Leasing a pub- help needed.

DVardysShadow

roger196 wrote: »

I never realised that the £200 billion quantitative easing from the Bank of England was covered by the personal guarantees of the directors of the recipient banks.

Only the little people have to give personal guarantees while the bankers walk out with a pension.

TighterThanTwoCoatsOfPain

roger196 wrote: »

.... Do not sign a 21 year lease as you will be liable for the rent for the next 21 years even if you assign the lease and the replacement lessee fails to pay. .

not necessarily..... you can often buy yourself out of this obligation on assignment and its not a lot of cash (in the scheme of things)..

I'd echo RunningHorse at wishing you the very best of luck, however dont let anidotal stories put you off..

Despite the headlines, the failure rate for pubs (well actual bankrupcies at least) are in line with other "small business" start ups.. At the end of the day, a failing pub is no good for the leaseholder or the landlord. If you go for it, onlystrike a deal that YOU believe will work for YOU. Everything is negotiable up to the point you sign the lease. Dont expect to change the rules after you have signed.

RecoveringAlcoholic

Within walking distance of me there are about six closed pubs.
Most have been on the market for over a year.

If they are advertised on Rightmove, Property-Bee will tell you all.


.

property.advert

Another factor is the massive reduction in the price of booze for home consumption. It is cheaper now than when I left nearly a decade ago !

Thus, the correlation between the pub price and the in house price has been broken. People will pay a margin, quite a healthy one actually, but if you break that, they will look at the savings and booze in doors, perhaps inviting friends round and putting on food with the money saved from not going to the pub.

Bottle of beer at home 40/50p - can be 30p (Stella quality). Same beer in a pub £2.50 upwards. Drink 10 a night and the pub costs you £20 more or 5 times the home cost !!!

Add in a recession and ....... you know the answer.

HAMISH_MCTAVISH

TheGaz1982 wrote: »

There is a large pub / nightclub to lease near where I live, the premesis has great potential and I would love to have a pop at it, but think that the risk may possibly be too high to chance (considering that I do not have great experience in this field- although my business partner does).

Could anyone give me advise on leasing a pub. The lease is around £35k per year paying quarterly (first payment in advance). The land loard is a one man band- and not a huge national chain so obviousley there is room for negotiation as it is standing empty.

What is the best way of financing this- assuming I need around £30k to get it up and running?

Can I write a 'option to buy' into the lease agreement?

Is all capital expenditure at my own risk?

Any advise would be very much appreciated!

Regards,

Gareth.

The pub/club industry is brutally competitive. You have to be very good at what you do to succeed, and there are a lot of very good operators who can't make it work.

A pub is very different from a club, which is different again from a style bar or a chameleon venue. And initial investment figures in capex and F&F are wildly different again.

The leased divisions of the big pubco's (punch and enterprise) are down around 10% Year on Year in terms of trade volume.... The biggest and best nightclub operator in the UK (Luminar) is down a staggering 14% year on year.

In short, it's absolutely DIRE out there.

Supermarket promotions and the smoking ban have absolutely killed the trade in these recessionary times.

Having said that, the budget managed house operators, whitbread and wetherspoons, are thriving, and are up year on year. But they have extraordinary levels of cost controls, and purchasing power (and thus pricing advantage) that cannot be matched by independant operators. No matter how good your partner may be.

Food led venues are doing far better than drinks led venues. Coffee and real ales are still growing in volume and margin, nothing else is.

Forget about the lease amount, you need to see the books as to trade volume of the previous failed operator, as a fair lease is calculated on a percentage of turnover. If they don't have that, and/or you can't verify it, forget it.

Yoiu also need to do some serious market research as to competitors, their pricing, margin, draw, session success levels, trading patterns, etc. If your main competitors are big boys in the industry, also forget it. They are better than you, and can buy cheaper than you.

Now having said all that, there are some extremely good deals to be done at the moment, given how desperate some landlords are. And as per all previous recessions, the bold and the brave that negotiate the right deals at the right timeand create the right business may well become very wealthy indeed.

But if you don't know exactly what you're doing, you will lose it all.... and then some.

TheGaz1982

All,

Thank you for your advise. I think I will give it a miss for the time being and make my money somewhere else!

Very informative and usefull information anyway!

Regards,

Gareth.

marcg

Impressive to see so much info put out and the OP big enough to accept it rather than the usual defensive pose most dreamers seem to strike. To add the little I know to it - a friend is an interior designer doing mostly pub fit-outs. He said the minimum you'll spend on a budget refurb on a small pub is £35k.

C_Mababejive

I tend to agree. Pubs are closing at a frightening rate and why? Because the traditional customer base is dwindling. The ordinary working man does not want to sit in a pub for a drink becuase;
a)they can be full of criminal chavs
b)they can be scruffy/inhospitable
c)too expensive

The only pubs that will survive are those that provide attractive environments and serve good quality food. Obviously if your pub is in the country/touristy area..so much the better.

Running_Horse

My local, formerly run by my friend, has had two managers in the month since they forced him out. Some boycotted it out of loyalty, but I persevered because I don't want it to shut down. Since he left all the banned 14 year olds have returned to the pool table, and the other night it wasn't even open. Probably won't keep trying, and in truth it needs a major overhaul, but who is going to invest that kind of money now? I can drink supermarket cider at home, or walk a little further to the only other pub in the area. It's a shame, but I don't see it changing any time soon.

C_Mababejive

Indeed Running Horse..you paint a typical picture of many pubs now. Society has changed and the underclass are in the ascendancy. They blight most of our lives in some way or another and so it is with pubs. Who in their right mind wants to visit a pub full of louts/criminals when you pay too much for a drink and risk getting a flogging with a pool cue/have to listen to and share space with scum? Wetherspoons are generally ok but smaller pubs have generally had their day. All we need to do now are to remove the alcohol licences of the scummy late night off licences/Bargain booze/california wines/ahmeds corner shop and we will all be better for it.