Last updated: 200704
PCs in one of my campaigns recently acquired an inn. So what’s it cost to run and maintain an inn for the AD&D universe? How much money could the PCs make? One study of real-world services showed that full-service restaurants at all levels spent about 33% of each dollar on the cost of food and beverages, 33% on wages, and from 5-6% on restaurant occupancy costs. Hotels also spend roughly 33% on wages and 6% on occupancy. Energy costs are around 6%. Net profit margins on restaurants vary around 3%, and hotels vary around 5%, so when performing calculations the net profit should be about 4%. How can we extrapolate this to the AD&D world?
I reviewed the inns from a variety of modules (T1-4, N2, L2, N1) for food costs, number of rooms, and occupancy. For the average inn, averaging everything (meaning there could be better or worse, using a combination of mean and median):
Restaurant Revenue
Breakfast: 1 sp
Lunch: 3 sp
Dinner: 5 sp
Ale: 1 sp
Average number of customers at any one time: 10
Assuming 2 hours of breakfast, lunch, and dinner, turnover every hour, plus bar for 6 hours: (2*10*1 sp)+(2*10*3 sp)+(2*10*(5 sp+1 sp))+(1 sp*10*6*2) = 20 sp +60 sp +120 sp +120 sp = 300 sp / night, or 9,000 sp / month.
Room Revenue
Private room (8 rooms): 2 gp each
Dorm room (12 beds): 10 sp each
Occupancy: 50%
Each night 4*2 gp + 6*10 sp = 220 sp, or 6,600 sp / month.
Gross Income
9,000 sp/month (restaurant) + 6,600 sp/month (rooms) = 15,600 sp/month.
Staff Expenses (per month)
Innkeeper: 100 gp/level (Level 2)
Cook: 1@10 gp
Barkeep: 1@5 gp
Serving Wenches: 2@2 gp
Potboys/scullions/maid: 3@1 gp
Stableman: 2@1.5 gp
200+10+5+2*2 + 3*1+2*1.5= 225 gp/month or 4,500 sp/month staff expense. That’s 29% of the month income of 15,600 sp, tolerably close to the anticipated 33% of 5,148 sp, indicating that the staffing estimate calculated by AD&D expenses is at least in the right ballpark!
Expenses
Food cost of 33% of food sales
Staff cost of 33%
Occupancy Cost (rent) of 6%
Taxes/tithes/duties/graft/licensing of 10%
Repair/replacement/renewal of 10%
LHF (Light/Heating/Fuel) of 6%
Sales and marketing of 6%
Miscellaneous cost of 6%
Or 15,600 sp – 3,000 sp (food) – 12,012 sp (77%) = 588 sp profit (4%) each month.
The profit margin can adjust by varying those expense values, but a better adjustment is to adjust the income parameters, so that profit remains around 4%.
What if the owner should choose to sell? Well, a well-established business typically sells for a multiple in the range of two to four times annual adjusted net income. A one or two multiple, on the other hand, would be associated with an enterprise in which the buyer assumes greater risk. Since the average business sells for one to five times the adjusted net income, should the owner of an inn choose to sell, it would return a sale price of 1-5 times the annual profit, based on the stability of the local market.
https://www.quora.com/What-are-some-of-the-biggest-expenses-in-the-hotel-business
