Fixed Cost: Rent and occupancy costs
Semi-Variable Cost Utilities, paper & linen goods, uniforms, tableware, marketing
Variable Cost Labor Cost, Food Cost, Beverage Cost
Roughly speaking, these categories break down as follows in overall percentage cost:
Fixed Cost Between 5% and 10%
Semi-Variable Cost Between 12% and 17%
Variable Cost Between 55% and 60%
Therefore, if you had a pub that was generating $1,500,000 in revenues, your cost would look something like the following:
Fixed Cost Between $75,000 and $150,000
Semi-Variable Cost Between $180,000 and $255,000
Variable Cost Between $825,000 and $900,000
So your total costs might be between $1,005,075 and $1,305,000, leaving you approximately $200,000 to $500,000 in annual pre-tax profit. Of course many factors can impact on these numbers, but under normal circumstances, these would be typical operational margins.
What you will see from this illustration is that fixed cost and semi variable cost are not only relatively low, they are also somewhat out of your control……rent is something that the landlord sets and the volume of business controls many of the semi-variable costs. The greatest amount of variability comes from your food, beverage and labor cost and it is in these prime costs that your battle for profitability resides, and where we’re going to focus.