A Bristol pub believed to be the only one in Britain to be run by a town council, is at the centre of an investigation to see if local householders are getting good value for their council tax.

Concern is growing that the Ratepayers Arms in Filton is not making enough money and action needs to be taken to help it become more profitable.

The pub is part of the Filton Sports and Leisure Centre in Elm Park, tucked at the back of the building, and at one time was included in the Campaign for Real Ale's Good Beer Guide. But at best it only makes a small operating profit and historically it runs at a loss.

Now Filton Town Council has set up a working party to carry out a full review of the pub, which has been in business for the past 27 years.

Councillor Adam Monk, vice-chairman of the finance committee, said he believed the pub could be more lucrative.

He said: "It caters for a very small element of the community but could cater for a greater part and make a better return.

"It's not particularly well marketed and, like any pub, it has its busy and quiet times. Sometimes there is no-one in there. It's a great facility for the community, but it should make a profit.

"I've proposed looking at the costs to see what can be stripped out, to promote it and identify what people want. Some people believe there's a hidden agenda to close it, but that's not the case at all."

Mr Monk said one of the controversial issues was live entertainment staged on Sunday evenings. He said: "We're not getting the numbers in. If we put on entertainment, we should not be subsidising it. It may be that people do want live music but perhaps it's being offered on the wrong day or it shouldn't be organised so often."

Mr Monk said he enjoyed a pint of real ale or stout and had a choice of three real ales in the Ratepayers Arms – reduced from five some years ago and with a Butcombe beer the best-seller. But he said the number could be reduced to two to prevent wastage and the working party will also look at opening hours.

Currently the pub is open at lunchtimes in the week and again in the evening, while at weekends it is open from noon to 11.30pm.

In a motion agreed by the council, Mr Monk said: "Any spend by the council of taxpayers' money should be on the basis that it will be of benefit to the large majority of Filton residents, achieving a greater good and not for a chosen few."

He said it was difficult to get all operating figures as the pub was part of the sports complex and such outgoings as electricity costs could not be isolated from the overall bill. But he said the pub made a net profit of £1,501 in 2007-08, which included £6,000 from rental of a flat on site.

Pub manager John Beese said: "Some people in Filton don't even know the pub is here. Some think it's a members-only bar but in fact anyone can use it. It should be promoted a bit more."

His wife, Heather – who produces a range of bar snacks from toasted sandwiches and pies to the most expensive meal of chicken and chips at just £3.50 – welcomed being asked by the working party for ideas.

She said: "There are times in the day when the pub is closed but it could be opened up then for other uses. We have some ideas and have given them to the council."

At Wednesday lunchtime, the Ratepayers Arms had three customers by 1pm. One didn't want to be named but blamed the introduction of a smoking ban a year before it was stopped nationwide on customers going elsewhere.