Canberra, Australia – In the heart of Canberra, the Old Canberra Inn stands as a testament to the city’s rich history and the evolving challenges of running a hospitality business. Co-owner Ben Johnston recently unveiled the intricate financial landscape behind operating this beloved establishment, shedding light on the true costs that threaten the survival of local pubs.
Sitting in a beer garden on a warm afternoon, it’s easy to fantasize about owning a pub. The allure of pouring pints, engaging with locals, and hosting live music is a dream for many Australians. However, Johnston’s experience reveals a stark contrast between fantasy and reality.
The Financial Reality of Pub Ownership
Johnston, who co-owns the Old Canberra Inn, did not initially set out to run a pub. His journey began overseas, working in hospitality roles in Guatemala and London. Upon returning to Australia, he quickly rose through management ranks, recognized for his ability to balance customer service with financial acumen.
In 2014, the opportunity to purchase the Old Canberra Inn arose. The venue, with its historic charm and loyal clientele, seemed like a promising venture. However, Johnston soon discovered that the economics of running a pub were far more complex than anticipated.
“From the outside, a pub looks simple,” Johnston explains. “But it’s more like a small industrial business that happens to sell drinks.”
The Breakdown of Costs
For every $13 pint sold, a significant portion of the revenue is allocated to various expenses. Approximately 30% goes to the beer supplier, another 30-40% to wages, and around 9% is consumed by GST. Rent, electricity, insurance, and maintenance further erode profits.
“You may as well hire your own repairman,” Johnston remarks, highlighting the annual maintenance costs that can exceed $100,000.
Moreover, the Old Canberra Inn’s commitment to supporting independent brewers, such as Capital Brewing and BentSpoke, adds a layer of complexity but aligns with Johnston’s values of fostering local businesses.
Regulatory and Economic Pressures
The financial pressures extend beyond the cost of goods sold. Canberra’s regulatory environment presents additional challenges. Liquor licence fees in the ACT are significantly higher than in neighboring New South Wales. Johnston, who also runs The Steam Packet Hotel in Nelligen, notes the stark difference in licensing costs between the two locations.
Furthermore, rising wages, superannuation contributions, and new regulations like portable long service leave add to the financial burden. Johnston acknowledges, “It is costs on costs on costs.”
These mounting expenses raise critical questions for the future of local pubs. If such establishments disappear under financial strain, what will replace them?
Adapting to Changing Consumer Habits
Beyond the bar, the hospitality industry faces shifting consumer behaviors. Australians are drinking less alcohol, prompting venues to pivot towards food sales. However, this shift is not without its challenges. The country faces a chronic shortage of chefs, forcing many businesses to sponsor migrant workers, further increasing operational costs.
Johnston reveals, “The minimum sponsorship salary is now over $76,000, before additional costs.”
Food costs have also surged, impacting menu pricing and profitability. The Old Canberra Inn, known for its hand-cut chips, has seen the cost of potatoes more than double in recent years.
The Intangible Rewards of Pub Ownership
Despite the financial hurdles, Johnston remains committed to his venture. He emphasizes the importance of understanding the market and building a business that resonates with customers.
“The real reward of running a pub rarely appears on a balance sheet,” Johnston reflects. “It’s in the nights when the courtyard is full, and the whole place feels alive.”
As the conversation in the beer garden inevitably turns to the idea of owning a pub, Johnston’s experience serves as a reminder of the complexities and rewards of keeping a historic venue like the Old Canberra Inn thriving.
