Buying a pub lease

SailorSam

Wherever you go you see closed down pubs, it's not an easy thing to make a good living with these days. Look at people coming out of any supermarket with cheap booze, that's 'cos they drink at home more and go out less.

bris

Do not buy a leasehold pub, it will end in tears.

It's the hardest game to be in now and the leaseholder controls everything.

You might (but I doubt it) have had a chance if it was freehold so you can set your own prices and buy from different suppliers, but with a leasehold you have no chance.

Apart from that when things start to get tough you will find yourself working in the pub 16-18 hours a day to try and rescue it, are you prepared to work these kind of hours? Honestly, its a business for the big boys now, avoid the locals.

eattothebeat

No not the catering company...just a massive Blondie fan.

eattothebeat

The pub would only be tied to cask ales and beers -
spirits and wines are free from tie.
My partner and his manager at work who we
are going in to business with have worked together for the past 6 years and the bar they have worked at coins it in. They can take £3k alone on a Sunday. A quiet week is £1200/£1300.

da_rule

But a quiet week being £1200/£1300 in all likelihood wouldn't cover your overheads. So how many quiet weeks could you afford before you start to struggle.

I would also assume that the place your partner currently works may be bigger than the place you are looking at (so have larger capacity). Also, it probably has goodwill.

The question comes down to, how many bums on seats do you think you could get in the restaurant (food seems to be where the most profit comes from) and at what prices would you have to knock the good out at to get a profit? Then you need to look at what is happening in the local area and how this price compares.

Also, what reputation does the pub have? If it has a bad one (especially for its food offering) then do you really think that hanging a 'Under New Management' banner over the door will change that?

unlucky67

I've been involved with opening a few new restaurants for other people, was a chef then waitress and then outside event organiser for many years. My partner was a chef for many years.
My partner had a restaurant - made a go of it but had to work every hour...for less than NMW if you worked it out...
He sold the lease after 7 yrs. Made a small profit on it and had money in bank (no time to spend much on socialising etc) - now works for someone else, no real responsibility and for not much money...but happier (and he gets to see his children more than for 2 hrs a week)
I think you need to think about the profit margins involved - using the old accepted figures restaurants working at a 67% gross profit on food (everything you buy times 3 then add vat) make a net profit of 12%...
That £3000 is actually £2500 (take off vat and you can't claim much of that back - you haven't paid VAT on food and wages, rent and rates ), then say if you can sell everything at 67% GP your food costs are £800+ - you now have £1700...doesn't look that great for your best day - especially cos you need to pay wages, rent, rates, energy bills, bank charges, etc...
And on your bad day - that 1200 less vat is £1000 then £350 food cost leaves you £650 to cover everything - and these costs are more or less the same ...
That £3000 could be 100 customers at £30 per head...How much do you plan to charge? What level? High turnover or high quality?
The more you charge the better food and level of service people expect...
How many covers have you got? You will struggle to do more than 2 seatings a service looking at £30 per head...and the more you need to turn over the seats the faster the service needs to be (without the customer feeling rushed) - you need more staff... and you staff costs will be high -
Even at NMW you will be looking £75 per member of staff for 12 hrs split shift day - for 50 covers a service you need 1-2 waiting staff (depends on layout. level of service and staggering bookings) and 1 porter, 1 commis (your partner doing most of the cooking) that £225-300 plus employers NI.
And you have to build up that kind of level of trade ...be careful about advertising/promoting too much before you open...
Even so depending on location, you might start off really busy (as people are nosey) - the danger is you get absolutely hammered so lots of people get bad service/food (even if you have a guinea pig first night to make sure everything works as expected) and you can't afford that because word of mouth is more important than anything, you need to make sure they come back - with their friends - better a quiet opening and build up - then promotion if nec but as I said not always possible. And better to turn away a booking than take them and not be able to give them good service.
And don't expect to be as busy as your first day a month after opening ...like I said you have the novelty value at first...
You need to have at least a couple of months running costs -preferably 6 months - in your bank - maybe with the facility set up (before you open) to get an overdraft - they might charge you a bit for an overdraft you never need but better that than trying to get one when you are desperate ...

And I have never worked in a restaurant which hasn't been quiet sometimes - rarely zero but sometimes...and things like deep snow outside and people will cancel ...but you still need to be open - if someone comes and you are unexpectedly closed they are less likely to come back...
And on those quiet days you still have to have the staff etc...no point zero hours/telling staff not to come that night and not pay because you need good full time to staff, you can't afford to pay them a lot so you need to try and look after them as best you can...(and a bank of casual staff that can come in and help out if you are really busy). And still pay the rent and the rates and the heating and for the unsold food that goes in the bin...

It is like people opening a cafe because it is sounds nice -
work out how much money you can make on each coffee (net profit)
Work out how much money you need to tick over a day (rent, wages etc (not coffee cost)
Work out how many coffees you need to sell ...see if you can realistically sell that many...or if you can get people to spend more....
Guess the same for a pub - but do it with profit on pints ..

Opinion

eattothebeat wrote: »

The pub would only be tied to cask ales and beers -
spirits and wines are free from tie.
My partner and his manager at work who we
are going in to business with have worked together for the past 6 years and the bar they have worked at coins it in. They can take £3k alone on a Sunday. A quiet week is £1200/£1300.

Unlucky67's post is very good. Just to add a few comments myself, as the owner of a bar;

Working together for a business is one thing, working together in your own business is another ball game. What happens when one person has a different idea, different suggestion etc?

I really, really cannot see how you could sustain the business on £1,300 per week. Even working to high margins, you've got your fixed costs such as rent, business rates, salaries, accountant fees... they don't vanish just because you've had a bad week. Then you have all your other/variable costs... suppliers, staff wages, VAT payments, cleaner, handyman (you'll not survive without one), PAYE liability, PRS, gas, electricity, water, premises licence, insurance, waste collection, bathroom services, phone/broadband... the list goes on and on.

I'm not going to argue with all of the people saying that you can only make it work doing 16-18 hour days- I don't have that problem, but you do need to be realistic and you do need to go in with your eyes wide open... throw the rose tinted glasses away.

Feel free to PM me if you want any other hands on information, assuming you're not living in the same town as me I'm happy to go over my P&L etc. with you.

eattothebeat

All good advice. Thank you so much, def not going in with ros! tinted glasses. My mum owned bars for years and I grew up in them so I know how much hard work it can be.
Opinion -that would be great - will PM you.

Lisa45

Don't do it - my husband's family ran pubs/restaurants and he was brought up in the industry, going on to manage his own pubs very successfully.

We did the worst thing ever back in 2005 and took on a Punch lease that we thought was a sure thing - surely with all his experience and knowledge we wouldn't be one of those horror stories you read about would we - only stupid people get into trouble don't they ?????

... I would never touch a Punch lease if I had our time again - and I would never recommend anyone else to - no matter how sure you are.
Walk away whilst you can is my advice and look around for a freehold that you will be in full control of.

Fishingtime

eattothebeat wrote: »

The current leaseholder is very keen to get out of the lease with some flimsy story of moving down south.

And you still want to buy into the business even though you say the present landlord has come up with a flimsy excuse