Labour costs have always been one of the biggest expenses for pubs, but in 2025, they’re hitting record highs. Many pubs are feeling the squeeze, and in fact, it’s one of the factors leading to the closure of approximately one pub every day across the country.
Why are pubs’ labour costs so high? The National Minimum Wage is rising faster than inflation, and competition for skilled hospitality staff is still strong.
It’s tempting to just slash staff hours. But cutting too deeply risks harming service quality, which can drive customers away and make the problem worse. By reviewing how, when, and where staff resources are used, you can protect service standards while keeping costs under control.
Here are seven ways to do it.
1. Reconsider Your Hours of Operation
One of the simplest ways to control labour costs is to make sure you’re only staffing the pub when it’s actually profitable. Many pubs continue to open at times that no longer make financial sense (such as weekday lunches, early afternoons, or quiet Mondays) because ‘that’s how it’s always been done’.
Start by analysing your sales and staffing data by hour and by day. Most modern POS systems can show when you’re busiest and when you’re barely covering wages. If certain trading hours consistently underperform, consider closing during those times or adjusting your opening schedule seasonally.
It’s also worth looking at how you open. Could you delay kitchen prep on slow days, open the bar later midweek, or close earlier on quiet nights? Even small tweaks to your rota can add up to meaningful savings over the course of a month.
2. Optimise Staff Scheduling
Overstaffing quickly eats into profit. But understaffing leads to slower service, stressed employees, and lost sales. The sweet spot lies in using data to guide your scheduling decisions.
Start by reviewing sales trends, weather patterns, and event calendars to forecast demand. Many POS systems and scheduling tools now integrate data automatically to help you predict when to bring in extra hands and when to trim back.
Cross-train your team so staff can switch between roles (bar, floor, and food service) depending on what’s needed. This flexibility means fewer people can handle more tasks without compromising quality.
Finally, keep a close eye on overtime. It’s easy for a few extra hours here and there to build into a significant monthly cost. Set clear policies requiring overtime to be approved in advance, and make sure managers stick to them.
3. Use Labour Rota Software
Labour rota software automates admin and helps you make better scheduling decisions by:
- Preventing overstaffing. Most systems use past sales data and local trends to forecast how busy each shift will be. Instead of relying on guesswork, you can plan rotas around actual demand to avoid overstaffing.
- Saving managers’ time. Building rotas manually can take hours each week, and that’s time better spent on the floor. Automation frees up managers to focus on customer experience and other revenue-generating priorities.
- Tracking labour costs. The best systems display your projected wage costs as a percentage of expected sales, so you can instantly see whether a shift is likely to be profitable. Over time, that data helps you fine-tune staffing levels and understand the true cost of every hour worked. Plus, you can see staff members’ total hours in real time and alert managers before they exceed contracted hours.
Popular labour rota software options include RotaCloud, Deputy, and Fourth Hospitality (also called just ‘Fourth’):
- RotaCloud is the most cost-effective for single-unit operators or small groups with straightforward needs.
- Fourth is an enterprise-grade workforce platform that includes not just rota, but payroll, HR, compliance, and more. It’s a great option for those that need the bells and whistles (and can afford it).
- Deputy provides a middle ground with more advanced forecasting and integrations than RotaCloud, but at a lower price point than Fourth.
4. Redefine Service Models
A full table-service model is expensive to maintain. It requires more staff on the floor, longer shift times, and careful coordination between front and back of house. For many pubs, that level of service simply isn’t sustainable when wage costs are rising faster than takings.
A hybrid model can strike a better balance. Customers order and pay at the bar or through a mobile app, while staff deliver food and drinks to their tables. This approach keeps the experience friendly and efficient without stretching your team too thin.
Technology can help, too. QR code menus, self-ordering systems, and contactless payments reduce the time spent on admin tasks. That leaves staff more time to focus on guests.
Focus your team’s time on what customers actually value most, like warm welcomes, product knowledge, and atmosphere, and streamline the rest.
5. Simplify Your Menu
A large, complicated menu means longer prep times, more ingredients to manage, and a need for staff with broader skills. Every additional dish adds complexity to service. And when margins are tight, that complexity costs money.
Start by reviewing which dishes actually sell and which don’t. Your POS data will usually show clear trends. Focus on the high-margin, consistent sellers, and consider removing items that are labour-intensive or slow-moving.
A smaller, well-designed menu can highlight your strengths and improve consistency, while giving your kitchen team a manageable workload. You’ll also simplify training for new staff.
6. Improve Retention
Every time a team member leaves, you lose time, skills, and productivity, not to mention the expense of finding and onboarding their replacement. In 2017, People 1st reported that the cost of recruitment and initial training of a new hospitality employee was £750. Adjusted for inflation, that’s just over £1,008.30 in 2025.
Keeping good people is one of the most effective ways to control your labour costs in the long run. A few keys include:
- Making sure your pub is a good place to work. That doesn’t necessarily mean big pay rises (although you should, of course, pay fairly). But clear communication, consistent expectations, and a culture where people feel valued. Simple things like recognising good work, offering a free meal or drink after shift, or being flexible with rotas go a long way.
- Investing in training and progression. When staff can see a path to learning new skills or moving up, they’re far more likely to stay. Even short, in-house sessions on upselling, cellar management, or customer service can improve both confidence and efficiency.
- Talking to your team. Regular check-ins help identify issues like burnout, rota clashes, or pay concerns before they turn into resignations. Staff who feel listened to are more engaged and productive, which directly reduces turnover and recruitment costs.
7. Align Pay with Performance
Rising wages are unavoidable, but how you structure pay can make all the difference to your labour costs. If higher wages go hand in hand with higher productivity, better retention, and stronger sales, they can more than pay for themselves.
Even small incentives tied to measurable outcomes can drive results. For example, you might offer bonuses for meeting sales targets, upselling specials, or achieving high customer satisfaction scores.
Make sure your team understands how performance links to rewards. Staff should know what they’re working towards and how success will be recognised.
At the same time, keep pay reviews consistent and data-driven. Use your rota and POS data to identify your most efficient team members and ensure their efforts are rewarded appropriately. Aligning pay with performance not only helps you keep costs down but also builds a culture of fairness and accountability, two traits that help keep great people in your business.
Take Control of Your Labour Costs with Carroll Accountants
Labour will always be one of your pub’s biggest expenses, but it doesn’t have to be unmanageable. With the right mix of smarter scheduling, simplified operations, and performance-driven pay, you can protect your margins without compromising on service or staff morale.
Carroll Accountants specialise in helping pubs and hospitality businesses stay profitable, even as labour costs rise. Talk to us today to find out how smarter financial planning can keep your wages sustainable and your pub thriving.