just means I wont be going back to that pub again.

hfallada

Insurance in Ireland in Public places is huge. But I think aviva stadium realised it was cheaper you order kegs to uk and pay duty there and bring it back to Ireland and pay the duty. The brewery's were ripping them off here. But I think a keg is like €150 which is about 100 points. So add 23% to that for vat plus other charges like wages and insurance.

But I think if pints were like €3 to €3,50 I would buy a pint in a bar or a club. Rather than pre drinking before hand

adamski8

Jumboman wrote: »

What do you do when you have already ordered a pint then you find out how expensive it is ?

I ordered a pint last week in Dublin city centre and got hit for 5.70 I was shocked at the price but at the same time I was not going to walk away it just means I wont be going back to that pub again.

Dont pay and walk away! annoying how pubs get away with not advertising clearly their prices

minidazzler

Jumboman wrote: »

What do you do when you have already ordered a pint then you find out how expensive it is ?

I'm not a cheap skate, but I'll ask the bar person first if I'm in the type of place where I expect the drink to be expensive.

Rabies

rubadub wrote: »

Have you any evidence of this below cost selling. I hear publicans talk about it all the time, but no evidence. I do know distributors attempt to charge publicans a fortune, some of these morons seem to think everybody pays the same wholesale prices, and therefore proclaim below cost selling, simply because they get charged more.

Yup.
I'll be in the supermarket later near me. if they have their will take a picture of it.
The bar my g/f works at buys Hein from the supermarket because it is cheaper than wholesale. Thats wrong.
People often say screw the pubs, its cheaper to drink at home. When some of the supermarkets sell below cost, it makes it a tough market.
Here in Auckland you can get in big trouble from the council for selling alcohol cheaply in your bar. Go more than 40% off normal city price and expect visits from the council and cops.

Rent here is high, as it is in any city in the world.
I know of bars that have rent of up to $10k a week before staff and associated costs :eek:
We're not too bad, rent is cheap at almost $2k a week. Though 260 staff hours on top of that at different pay rates, doesn't include what the office needs each week to run, suppliers and other stock, food, kitchen equipment, maintenance of bar and lines, power, light, heat, insurance etc.

P_1

minidazzler wrote: »

And that's at the very very very very low end of the scale, given you're not taking into account licence fee's, electricity, gas, garnishes, straws, napkins, maintenance, never mind out of trading hours work that needs to be done.

If pubs are always selling their drink for 3.50 etc, It's likely an old mans pub that has a very steady stream of regulars, is well established, the premises owned and the staff small, longterm and handy with fixing everything they have. You just can't expect the same out of a pub in Temple Bar, they do have to profit. (Though personally I'd never pay more than 5.20 for a pint in Ireland.... even that hurts emotionally :pac: )

That's true, I was being very basic with my expenses argument.

Out of interest, how many pints an hour would a pub tend to need to sell to keep above water?

enda1

Rabies wrote: »

Yup.
I'll be in the supermarket later near me. if they have their will take a picture of it.
The bar my g/f works at buys Hein from the supermarket because it is cheaper than wholesale. Thats wrong.
People often say screw the pubs, its cheaper to drink at home. When some of the supermarkets sell below cost, it makes it a tough market.
Here in Auckland you can get in big trouble from the council for selling alcohol cheaply in your bar. Go more than 40% off normal city price and expect visits from the council and cops.

Rent here is high, as it is in any city in the world.
I know of bars that have rent of up to $10k a week before staff and associated costs :eek:
We're not too bad, rent is cheap at almost $2k a week. Though 260 staff hours on top of that at different pay rates, doesn't include what the office needs each week to run, suppliers and other stock, food, kitchen equipment, maintenance of bar and lines, power, light, heat, insurance etc.

What's "wrong" with buying from a supermarket instead of some wholesaler?

The only wrong action in that post seems to be the propping up of a kartel fuelled by the council.

BaZmO*

P_1 wrote: »

Out of interest, how many pints an hour would a pub tend to need to sell to keep above water?

That'd be totally relative to the overheads a the particular pub in question.

P_1

BaZmO* wrote: »

That'd be totally relative to the overheads a the particular pub in question.

True, bit of a 'how long is a piece of string' question that.

I'm guessing that economies of scale would come into it. Basically a smaller pub would need to operate on higher margins and a larger pub can afford to operate on tighter margins.

68Murph68

One area where the supermarkets and the chain local stores after an advantage over pubs is that they have huge purchasing power compared to pubs.

Given the volumes that supermarkets'chain local stores are buying they can afford to play the suppliers off against one another to get the best possible price. In this case the balance of power is with the supermarkets - in the worse case scenario if a situation arises where say Tesco stops ordering Heineken or Guinness for a month or two its not going to have a massive effect on Tesco's profits. People are still going to be doing their weekly shop at Tesco. Sure they're going to be a bit annoyed about the lack of beer but it's not going to be a massive issue where they boycott Tesco from that point on. In this situation the brewers profits are going to be affected far more than Tesco's profits.

Compare that to the purchasing power of the standard publican. The standard publican needs the breweries a lot more than the breweries need them. If a pub goes a day or two without one of the popular brands its going to impact them pretty much straight away.

Compare the volume of beer that Tesco Ireland will order in any month compared to what any individual pub will order. Even the largest of pub chain's monthly order would be absolutely tiny compared to Tesco's monthly order. This will have a knock-on effect in terms of bargaining power and a consequent effect on the price paid by Tesco for a pint of beer compared to the price paid by a publican.

Basically the cost of what a supermarket/large chain will pay for the beer it sells will always be a fair bit cheaper than what a pub will pay.

That's even before you go anywhere near the whole area of costs which can vary dramatically from pub to pub.

Cookie_Monster

68Murph68 wrote: »

One area where the supermarkets and the chain local stores after an advantage over pubs is that they have huge purchasing power compared to pubs.

I'm glad someone mentioned that. Tesco et al will pay far less than the wholesales does for beer, never mind the pub, because of the sheer quantities involved.

That at least would be one of the benefits of chain pubs were they to appear, the central purchasing power of say 50 pubs could probably bypass the wholesaler direct to brewery like the supermarkets do.
Wholesalers will add on around 30-50%* to the cost they pay to on sell to pubs and that's a big extra cost.

*I work for a hospitality industry manufacturer and wholesaler, though not with alcohol, so I know the margins, I would imagine beer follows a roughly similar trend

Mr Simpson

adamski8 wrote: »

Dont pay and walk away! annoying how pubs get away with not advertising clearly their prices

Licenced premises must display their prices outside or just inside the entrance to their premises. Normally its just inside

http://corporate.nca.ie/eng/Business_Zone/Guides/Full%20List/Licensed%20Premises.html

twowheelsonly

As a ball park figure an 'average' pub has to make approximately 3 times its costs just to break even.
Some of the costs associated with a pub are frightening.
SKY for instance, which is a massive rip-off, is in around €500 per month which means the bar has to take €1500 just to pay for that.
Pay a small band €200 and you need to take another €600.
Most bars, in particular smaller ones, now have to buy their glasses (they used to be free practically across the board) and I believe that a willy nilly free supply of Beer Mats is the next thing to be dropped by the breweries.
Take in all the associated recurring costs: Staff, lights and heating, rent, rip-off rates, rip-off insurance - both employers and Public Liability, IMRO fees, Security, Accountants and probably a whole lot more that I can't think of right now. You'd have to be selling a serious amount of pints to cover all of that, hence over-inflated mineral prices and 'cheap' spirits in an attempt to boost the profits.

Just to put it into perspective - To the OP: How much are you worth a week workwise? Say it's €400 into your hand after tax. The real price of that is €600 or so. At €2 mark-up (which it's not afaik) on each pint that's 200 pints that you alone have to sell just to pay your wages - and there's no profit left for the pub. Bear in mind that you're just one small cog in the machine. Everybody else has to do the same and that's just to cover the drink costs. Only after you and your colleagues have sold your 200 pints does the pub retain the mark-up to start paying for all of the other overheads. A busy pub in a busy town/city will do it but there's plenty that will struggle to do so.

Rabies

enda1 wrote: »

What's "wrong" with buying from a supermarket instead of some wholesaler?

The only wrong action in that post seems to be the propping up of a kartel fuelled by the council.

Supermarkets don't like selling to bars here.
It's not looked at favorably.

No prob with supermarkets selling alcohol cheap. Great for the consumer. But below purchase price is wrong.

I used to work for a chain of bars. We had massive buying power. Got some of the best prices in the country. Still couldn't match the supermarkets on going price.

I'm all for bars dropping prices. I think we're too expensive. NZ has stupid high prices for the quantity of alcohol sold. Ireland is cheaper than here. Doesn't help that the average pay is less here either.

Anyway, here are some pics from my super market trip.
Heineken 24pk wasn't on special. Was changed to the NZ equivalent of Steinlager. Prob swap back next week.

There is room for bars to drop prices. We fight against greedy landlords, and profit hungry multi site owners.

ardle1

I'll just throw something out there 'PRETTY SHOCKING' anyway I drive a taxi in Dundalk,lil bit famous for having a couple of Breweries,, a certain man in his 60s,use to work in one of them,,,long story short and from the horses mouth,, a galon of beer (yes a galon) can be made (or could be made) in a certain Dundalk brewery and not to long ago, for about 50cent,,,

Rabies

Sounds about right. How else do you think they make their money?

How much does a normal gallon of home brew cost? A couple of euro?

Sofiztikated

ardle1 wrote: »

I'll just throw something out there[COLOR="Red"] 'PRETTY SHOCKING'[/COLOR] anyway I drive a taxi in Dundalk,lil bit famous for having a couple of Breweries,, a certain man in his 60s,use to work in one of them,,,long story short and from the horses mouth,, a [COLOR="DarkOrange"]galon[/COLOR] of beer [COLOR="Red"](yes a galon)[/COLOR] can be made (or could be made) in a certain Dundalk brewery and not to long ago, for about 50cent,,,

Nothing "pretty shocking" there. Production of a beer, especially 1 that's been made for years and "perfected" costs sod all. Then add in marketing, wages, transport, R&D, etc.

People keep talking about pubs not having buying power. They should. Vintners.

I'll give you another 1. I work in quite a large hotel chain. Over a 1000 properties. AFAIK, we sell Diageo products in every one. Still costs us €150-€170 a keg. There is nowhere else for us to get that product. The paying majority want Diageo products.

Note: I'm not f&b, so I'm only going on what I've picked up.

Rabies

Sofiztikated wrote: »

I'll give you another 1. I work in quite a large hotel chain. Over a 1000 properties. AFAIK, we sell Diageo products in every one. Still costs us €150-€170 a keg. There is nowhere else for us to get that product. The paying majority want Diageo products.

Note: I'm not f&b, so I'm only going on what I've picked up.

The hotel will get rebates based on volume sold.
Won't be seen on the invoices

irish_goat

Rabies wrote: »

Sounds about right. How else do you think they make their money?

How much does a normal gallon of home brew cost? A couple of euro?

There's lads that can do it for about 17c a bottle I think. Afaik, it costs Diageo more to package their beer than brew it.

Frynge

Rabies wrote: »

The hotel will get rebates based on volume sold.
Won't be seen on the invoices

Yes they do and how they work is;

More than €8000 purchased will get a 1.75% rebate once a year as a credit note
More than €26000 purchased will get 6% rebate
Up to €150000 which gets a 14% rebate

Figures are prob not exact but should be fairly close.


The price of a keg in Ireland is the exact same for everyone. I will post them if people want, depending on where in the country you are the margins range from 40% - 70% but most are in the 50%-60% ie €4-€4.5 for stout/ale.

Some one asked about how many pints a pub has to sell an hour to cover themselves, the question is somewhat irrelevant as every pub in the country would be operating at a loss most of the time. Pubs have their busy times and quiet times, busy times consist of getting the drink out over the counter and the money in over the counter, quiete times consist of updating Facebook pages, arranging orders/delivery's changing light bulbs and such. These are all important parts of the business that the customer has no concern about until they are not done.

P_1

For all the criticism of Diageo thats out there you do have to admit that how they got to such a dominant position in the drinks industry is pretty admirable.

rubadub

Rabies wrote: »

The bar my g/f works at buys Hein from the supermarket because it is cheaper than wholesale. Thats wrong.

What do you mean by "thats wrong"? I have a friend who works in a pub too and gets the 20 pack bottles in all the time.

Rabies wrote: »

Supermarkets don't like selling to bars here.
It's not looked at favorably.

Who tells you this? what is "unfavorable" about it?
I expect the local centra selling the heineken loves to see my mates boss loading up loads of boxes of beer, which is obviously not below cost.

Rabies wrote: »

I used to work for a chain of bars. We had massive buying power. Got some of the best prices in the country. Still couldn't match the supermarkets on going price.

How did you conclude that you had the best prices? did your competitors actually disclose what they paid (which would be highly unusual). I know where I work they would love to get their hands on competitors accounting information, we have no idea what they pay for components etc, just as my company would never disclose our selling prices to various customers, who do get charged wildly different prices.

minidazzler

Frynge wrote: »

The price of a keg in Ireland is the exact same for everyone. I will post them if people want, depending on where in the country you are the margins range from 40% - 70% but most are in the 50%-60% ie €4-€4.5 for stout/ale.

I'd be interested to hear the prices. Give a breakdown; Cork, Dublin, Galway and Donegal? Thanks

Geuze

Frynge wrote: »

The price of a keg in Ireland is the exact same for everyone. I will post them if people want, depending on where in the country you are the margins range from 40% - 70% but most are in the 50%-60% ie €4-€4.5 for stout/ale.

I would love to hear the exact pre-VAT price of a 50L keg of beer - various brands.

Geuze

Frynge wrote: »

Yes they do and how they work is;

More than €8000 purchased will get a 1.75% rebate once a year as a credit note
More than €26000 purchased will get 6% rebate
Up to €150000 which gets a 14% rebate

Figures are prob not exact but should be fairly close.

OK, to be clear, can you confirm that pubs get rebates from brewers based on figures like the above?

I suspected as much.

So if a pub pays x + VAT for a keg, and assuming they are a busy pub, they get an annual rebate of (0.14)(x)?

Geuze

Sofiztikated wrote: »

, we sell Diageo products in every one. Still costs us €150-€170 a keg. There is nowhere else for us to get that product. The paying majority want Diageo products.

This suggests huge profit margins being earned by Diageo.

BeerNut

Geuze wrote: »

This suggests huge profit margins being earned by Diageo.

Not if you subtract the amount they pay for advertising and sponsorship, I'd say. Their 2012 Annual Report shows that Diageo took in just under £3 billion in Europe, but made a mere 3% profit on that, walking away with a trifling £966,000,000. Hardly worth getting out of bed for...

enda1

BeerNut wrote: »

Not if you subtract the amount they pay for advertising and sponsorship, I'd say. Their 2012 Annual Report shows that Diageo took in just under £3 billion in Europe, but made a mere 3% profit on that, walking away with a trifling £966,000,000. Hardly worth getting out of bed for...

Maybe you mean a trifling £96,600,000 for it to be 3%?!

Pocket change

BeerNut

enda1 wrote: »

Maybe you mean a trifling £96,600,000 for it to be 3%?!

Oh yeah

Page 29 says net sales were £2,949,000,000 and operating profit was £966,000,000, but page 6 gives the operating profit at 3%.

I dunno. My point really was that if you're interested in how much profit Diageo makes, the figures are out there.

enda1

BeerNut wrote: »

Oh yeah

Page 29 says net sales were £2,949,000,000 and operating profit was £966,000,000, but page 6 gives the operating profit at 3%.

I dunno. My point really was that if you're interested in how much profit Diageo makes, the figures are out there.

True enough.

Profit margins are rarely high at the end of the day. The problem in the Irish pub trade is that there are just so many people taking a margin that these accumulate to be a lot. That combined with terrible inefficiencies, a kartel-like grip by Diagio, a kartel-like stranglehold like Vinter's and a terrible consumer inertia about their brands.

Overall in this thread there has been a shocking misunderstanding of the word profit though (not aimed at you)!