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Comment by workingon | Hacker News Reader

This is so strange, and the exact opposite of America. In America margins on drink are 100-200%+ while margins on food are much less when you take into account untipped workers fixing it. It must be the tipping difference, since bartenders are basically free labor in America.

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It sounds strange because it's just false. The vast majority of the margin in UK pubs comes from alcohol sales. I've worked and invested in the industry and it would be a very very unusual pub where this was not the case.

As an aside, this is classic HN: very authoritative sounding comment, voted right to the top, spouting complete nonsense.

There does need to be a little nuance though, since the vast majority of pub owners are actually on a wet lease then the pub itself doesn't get all of the margin, the breweries normally take 20-25% of that margin.

So an example from a recent wholesale catalogue, 1 30L keg which you can probably sell 58 pints out of will cost around £150 so that gets your cost price of around £2.58 / plus VAT and beer duty and you're up to cost price of over £3.00 / pint

So margins are variable but as you can see if you want to sell at around the average price around the country which is £4 / pint then you're not talking about a massive margin.

The reason why food is a popular option for bar owners is that the breweries don't take any of the margin so the owner takes all the profit from food sales, plus in many ways, the food is extra income from people that would be taking up the space to drink too.

Yeah, I was thinking the same. A large proportion of uk pubs are leased by the likes of Star (Heineken), Punch, Enterprise etc, and they really do screw their landlords on alcohol ties. Free houses basically procure alcohol at 1/2 the price. Food GP is much better in these pubs as a result.

This is a fair point — I have never been involved with, nor really patronised, tied houses, so I know less about the economics of them. The alcohol is still far more profitable than the food regardless; it's just that in a tied house a significant chunk of that profit is being taken by the pub company.

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