happy-hour-maths

---
name: happy-hour-maths
description: Works out what a drinks offer actually does to your cash before you print it: the true cost of the serve, the VAT out, the legal price floor set by duty plus VAT, the cash you lose per drink at the offer price, the extra volume you need to stand still, and the units the offer invites one customer to drink. Use before every happy hour, two for one, bottomless offer or "£5 all night", and again a fortnight after it starts.
---

# Know what the offer costs you before the board goes out

You give this the drinks in the offer, the invoices behind them, your pour sizes, your full prices, the offer price and the hours it runs. You get back one dated file: the cash margin per serve at full price and at offer price, the duty plus VAT floor below which you may not sell at all, the break-even uplift in volume expressed as extra drinks per hour rather than as a percentage, the units the offer puts in front of one customer, and a stop rule with a date. It will not tell you what gross profit you should be running at, because there is no published figure for one independent venue and chasing one is how offers get set by somebody else's accounts.

## What it does

1. **Start from the serve, not from the bottle.** For each drink in the offer: the container as purchased, the invoice cost excluding VAT with the invoice reference and date, the deposit and delivery if they are charged, the nominal yield in serves, and the real yield after the losses you actually have. A 70cl bottle at 25ml is twenty-eight serves on paper and fewer in practice. A keg is its stated volume less the line pull-through and the ullage. Use the measured number if you have one from a stocktake and say plainly that you are using the nominal one if you do not. Everything downstream is this figure multiplied by something, so an optimistic yield produces an optimistic offer.

2. **Take the VAT out before you do anything else, because the offer is priced gross and the margin is net.** The standard rate of VAT is 20%. A drink sold at £5.00 gross is £4.1667 net of VAT, so the money you keep before costs is £4.17 and not £5.00, and a £1 discount from £5.00 to £4.00 is a net fall of 83 pence rather than a pound. Owners routinely do the offer arithmetic on the gross price and discover the difference at the quarter end. Carry the unrounded figure through the calculation and round once at the end.

3. **Set the legal floor, per drink, before you agree any price.** A mandatory licence condition provides that no alcohol may be sold "for a price which is less than the permitted price", and the permitted price is the price found by applying a formula in which "D is the amount of duty chargeable in relation to the alcohol as if the duty were charged on the date of the sale or supply of the alcohol" and "V is the rate of value added tax chargeable", with the result "rounded up to the nearest penny". The Order's explanatory note puts it in words: the aggregate of the duty chargeable on the date of sale "and the amount of that duty multiplied by a percentage which represents the rate of VAT chargeable". Work the duty per serve from the current rates: from 1 February 2026 beer at 3.5% to 8.4% ABV is £22.58 per litre of pure alcohol, draught beer at 3.5% to less than 8.5% is £19.45, and spirits, wine and other fermented products at 8.5% to 22% are £30.62. The floor is usually well below any sane offer price, and the point of calculating it is the day it is not.

4. **Work the cash per serve at full price and at offer price, side by side.** Net price less the cost of the serve from step 1, at each price, with the difference in pence shown. Then multiply by the serves you currently sell in those hours to get the cash the offer gives away on the volume you already had. That figure is the real cost of the promotion and it is paid on the first night, before any new customer arrives. Most offers are argued for on the volume they might bring and never costed on the volume they already have.

5. **Express the uplift you need as drinks per hour, not as a percentage.** Divide the cash given away by the cash margin per serve at the offer price. That is how many extra serves you must sell in the promotional hours just to end up where you started. Divide it by the number of hours and you have the number the floor staff will recognise: seven more pints an hour, or forty. A percentage sounds achievable and a number per hour is checkable from the till at nine o'clock on the first night. Where the offer price is at or below the cost of the serve, the uplift is infinite and the skill says so in those words rather than printing a large number.

6. **Count the units the offer invites one person to drink, and write the number down.** Units are ABV multiplied by millilitres divided by 1000. Do it for the offer as a customer would take it: two for one on a 5% pint is 5.7 units bought in one transaction, and a timed bottomless offer is the number of serves the time allows. The ASA has upheld a complaint about a restaurant menu promotion where "a party of 15 equated to 12 units per person in one sitting, which the ASA considered excessive when taking official health guidelines into account". The guideline it is measured against is the Chief Medical Officers': "it is safest not to drink more than 14 units a week on a regular basis". An offer that puts most of a week into one sitting is a commercial problem before it is a regulatory one, because that customer is not buying anything else.

7. **Check the mechanic, not just the price, against the conditions.** The mandatory conditions prohibit, among other things, "provision of unlimited or unspecified quantities of alcohol free or for a fixed or discounted fee to the public or to a group defined by a particular characteristic in a manner which carries a significant risk of undermining a licensing objective", and "provision of free or discounted alcohol or any other thing as a prize to encourage or reward the purchase and consumption of alcohol over a period of 24 hours or less" on the same qualified terms. The Home Office guidance is equally clear that the hour itself is not the problem: the drinking games prohibition "does not necessarily prohibit 'happy hours' as long as these are not designed to encourage individuals to drink excessively or rapidly". Price the offer and then read the mechanic.

8. **Refuse to use a borrowed benchmark, and say why in the file.** There is no published gross profit percentage, wet margin, spend per head or promotional uplift figure for a single independent UK venue. The numbers that circulate come from suppliers, from stocktaking firms and from surveys of large groups with different rents, different buying terms and different customers. An owner who sets a target from one of them will either cut a line that was working or run an offer that was never going to clear the gap. The comparison that means something is this venue against itself: the same hours last month, and the same hours this month.

9. **Write the stop rule before the offer starts, and date the file.** Three lines: the number the offer has to hit, measured in extra serves per hour from the till; the date it will be measured, which should be no more than two weeks out; and what happens if it misses, written as a decision and not as a review. Add the two figures that must be re-checked if anything moves: the duty rate and the VAT rate, since the permitted price should reflect a new rate within fourteen days of it taking effect. Put the build date and the date each rate was read in the footer, because an undated pricing file gets reused next season with last season's duty.

## Then it checks

1. Every drink in the offer has a cost per serve traced to a named invoice with its date, and the yield used is marked either measured or nominal, with no yield left unmarked.
2. Every price in the file is shown both gross and net of VAT, with the VAT rate stated, and no margin is calculated from a gross figure.
3. Every drink has a permitted price figure with the duty rate, the strength and the serve size used to reach it, and the offer price is shown against that floor.
4. The break-even uplift is expressed as extra serves per hour as well as in total, and where the offer price is at or below the cost of the serve the file says the offer cannot break even rather than printing a number.
5. The file states the units the offer invites one customer to buy in one transaction, with the arithmetic shown, and names the serve sizes it assumes.
6. The file contains no gross profit target, industry average, uplift benchmark or spend per head figure, and its only comparison is this venue's own trading in the same hours of an earlier period.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state a gross profit percentage a venue should achieve, a promotional uplift a venue should expect, or a spend per head figure. No such figure exists for one independent venue, and an offer priced from a borrowed number is priced from somebody else's rent.
- Never model the offer on new customers alone. The cost of the discount on the volume you already had is paid first and paid every night, and an offer that is only justified by people who have not arrived yet is not justified.
- Never price below the permitted price, and never present the permitted price as a target. It is a floor set by duty plus VAT, not a guide to what a drink is worth.
- Never recommend lengthening the promotional hours to make the arithmetic work. That increases the volume the discount is paid on and it is the change most likely to turn a priced offer into an unspecified one.
- Never publish an offer price until the mechanic has been checked separately from the price. A lawful price attached to a prohibited mechanic is still a prohibited promotion.
- This output is a working document prepared for the owner to check against their own invoices, till reports and prices, and for their accountant to check before it informs a pricing decision, and for their licensing officer or solicitor to check the mechanic before the offer runs. It applies published rates and published conditions to figures supplied by the owner; it is not a duty or VAT calculation HMRC has agreed and it is not a ruling that the offer complies.

## Built from
- HM Revenue & Customs, "Alcohol Duty rates", https://www.gov.uk/guidance/alcohol-duty-rates, published 23 August 2023, last updated 1 February 2026, read 16 September 2026: the duty rates per litre of pure alcohol used in step 3.
- HM Revenue & Customs, "VAT rates on different goods and services", https://www.gov.uk/vat-rates, no publication date shown on the page, read 16 September 2026: the 20% standard rate used in step 2, and the page's own note that it increased to 20% on 4 January 2011.
- The Licensing Act 2003 (Mandatory Conditions) Order 2014, SI 2014/1252, Schedule, https://www.legislation.gov.uk/uksi/2014/1252/made, made 14 May 2014, read 16 September 2026: the permitted price condition, the D and V definitions, the rounding up rule and the fourteen day rule in steps 3 and 9.
- The Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014, SI 2014/2440, Schedule paragraph 1, https://www.legislation.gov.uk/uksi/2014/2440/made, made 11 September 2014 and in force 1 October 2014, read 16 September 2026: the unlimited quantities and prize prohibitions quoted in step 7.
- Home Office, "Revised guidance issued under section 182 of the Licensing Act 2003 (September 2026) - accessible version", https://www.gov.uk/government/publications/explanatory-memorandum-revised-guidance-issued-under-s-182-of-licensing-act-2003/revised-guidance-issued-under-section-182-of-the-licensing-act-2003-september-2026-accessible-version, page published 13 October 2014 and last updated 15 September 2026, read 16 September 2026: the happy hours sentence in paragraph 10.39 quoted in step 7, and paragraphs 10.70 to 10.73 on the permitted price.
- Committee of Advertising Practice, "Alcohol: Promotional marketing", AdviceOnline, https://www.asa.org.uk/advice-online/alcohol-promotional-marketing.html, dated 28 July 2025 on the page, read 16 September 2026: the Epic Pub Company twelve units per person example quoted in step 6.
- UK Chief Medical Officers, "UK Chief Medical Officers' Low Risk Drinking Guidelines", https://assets.publishing.service.gov.uk/media/5a80b7ed40f0b623026951db/UK_CMOs__report.pdf, dated August 2016 on the document, read 16 September 2026: the 14 units weekly guideline quoted in step 6.

# happy-hour-maths

## You are given
One drinks offer for a UK hospitality venue, with the mechanic, the days and hours it runs, the first and last dates, and the list of drinks it covers. For each drink: the container as purchased, the invoice cost excluding VAT with the invoice reference and date, any deposit and delivery charge, the ABV, the serve size in millilitres or pints, the nominal yield in serves, the measured yield in serves where a stocktake has produced one, the full gross price and the offer gross price. The till record of serves sold in those same hours over a comparable earlier period, with the dates of that period. The Alcohol Duty rates and the VAT rate in force, supplied with the dates they took effect. The statutory wording of the permitted price condition and of the prohibited activities, supplied as text. And, once the judgement has been made, the owner's stop rule: the target in extra serves per hour, the measurement date and the decision if it is missed.

## Produce
Write into a `./happy-hour-maths-output/` folder:

1. `cost-per-serve.csv` with these columns in this order: `drink_no`, `drink_name`, `container_description`, `invoice_ref`, `invoice_date`, `container_cost_ex_vat_gbp`, `deposit_gbp`, `delivery_charge_gbp`, `serve_ml`, `nominal_yield_serves`, `measured_yield_serves`, `yield_used`, `yield_basis`, `cost_per_serve_gbp`. `yield_basis` is exactly one of `measured` or `nominal`, and every `nominal` row is listed in `gaps.md`.
2. `price-and-vat.csv` with columns: `drink_no`, `drink_name`, `full_price_gross_gbp`, `full_price_net_gbp`, `offer_price_gross_gbp`, `offer_price_net_gbp`, `vat_rate_percent`, `net_discount_gbp`. Net is gross divided by one plus the VAT rate. Carry six decimal places in the working and round to the penny only in the columns named `_gbp`.
3. `price-floor.csv` with columns: `drink_no`, `drink_name`, `abv_percent`, `serve_ml`, `litres_of_pure_alcohol_in_serve`, `duty_rate_gbp_per_litre_alcohol`, `duty_in_serve_gbp`, `vat_on_duty_gbp`, `permitted_price_gbp`, `offer_price_gross_gbp`, `offer_price_below_permitted_price`, `rates_effective_date`. `permitted_price_gbp` is the duty in the serve plus VAT on that duty, rounded up to the nearest penny. `offer_price_below_permitted_price` is `yes` or `no`, and every `yes` is listed in `gaps.md`.
4. `margin-and-breakeven.csv` with columns: `drink_no`, `drink_name`, `cash_margin_full_price_gbp`, `cash_margin_offer_price_gbp`, `margin_given_away_per_serve_gbp`, `serves_in_these_hours_last_period`, `cash_given_away_on_existing_volume_gbp`, `extra_serves_to_break_even`, `promotional_hours_per_week`, `extra_serves_per_hour_to_break_even`, `can_break_even`. `can_break_even` is `yes` or `no`, and where it is `no` the two extra serves columns carry the literal text `offer price is at or below the cost of the serve` rather than a number.
5. `units-exposure.md` showing, for each drink and for the offer as a whole, the units one customer is invited to buy in a single transaction, with the arithmetic written out line by line, the serve sizes it assumes, and for a timed offer the number of serves the time allows and how that figure was derived. Units are ABV multiplied by millilitres divided by 1000. Compare it only to a guideline figure that was supplied, and name that figure's source.
6. `mechanic-check.csv` with columns: `test_no`, `prohibited_activity_name`, `statutory_wording_verbatim`, `result`, `what_in_the_offer_triggers_it`. One row per prohibited activity supplied. `result` is exactly one of `pass`, `fail`, `cannot test`, and every `fail` and `cannot test` is listed in `gaps.md`.
7. `stop-rule.md` with exactly four lines: the target in extra serves per hour as supplied, the measurement date as supplied, the decision if it is missed as supplied, and the dates the duty rate and VAT rate were read. Written empty where the stop rule was not supplied, and the fact listed in `gaps.md`.
8. `gaps.md` with a numbered list of: every drink with no invoice reference; every drink using a nominal rather than measured yield; every drink priced below the permitted price with the shortfall in pence; every drink where `can_break_even` is `no`; every prohibited activity marked `fail` or `cannot test`; the fact if no comparable earlier period was supplied; and the fact if `stop-rule.md` is empty.

## Rules
- Codex calculates, converts, compares and records. It never sets a price, never proposes an offer, never chooses the hours, and never writes the stop rule, which is supplied.
- Never write a gross profit percentage target, a wet margin benchmark, an industry average, a promotional uplift figure or a spend per head figure. No such figure exists for one independent venue and none is to appear in any file. The only comparison permitted is this venue's own supplied earlier period, named with its dates.
- Never calculate a margin from a gross price. Net is derived first, in every file, with the VAT rate stated in the row.
- The permitted price is calculated only from the supplied duty rate and supplied VAT rate, with the effective date recorded in every row, and rounded up to the nearest penny at the final step only. Never use a remembered rate and never round down.
- Where the measured yield is supplied it is used, and `yield_basis` says `measured`. Where it is not, the nominal yield is used, `yield_basis` says `nominal`, and the row goes in `gaps.md`. Never split the difference between the two.
- Volumes are converted using 1 pint equals 0.568261 litres, a half pint equals 0.2841305 litres and a two-thirds pint equals 0.3788407 litres. State the factor used in a header row comment in `cost-per-serve.csv`.
- Never write the words lawful, compliant, approved or safe to run into any file, and never turn a `fail` in `mechanic-check.csv` into a `pass` because a change has been proposed.
- Never extend the promotional hours, change a price, or adjust a serve size to make a calculation work. Report the figure that results from the inputs supplied.
- Use British English, GBP and DD Month YYYY dates. No em dashes in any file you write, and any supplied text containing one is recorded verbatim and flagged in `gaps.md`.
- Every file ends with this line: this is a working document prepared for the owner to check against their own invoices, till reports and prices, and for their accountant, licensing officer or solicitor to check before the offer runs. It applies supplied rates and supplied conditions to supplied figures and is not a duty or VAT calculation HMRC has agreed.

## Return
The absolute path of each file written, the row count of each CSV, the number of drinks in the offer, the cash margin at full price and at offer price for each drink, the total cash given away on the existing volume across the offer, the extra serves per hour needed to break even for each drink and any drink that cannot break even, every drink priced below the permitted price with its shortfall in pence, the units figure for the offer as a whole with the assumptions it used, the result of each mechanic test, the stop rule as recorded, and the `gaps.md` item count.