Brewpub margins: balancing food and beer sales

Two businesses in one building

A brewpub sells beer made on site together with food. Sometimes it also sells packaged beer or kegs outside. The kitchen and the brewhouse have different cost structures. Beer made on site usually has a high gross margin per serve, but only after you cover the brewhouse, cellar, cold storage and a brewer. Food has a lower margin per plate and more waste. It also needs more staff hours.

Owners often assume the beer pays for everything. In many brewpubs the mix is closer to the reverse in the early months, when volume is low and the kitchen brings the footfall. Plan for both outcomes.

Work out the margin of each line

Gross margin is selling price, net of tax, minus the direct cost of the product, divided by the selling price. For beer, direct cost is the cost of ingredients, packaging or keg handling, cleaning chemicals and the share of brewing labour you can attribute to the litre. For food, it is ingredients and any packaging, with waste added in.

A hypothetical illustration in currency units: a pint with a net price of 300 and a direct cost of 90 leaves 210, or 70 per cent. A plate with a net price of 400 and a direct cost of 140 leaves 260, or 65 per cent. Real figures vary widely, so use your own recipes and your own purchase prices. The point is to see both on one page.

Count what the gross margin leaves out

Gross margin ignores labour, rent and utilities. A kitchen needs cooks, a pass, dishwashing and cleaning, usually over longer hours than the brewery needs. Rent and utilities are shared. If you split fixed costs between food and beer by floor area or by hours worked, you may find that a dish with a decent gross margin loses money after its share of kitchen labour.

Do this honestly once, then simplify. A rough allocation is better than none.

Plan the mix with a simple table

Take one typical table of four people. List what they order across a week: pints, flights, soft drinks, starters, mains. Apply the margins above and total the contribution per table. Then compare weekday lunch, weekday evening and weekend. You will usually see that one slot carries the week.

The table also shows where a change helps. A higher-margin starter that most tables add is worth more than a clever new beer that few order. Our guide on the taproom-only model shows the opposite design, where food is mostly brought in or left out.

Waste and wastage on both sides

Food waste is visible in the bin. Beer waste hides in the cellar: lines flushed, kegs that go flat, beer past its best in warm weather and dregs left in a serving tank. Track both weekly. In a hot climate a keg tapped on Tuesday and still half full on Sunday is a real loss, so size kegs and serving tanks to the pace of the pub.

Cut the menu to what the kitchen does well and let beer be the reason to stay longer. Dishes that cook well with your own beer, such as a batter or a braise, can use spent grain or surplus beer and give the menu a point of difference at little extra cost. Fewer ingredients means less waste and faster service.

Pricing and the role of the beer list

A short beer list sold at a steady price, with one or two seasonal beers, simplifies both brewing and buying. A long list ties up fermenters and increases waste when a style sells slowly. For the product side of this, see which of your beers make money.

Check the licence rules for your state before you plan how food and beer are sold together, for example whether beer may be sold for takeaway. Rules differ by state and change, so ask a licensing adviser.

What to measure every week

Track gross margin by line, food cost per cent, beer cost per cent, waste, covers and average spend per head. Six numbers on one sheet will warn you early. Review them with the head chef and the brewer in the same meeting, so each sees the other's problem. A kitchen that over-orders and a cellar that over-brews usually share one cause, which is a forecast nobody owns. If you cannot yet build that sheet, the course below teaches exactly how.

Common questions

Is beer always more profitable than food in a brewpub?

Not always. Beer often has a higher gross margin, but the full picture depends on volume, labour and waste. Calculate both from your own costs.

How much food should a brewpub offer?

Enough to keep guests longer, but a small menu you can cook well. Larger menus raise waste and kitchen labour.

Should I count brewing labour in beer cost?

Yes, at least the part of the brewer's time that goes to the beer sold in the pub. Otherwise your margin looks better than it is.

Can I serve my beer without a kitchen?

Often yes, but the licence rules differ by state. Check with a licensing adviser before you plan the layout.