Buying a pub lease

eattothebeat

Hello!
Looking for some impartial advice.
My partner (a chef) and myself have been looking for our own restaurant/bar to lease for a while now.
Long story short we have found one in Edinburgh in a good location. It is brewery owned with 13 yrs left on the lease and the current leaseholder is selling his lease so it would be a Business Transfer. It is advertised at o/o £75K but the estate agent has told me they will accept a sensible cash offer of circa £55k
The pub was returned last year and the rent has increased £10k to £49k. The refurb is not exactly my taste but ok. The kitchen is not great and runs on elec and my partner is use to gas. The current leaseholder is very keen to get out of the lease with some flimsy story of moving down south. The pubs does an ok trade but nothing to rave about. I know we could make a great success out of it. What are people's thoughts on lease price and huge increase in rent?
Thanks in advance.

silverwhistle

Is it really a brewery or one of the pubcos? I'd be very, very wary. Increase your turnover and they'll increase your rent, charge you sky high prices for beers (ask a local freehouse what _they_ pay for a barrel).

Have a look at this: http://www.theguardian.com/commentisfree/video/2012/mar/16/pub-closures-pubcos-landlords-punch-video

I like my food and my real ale (and my wine, for that matter!), but wouldn't want to see your enthusiasm squashed by one of these companies... Go for a few unaccompanied/incognito visits to the pub, or get mates to go and stand a few pints and you might learn why the landlord is leaving...

davehills

Great idea Silverwhistle! Get your mates to check the place out and chat to a few people!

If you do decide to go with it, I'd suggest starting with a low offer on the basis that the rent has seen a sharp increase. You can always increase your offer if the vendor doesn't bite.

eattothebeat

It is a Punch Tavern pub. Just watched that video in horror!
Current leaseholder has been there 12 years and I've seen (unaudited) accounts which show it is trading at a profit - around 60% gross profit. He says Punch hardly pay any attention to him.

ManAtHome

As well as getting a serious check of the books, check out Punch as well - good start here http://www.theguardian.com/business/punchtaverns , latest here http://uk.reuters.com/article/2014/04/15/punch-taverns-restructuring-idUKL3N0N62SA20140415 (beware the ides of May..?)

phill99

eattothebeat wrote: »

I know we could make a great success out of it.

Sorry, but you don't.

And that attitude is the biggst reason restaurants fail. Everyone who has ever had a restuarant has said that. Ts not just small unknowns that fail. Look at the number of celebrity chef iwned restaurants that have failed.

Restaurants have the highest attrition rate of all small businesses. 80% will fail within 5 years.

Look at the basic figures: you have £49k rent. Business rates in Scotland are around 42p in the pound. Based on a valution of say just £35k, you will have to find £1225 each week before you have taken a penny. You will need £5k tied up in stock.

And why us the other guy leaving? It almost smacks at desperation if he is willing to let his lease be bought for a third less than its advertised at.

Do you not hear alarm bells?

FatVonD

I know somebody who took on a pub with them, he had managed it for them some years before.

They managed okay until the smoking ban when their takings halved overnight and they could no longer meet the overheads.

He is a brilliant chef, his wife is an accountant. If they couldn't make it work then I really don't know who could.

DKLS

I know someone who took on a pub, when the smoking ban hit, he thought about quitting but decided to take a risk and refurbed and started doing food, and has over a number of years changed to a gastro pub and he is doing a roaring trade and you have to book weeks in advance to go for sunday dinner.

eattothebeat

Glad to hear a positive story!
Thanks for all the advice - keep it coming!
Where is the gastropub? DKLS?

paddyrg

ETTB, are you related to the well respected tour and event catering company of the same name?

DKLS

eattothebeat wrote: »

Glad to hear a positive story!
Thanks for all the advice - keep it coming!
Where is the gastropub? DKLS?

The pub is in West Yorks, http://www.3acres.com/restaurant.html

It is definitely a tough time for Pubs, but with the right offering they can be successful, is the Edinburgh pub a tourist or locals pub?