Go big or small or go home
Many pubs claim to be the smallest in the country, and among those at the more petite end of the market are The Nutshell in Bury St Edmunds, The Signal Box Inn in Cleethorpes and The Butchers in Herne. Although the latter might be slightly too big to be the smallest at three metres by four metres, there is no disputing that it was the UK’s very first micro-pub.
When Martin Hillier opened his tiny bar almost 20 years ago in a former butcher’s shop, he created a concept that has inspired an army of would-be pub operators to open their own micro-pubs. Armed with the new Licensing Act of 2003, it became significantly easier to successfully gain approval for change-of-use and an alcohol licence on former retail units.
According to some sources such as the Pubs Galore website, there are around 1,000 micro-pubs, although the collation of the list is tough because many outlets do not necessarily define themselves as micro-pubs and might not easily be identified online. There is no doubt that after a very slow start after The Butchers’ opening, the number of applications for new micro-pubs has continued to accelerate, and right now there is a constant flow of approvals from local councils for new ones across the whole country.
These openings very much go against the overall trend we continue to see in the licensing premises market. Between March 2020 and June 2025, more than 4,500 outlets closed – including 2,370 community pubs, 1,350 gastro-pubs and 400 bar/restaurants – whereas the only positive category was bars, with 80 openings, according to AlixPartners’ Hospitality Market Index. Maybe micro-pubs fit into this latter category.
Whichever way they are counted, there is certainly much to be pleased about in this burgeoning corner of the hospitality industry that highlights how the smallest of units with operating costs stripped to the bone can be commercially viable, even in the midst of a terrifyingly challenging market.
However, it is not the only bright spot, because while micro-pubs have proved that small is beautiful, the large managed pub companies have over the years showed that the largest pubs can also operate profitably. The two groups from opposite ends of the size spectrum highlight how increasingly polarised the pub sector has become.
With thanks to Lavender Bank Partners and Geof Collyer for providing the following statistics. In 1994, Mitchells & Butlers (M&B) operated 2,635 managed pubs, with £364,000 sales each and Ebitda of £88,000 per pub. In 2024, it had a much fewer 1,654 pubs, but they achieved sales of £1.6m each and Ebitda of £241,000. There is no doubt that the average size of the M&B pub has increased over this period in order to deliver these numbers.
See also the figures from JD Wetherspoon over recent years. In 2015, the group hit its peak count of 939 pubs, with each generating sales of £1.6m and Ebitda of £190,000, But then the company begin skewing its portfolio to larger units (and selling off the smaller outlets), and by 2024, its pub numbers had reduced to 813. However, each outlet brought in a much larger £2.5m in revenue and Ebitda had increased to £300,000.
The reality is that the country has been sadly losing many of its traditional mid-sized Victorian pubs, which have proved to be unviable in many locations, because they either are often simply too big for their local communities or insufficiently big to benefit from economies of scale that enables cheaper prices and kitchens/chefs to operate. Their position in the perennially squeezed middle has put them in the danger zone for decades, and this scenario has not changed in recent times.
But amid the doom and gloom, we do at least have operators at the two ends of the market who have found models that are very effective at countering changing hospitality and economic landscapes. This does not necessarily translate into profits galore for all of them, but it does at least present a positive story to tell in these tough times. It seems to be a tale of go big or small or go home.
Glynn Davis, editor of Retail Insider
This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Beer Insider would like to thank Propel for allowing the reproduction of this column.