What a Customer Is Actually Worth to You

You will not run the ads. You resent the commission the booking platforms take. You knock the midweek promotion on the head before it starts. And every time, the reason is the same quiet thought: it feels too expensive.

Here is what almost nobody tells you. The operators who are growing are not braver than you, and they are not made of money. They have simply worked out one number, and that number turns the whole question on its head. They are not spending on customers. They are buying profit.

This guide walks through the maths in plain English so you can see exactly what one customer is worth to you, and exactly how much you can afford to spend to get one. No jargon, and no sales pitch.

Why spending feels scary in the first place

When margins are tight, every pound you spend before you know the return feels like a risk. That instinct is not daft. It has kept a lot of venues alive. But it is usually built on a misunderstanding of how the costs actually stack up, and once you see it clearly the fear has nowhere left to stand.

So let us follow the money through a real venue, one step at a time.

Where your money actually goes

Every pub, restaurant, cafe and hotel runs the same way underneath. You have fixed costs: rent, rates, insurance, your core wage bill, the energy. Those go out every week whether you are heaving or empty. Then you have costs that move with what you sell, mainly your food and drink. What is left after those variable costs is your gross margin.

According to UK Hospitality, gross margins across the sector typically run between 60% and 75%, with wet-led pubs and bars at the higher end and food-led venues usually between 60% and 70%. For everything that follows, we will use 70%, a realistic figure for a mixed food and drink operation.

But here is the part that trips people up. Gross margin is not profit. Not yet. Before a single pound is yours, the fixed costs have to be covered first.

The Worked Example

Say your venue carries £10,000 a week in fixed costs once you add up rent, rates, insurance, your salaried wage bill and energy. 

At a 70% gross margin, you need £14,286 in weekly sales before you make a single pound of real profit. (£10,000 ÷ 0.70 = £14,286.) 

That £14,286 is your break-even number. Everything you take before it is just keeping the lights on. 

What happens after break-even

This is the bit that changes everything.

Once you have hit that £14,286 and your fixed costs are covered, the next sale is almost pure profit. The rent is already paid. The heating is already on. The chef is already standing there. You are not adding any new fixed costs. You are just selling more.

So at 70% margin, the next £1,000 you take puts around £700 in your pocket. The next £5,000 puts £3,500 in your pocket. It stops being a slow grind and starts to compound, fast.

The question you should actually be asking

Most operators ask themselves: “Can I afford to spend £10 to get a booking?”

Wrong question.

The right question is: “if that booking happens after I have covered my fixed costs, what is it actually worth to me?”

If your average table spends £100 at 70% margin, that table is worth £70 in profit once break-even is behind you. Which means you could spend £20, £30, even £40 to bring that customer in and still come out well ahead. And that is counting one visit only. If they come back, or bring a friend, the number climbs a long way past that.

This is why the operators who grow consistently run the ads, pay the platform commission without blinking and fill the quiet midweek slots with offers. They are not throwing money away. They have done the sum, and they are buying profit at a discount. 

One honest thing worth saying

This only works when the business itself is working. If your venue is struggling because the food is not right, the service is slow or the location is against you, marketing will not save it. You will simply fill the place with people who leave disappointed and never come back, and you will have paid for the privilege.

Get the basics right first. Then spend to fill the place.

So what do you do with this?

Three steps. You can do it on the back of an envelope this afternoon.

The Bottom Line

Marketing stops being scary the moment you know the maths. 

Frequently Asked Questions

How do I work out my break-even each week?

Add up everything that goes out regardless of how busy you are: rent, rates, insurance, your base wage bill, energy and finance costs. Divide that total by your gross margin as a decimal. If your fixed costs are £10,000 and your gross margin is 70%, that is £10,000 ÷ 0.70 = £14,286. That is what you need to take before you make a penny of real profit. Not sure of your gross margin? Take your total sales, subtract what you spent on food and drink to make those sales, and divide by total sales.

How much should I spend on getting customers in?

Work out what a customer is worth at your margin above break-even, then think about how often they come back in a year. If a table of two spends £80, your gross profit above break-even is around £56. If that couple returns five times in a year, they are worth £280 to you. Spending £15 to £25 to acquire them makes obvious sense. Most operators who sit down and do this properly realise they could be spending considerably more than they are.

Is it actually worth paying commission to OpenTable or ResDiary?

If those platforms bring you people who would never have found you otherwise, then yes. The commission is simply a customer acquisition cost, and the same maths applies. The honest question is whether the bookings are genuinely new customers or people who would have rung you directly anyway. If it is mostly the former, the commission earns its keep. If it is mostly the latter, you are paying for something you were already getting for free.

What does it actually cost to get a customer through paid advertising?

It varies. Meta ads for restaurants typically cost somewhere between £8 and £30 per booking depending on your targeting and how good your creative is. Google Ads for local searches can run £5 to £25 per click, and turning that into a booking depends on your website and your offer. Booking platform commissions are usually 2% to 5% of the booking value. None of those numbers look frightening once you know that a customer above break-even, at 70% margin on a £100 spend, is worth £70 to you.

How do I know if what I am spending is actually working?

Track how much you spent and how many new customers it brought in, then divide one by the other to get your cost per acquisition. Compare that to what those customers are worth at your margin above break-even. Spend £500 on ads, win 25 new customers, and your cost per acquisition is £20. If each generates £60 above break-even on the first visit and comes back twice more that year, the return on that £500 is substantial. Most operators who have never run this sum are surprised by how clearly it lands in favour of spending more.

Want To Know Your Break-Even Number?

Talk to the Truli team. We work with owner-operators every day and we will help you run your numbers. No sales pitch, just an honest conversation. 

truli.co.uk      |      hello@truli.co.uk      |      01580 231 880