Pub leasehold..

Dunree

Our local pub is going up for sale.

The two business partners who own it have had a falling out and therefore calling it a day.

It is a very nice pub, not much passing trade, no tv or machines, so no thuggy football types in it.

Most of the clientelle are reasonably well to do people and it is a very friendly place.

Mrs D ran pubs for years, starting at the bottom until she was eventually running her own (with a former partner). When she left him, she got a proper job

Now, we could buy this lease but it would mean a few drastic changes.

We could rent out our place, for around £1100-00 pm, and live in the pub. We do not have any kids or mortgage, so the rent would go to making up the shortfall in Mrs D's wages (£44k per year).

I wouldn't give up work as I wouldn't want to. I love my job

When we first started drinking in there, we identified changes that we'd make, never thinking that one day there would be the possiblilty that we might have the place.

Now question time...

We could probably get this lease for around £45k, which would mean doing a small mortgage on the house, which is worth around £200k.

Between my wages (50k) and the rent, repayments wouldn't be an issue.

Is there any advice on, if we were to go down this road, on what questions we should be asking??

The current leaseholders are Enterprise Inns if that helps.

Mrs D is an excellent cook and used to run the kitchens in her pub days, so quality food would be on sale, food is where the major money is.

The pub is also a bit upmarket in its draught selections;ie; no bog standard lagers or ciders, only premiums, and an extensive wine collection.

We have identified areas where we could improve sales that the current owners, both close friends of ours, never considered.

Location is South London.

I'm looking to retire in 5-8 years, and I'm not one to sit about growing fat. I'd rather be doing something, and this would be right up my street.

When I'm not at work, I'd obviously be helping out

There are currently two part time bar staff, one of whom we would be getting rid of because he is a little sh:t [EMAIL="sh@and"]and[/EMAIL] costs the pub money...

Any thoughts/suggestions??

Dunree

Hoody

Before committing yourself you really need to get a very good accountant to look over the books very thoroughly. There are numerous pubs round here that have gone bankrupt several times ever since the smoking ban came into force. One just up the road has had seven or so different leaseholders within the last three years and none seem to be able to make the business pay, even though it is in the middle of a busy and large housing estate..

Dunree

Hoody wrote: »

Before committing yourself you really need to get a very good accountant to look over the books very thoroughly. There are numerous pubs round here that have gone bankrupt several times ever since the smoking ban came into force. One just up the road has had seven or so different leaseholders within the last three years and none seem to be able to make the business pay, even though it is in the middle of a busy and large housing estate..

Hi Hoody,

I can see where you're coming from. A couple of friends have pubs, and I know the ban hit them big time.

This place has a large, heated, covered beer garden in it, so that isn't too much of a problem thankfully

My cousin is an accountant, so I'd get him to go through the books before we go anywhere near buying.

One, I suppose, good thing is that we won't need the income from the pub to survive. My salary would cover us quite adequately.

I'm looking to retire by the time I'm 58, I'm 50 now, so a quiet pub like this might be the answer for my long term plans.

I'll get a fairly decent pension, approx £25k as it stands just now, and a lump sum, but as I said, I don't want to be sitting around, I need to be occupied. My job is constant from the minute I walk in the door, I wouldn't want to be rushed off my feet in retirement, so the pub, on paper, sounds ideal

Dunree

missminx

The food is a major point, especially in a leased premises. MrsD presumably doesn't have a current personal licence, so would need to approach the local authority to sort that out (includes forking out for CRB)
It isn't just the smoking ban, it's the increased prices on alcohol and of getting home for those outside walking distance.
I admire your positive attitude, and don't want to discourage you, but tread carefully. A pub is a far greater responsibility than children!!Only people who have had a pub understand that one! I always hesitate a little when someone is considering a pub for retirement as they are a LOT of work behind the scenes. One of the things MrsD may want to look in to in detail is the increased amount of paperwork, especially where the kitchen is concerned. She will also need to arrange food hygiene qualifications. Also, who will take responsibility for the pub when you are not there? As they would also need to be licenced - even to look after it for brief periods.
Rambling a little, will try and check back if I think of anything useful.

Dunree

missminx wrote: »

The food is a major point, especially in a leased premises. MrsD presumably doesn't have a current personal licence, so would need to approach the local authority to sort that out (includes forking out for CRB)
It isn't just the smoking ban, it's the increased prices on alcohol and of getting home for those outside walking distance.
I admire your positive attitude, and don't want to discourage you, but tread carefully. A pub is a far greater responsibility than children!!Only people who have had a pub understand that one! I always hesitate a little when someone is considering a pub for retirement as they are a LOT of work behind the scenes. One of the things MrsD may want to look in to in detail is the increased amount of paperwork, especially where the kitchen is concerned. She will also need to arrange food hygiene qualifications. Also, who will take responsibility for the pub when you are not there? As they would also need to be licenced - even to look after it for brief periods.
Rambling a little, will try and check back if I think of anything useful.

You must have been listening in to our conversation today

The licences were discussed as hers are well out of date. Things have more than likely changed since she last had hers.

We have both had to be CRB checked for our current jobs, I assume that we'd have to get this done again??

The pub has a deal with a local taxi company where they sort of scratch each others backs, the pub only uses this one company, and they put quite a bit of business their way, and the taxi company tells people about the pub

Paperwork I'm not bad at, as a lot of my job involves lots of paperwork.

The bit about a licencee was also discussed today. Mrs D thinks there are retired landlords who keep up their licences specifically for this reason, it's something I haven't heard of to be honest.

Does this help??

Dunree

missminx

arrgh! I just wrote a huge reply for you with as much info as I could think of and it has vanished into the ether.... :mad:

version 2 ....
Glad to hear you are discussing this in so much detail.

The transport thing is good, but still adds to cost of night out so I think people tend to have less nights out due to combined cost if you follow me. Was probably being vague in my post!

Contact the local authority for licencing infomation, your existing CRB may count. They might want you to do the course - used to be 2 days iirc- and I would suggest that you both do it and get your licences as it will be easier in the long run.

Speak to environmental health about the food hygiene courses. the basic is pretty much elementary, but is a legal requirement for your wife given her plans. It is sensible to do the next one up as well - it used to be known as intermediate but has changed name! - as it has a longer life span and will be helpful to her for the dreaded paper work I mentioned. It is mostly for the kitchen, and along the lines of hazard analysis, cleaning schedules, records of food temperatures etc etc etc.

I myself, would not be happy to entrust my pub to a random licence holder, but that is personal choice. You don't have to worry about it immediately, but would consider maybe a family member / close friend or even a responsible member of staff to do their licence.

I can probably help you quite a lot as I stacked up many years in the trade. If you want to pm me, I will give you my email for you to use in future as I am a little bit rubbish at checking my PMs unless expecting them! But I do check my email frequently. If that's helpful, then feel free.
I would also suggest you look up episodes of 'Save Our Boozer' with Jay Smith. He is very good, and you will see hints and tips which may be helpful to you. Googling him may also throw up useful articles and information.
HTH

Lexxi

Dunree wrote: »

The two business partners who own it have had a falling out and therefore calling it a day.

It is a very nice pub, not much passing trade, no tv or machines, so no thuggy football types in it.

So how would you attract new customers?

When she left him, she got a proper job
How long ago did Mrs D run pubs?

so the rent would go to making up the shortfall in Mrs D's wages (£44k per year).
You'd still be short on Mrs D's wage

I wouldn't give up work as I wouldn't want to. I love my job

When we first started drinking in there, we identified changes that we'd make, never thinking that one day there would be the possiblilty that we might have the place.

Now question time...

We could probably get this lease for around £45k, which would mean doing a small mortgage on the house, which is worth around £200k.
What about F&F, stock, contracts, repairs, the other 'little things' pubcos tie you to? The courses they send you on? Also, what if the bank won't agree to a mortgage, why risk your house on an industry that is on it's knees?
Between my wages (50k) and the rent, repayments wouldn't be an issue.
Why would you work to fund a business? What happens when you retire and your income goes down?
Is there any advice on, if we were to go down this road, on what questions we should be asking??
Ask Enterprise about all the little extras, ask the two who are running it why they have fallen out, it may well be it isn't a viable business
The current leaseholders are Enterprise Inns if that helps.

Mrs D is an excellent cook and used to run the kitchens in her pub days, so quality food would be on sale, food is where the major money is.
Only if it sells, you may need to change things around to do this and upset regulars. When would you see one another? You have your day job, she will be running a kitchen 7 days a week, how can she manage staff from the back of house. Is the equipment working, in god condition. My OH reminded me about a kitchen that took 170 hours to clean once and it had been in use the day before, yuck!

The pub is also a bit upmarket in its draught selections;ie; no bog standard lagers or ciders, only premiums, and an extensive wine collection. This has probably kept out the thugs you mentioned earlier

We have identified areas where we could improve sales that the current owners, both close friends of ours, never considered.
Maybe they did, maybe it wasn't viable or the landlord of the pub (in a property sense) wouldn't allow it
Location is South London.

I'm looking to retire in 5-8 years, and I'm not one to sit about growing fat. I'd rather be doing something, and this would be right up my street.
Running a pub is still a full time job with no time off, no weekends, no christmas, if you're still there is 5-8 years
When I'm not at work, I'd obviously be helping out
Why would you want two full time jobs?
There are currently two part time bar staff, one of whom we would be getting rid of because he is a little sh:t and costs the pub money...
How would you get rid of him, little !!!!!! isn't any defence for an ET that I've seen
Any thoughts/suggestions??

Look into Enterprise/Pubcos, they are ruthless, what happens if they decide they want you out? Depending on the contract you sign depends on how quick they can get you out, then where would you go, someone would be living in your house. What if you make a complete hash of it, would you want to stay in the area?
It's all well and good saying I'm going to look at the books, the Pubcos will give you year to date figures not actually figures, they will tell you how much beer has been sold, when talking over 12 months it will sound good, they are salesmen they aren't going to point out problems or shortfalls. The current lessees don't need to give you their figures.
Beer prices have risen year upon year, taxed again and again, you get to look at the supermarkets selling at a loss or without VAT and you'll get to pay Enterprise a premium for buying from them.
Dunree

It is something you need to think long and hard about. You will also need to find out if Enterprise plan on leasing the pub again. Sometimes they put it with temporary managers for a short while to build the business back up so they can get more money. I worked in the temporary mangement industry and there are so many pubs out there that close down over and over again, it's not always because of bad tenants but because the Pubcos make it so hard for these places to be a success now. This is because they know that someone else will be lining up to pour their money in once a tenant goes out of business. I've seen it time and time again.

I'm not trying to put you off so I apologise if I sound harsh but if you do want something to retire to then maybe start saving and look around for a freehold

Dunree

Hi Guys,

Thank you very much for all your very detailed responses. They certainly opened my eyes

When I got up today, working nights just now, hence the daft o'clock response times, I had a chat with Mrs D.

She was down in the pub last night and had a chat with the guvnor and his g/f.

I had already done a bit more research and had sort of half made up my mind that this would be too much.

When we spoke about what I had found and what she was told last night, then we decided that it wasn't such a good idea afer all.

We didn't realise all the extra costs, ie courses, monies to Enterprise etc. The more we delved, the worse it looked.

The £45k went up to just under £100k, which neither of us are prepared to risk. I am almost debt free for the first time in many years, and this scared the daylights out of me.

Again, I really appreciate all of your honesty and very frank replies. They opened our eyes wider to the very possible pitfalls that we were heading for.

We'll look at other options, but as it stands just now, the licenced trade isn't one of them

Thank you very very much guys, your time has been very gratefully appreciated

Regards,

Dunree

debtinfo

just wanted to put my tupance in, i used to work in bankruptcy and i can confirm that the number 1 type of business thats leads to bankruptcy is pubs and whilst some of them where because the people where simply rubbish at running a business most where because the pub trade is a dying one

Lexxi

Dunree wrote: »

We didn't realise all the extra costs, ie courses, monies to Enterprise etc. The more we delved, the worse it looked.

The £45k went up to just under £100k, which neither of us are prepared to risk. I am almost debt free for the first time in many years, and this scared the daylights out of me.

We'll look at other options, but as it stands just now, the licenced trade isn't one of them

That cost from 45 up to 100k doesn't suprise me.

I am pleased to hear you did some further research, you only have to look around to see how many licensed properties are struggling.

There's nothing to stop you looking into this further just in case something did come up in the future.

If it's that great a pub, Enterprise won't let it close, it makes more sense to them to pay someone to run it until they find a lessee as they still get their beer sales.

Dunree

Hi Lexxi,

Given this places location, I have a feeling that it will end up as flats.

I'm really glad that people took the time to give their advice and opinions, it did help to swing things.

The tow guys put a lot of time and effort into the place, but they were doing it full time. We could never have managed to work and run the pub.

Well, there's always tomorrow

Thanks for your valuable time guys

Dunree