Lies Damned Lies and Statistics

While looking for some interesting news I came across the website of the Association of Licensed Multiple Retailers (ALMR). They have a statistics page with the following interesting figures.

The average cost of running a licensed retail outlet is 48.0% of turnover: 46.7% in freehold premises, 49.1% in leasehold/tenancy and 45.1% in tied outlets.

At first I thought they may be useful to someone drawing up a business plan for a new venture as a way of estimating running costs. But you should remember they are averages. It doesn’t mean that if your turnover is as low as £2,000 per annum your costs will be £960! There will be cases where the costs are as low as 20% and in cases where pubs are failing costs could be 110% of turnover. The only way to estimate costs is to do it from scratch not rely on averages. Remember about the statistician who drowned in a lake of average depth six inches.