Tools

GP Calculator: Gross Profit on Any Drink or Dish, Ex-VAT

A gross profit calculator that takes the VAT off before it does the sum, because that is how GP is quoted in UK hospitality. Enter your selling price and your cost, get the GP percentage your supplier and your accountant would recognise.

Alex Riesenkampff

August 21, 2026 · 8 min read · Markdown

GP percentage in UK hospitality is calculated on the selling price with the VAT taken out: strip the VAT, subtract your cost, divide by the ex-VAT price. That first step is the one most calculators skip, and it is not a rounding difference. A pint sold at £4.83 with a cost of £1.30 runs at 67.7% GP when the VAT comes off first, and a flattering 73.1% when it does not. More than five points of margin, invented by a missing division.

Most of the time you want the sum the other way round: you know what GP you need, and you need the price that gets you there.

Both of those give you a theoretical GP: what the line makes if every pour is exact, every portion is to spec and every sale rings through the till. It is not the figure you bank. The one that decides whether your year works is the gap between the two, and that gap has a pound value.

Most operators cannot fill that second box, and that is the real problem. You know what the sums say. What the till says arrives quarterly, in aggregate, long after the week that caused it.

Closing that delay is what we built Super44 to do. It plugs into your POS and your Google reviews, finds the specific places money is leaking in your venue, and hands you a short list of things to do about it with the numbers attached. Over about twelve weeks it aims to add roughly £500 a month in profit at a typical venue.

The honest version of what that looks like: at a bar and café in Berlin Prenzlauer Berg, Super44 ran the exact sourcing maths on switching sekt from €4.40 to €2.50 a bottle. It came to about €46 a month, roughly €550 a year, and we told the owner plainly that it was small. The same venue's bigger number was elsewhere.

Why the VAT comes off first

The VAT inside your selling price was never yours. You collect it on HMRC's behalf and pass it on, so treating it as revenue inflates every margin you calculate against it.

Two things make this unavoidable in hospitality. The UK standard VAT rate is 20%, in force since 4 January 2011. And under VAT Notice 709/1, supplies made in the course of catering are standard-rated, which pulls in food that would be zero-rated in a shop. A sandwich in a supermarket chiller and the same sandwich on your counter are not taxed the same way.

So a pub or restaurant price almost always has 20% sitting inside it, and the ex-VAT price is the VAT-inclusive price divided by 1.20, not the price minus 20%. Those are different numbers. £4.83 divided by 1.20 is £4.03. £4.83 less 20% is £3.86. Using the second one costs you about 16p of apparent revenue per pint and drags your calculated GP down instead of up, which is the one error in this area that makes you feel worse than you are.

What counts as a good GP

Every calculator on page one of Google will hand you a number. Almost none will tell you whether the number is any good, and the ones that try are quoting figures with nothing underneath them.

One real benchmark does exist, and it is worth knowing precisely what it covers. UKHospitality publishes an annual benchmarking report with Christie & Co, drawn from 4,791 managed outlets and describing itself as "the only report in the industry that is based on actual profit & loss accounts, which are provided by UKHospitality members, and therefore does not rely on assumptions." Across the whole survey it puts gross profit margin on food sales at 67% and on wet sales at 66%, with wet ranging from 64% in accommodation-led venues to 72.7% in nightclubs.

Read the caveats before you compare yourself to it, because the report states both itself. The data covers the six months to 31 December 2021. And food margins that period "surpassed that of wet sales for the first time in the history of the survey", which the report attributes partly to the temporary VAT reduction then in force for hospitality. Over those six months hospitality VAT ran at 5% and then 12.5%; it went back to 20% in April 2022. So 67% is a real number from real accounts, and it is also nearly five years old and measured under a tax rate you are not paying.

What does not exist is a target band per drink category. Draught at 58-65%, spirits in the seventies, food at 65-70%: those get quoted as though they were industry standards, and we could find no publication from BBPA, UKHospitality or the British Institute of Innkeeping behind any of them. They come from hospitality software companies, drinks wholesalers and comparison sites, all publishing a number in the course of selling you something. A wholesaler has no reason to tell you what your target should be; their interest is the price you pay them.

The bands are not useless as rough orientation. They should just not be waved at you as a standard. The benchmark that decides anything is your own: run this across your top twenty lines and compare next quarter to this one.

A worked example, on a pint

The last average price of a pint of draught lager recorded in the ONS RPI series was £4.83, in January 2025. The series has published no observation since, which is itself worth knowing if you have seen that figure quoted as current.

Take it as a starting price. At 20% VAT the ex-VAT price is £4.03. Suppose your cost works out at £1.30 a pint once you have divided the keg price by the number of saleable pints in it. Gross profit is £2.73 a pint, and GP is 67.7%.

Now change one thing. Sell 400 pints a week and that line is worth about £1,090 a week in gross profit. Lose two points of GP, to 65.7%, and it is about £1,057. Roughly £33 a week, or £1,700 a year, from a change small enough that nobody would notice it happening. That is the case for doing this sum on a schedule rather than once.

The same sum, by category

The arithmetic does not change between a keg and a plate, but the cost you feed it does, and that is where the work is:

• Drinks GP calculator: per-serve costs from bottle and keg prices, including the measure sizes that decide a spirits GP.
• Food GP calculator: building a dish cost from a recipe before the GP sum can mean anything.
• Beer GP calculator: keg yield, and why the pints you can actually sell are fewer than the pints you paid for.

If you are pricing a menu from scratch rather than checking a line you already sell, how to price a menu item covers contribution margin, which answers a different and often better question than GP percentage does. And GP is only the first of the two numbers that decide whether a venue works: prime cost puts it together with labour.