Pub Lease

Discussion in 'General Business Forum' started by MatCooper, Nov 20, 2008.

  1. MatCooper

    MatCooper UKBF Regular Free Member

    Posts: 3 Likes: 0
    Hi everyone

    I'm looking at buying a pub lease for initially 5 years. Now i know in the press there is a lot about pub businesses going bust and the only reason i'm still interested in this lease is although i'm tied to the brewery on 'Beers' Only the business does food and hotel rooms which equals 40% of sales with a lot of potential to grow...

    I'm looking at being able to raise 20% of the deposit with my own savings do you think this would be enough to show my commitment to the bank to give me the rest ??? any other advice tips general helpful comments would be most appreciated.

    Thanks in advance
    Posted: Nov 20, 2008 By: MatCooper Member since: Aug 27, 2008
    #1
  2. Gillie

    Gillie UKBF Regular Full Member - Verified Business

    Posts: 13,169 Likes: 1,471
    You are heading in to that place the banks like to call a black hole ... ouch!!

    No seriously, lenders have serious issues with the pub game at the moment, mainly as they fall into one of their worst categories for loosing money on them!

    If you have a good relationship with your bank at present, ie they like you, then yes make an appointment and sit and chat to one of their Business Managers. Take along a good business plan with you, which I presume you have done already as you talk about food and accommodation, and then let them see your commitement ie the 20% and see what happens ...

    Good luck though! :rolleyes:
    Posted: Nov 20, 2008 By: Gillie Member since: Apr 12, 2006
    #2
  3. tony84

    tony84 UKBF Regular Free Member

    Posts: 3,954 Likes: 609
    Hi Mat,

    I live in a pub ive never really had any problems getting business overdraft of £xx,000. Im with RBS, their rates are not always the best however they have been effectively bought by the government at the minute and part fo their clause is to get lending back to 2007 levels, so it could be worth a try.

    Also im not sure where your pub is but in manchester hotels are thriving, business is actually up this year compared to last so it may be worth going down that line in that the hotel part andfood can help you through the difficult period of beer sales?

    Also sorry to plug but im starting up rooms4functions.co.uk may be worth submitting there. You may not have a function room however we have wakes in or pub and they never use the funtion room because its too big they always use a section of the main pub.
    Posted: Nov 20, 2008 By: tony84 Member since: Apr 14, 2008
    #3
  4. snipe12

    snipe12 UKBF Regular Free Member

    Posts: 329 Likes: 42
    A little off topic but just be careful on this point if you haven't already research rules etc. The reason I say this is because I have worked both for the Brewery and technical services who serviced Carlsberg, S&N, Enterprise, Spirit, some Greene King etc etc as well as my father leasing a tied pub and I know it is nothing but hassle. If your customers have no issues paying high amounts for beer then you are fine. In days gone by for example basics like Fosters were sold at double to Enterprise accounts by Enterprise compared to what the free house down the road would pay direct. The same was true for other pub groups and the likes of Weatherspoons actually get the beer for on average £20 less than cost hence the cheap prices! My thoughts are there could be issues if you're charging much more per pint.

    Secondly at the end of five years, should you manage to increase the business then will you not be liable to pay more for the next lease as you will have increased the business value due to the increased turn over?
    Last edited: Nov 20, 2008
    Posted: Nov 20, 2008 By: snipe12 Member since: Nov 2, 2007
    #4
  5. tony84

    tony84 UKBF Regular Free Member

    Posts: 3,954 Likes: 609
    Good point with the beer snipe.

    A barrel of beer can be a lot more expensive, it means your in a position you need to charge about 30p a pint more.
    Also for instance when companies bring out new drinks (For instance fruit cider) you get it about 6 months after everywhere else.
    Might be worth checking how much the barrels will cost and seing how much you would need to sell it for. Take into account the Gas.
    REALLY do your figures. Also something we did was to review all the contracts, from Gas, Electric through to the bin companies, some bin companies charge a land fill tax, some dont.
    Food companies, Drink companies for things your not tied to, play them off against each other, sometimes it might even be worth having 2, 1 for spirits and 1 for wine and orange juice etc.
    Basically just review every contract. Re-negotiate it.
    Posted: Nov 20, 2008 By: tony84 Member since: Apr 14, 2008
    #5
  6. snipe12

    snipe12 UKBF Regular Free Member

    Posts: 329 Likes: 42
    To pick up on your last point about re-negotiating, couldn't agree more. The drinks companies etc are desperate for business. OP - If you can afford to pay on delivery or within 7 days then you will get massive discounts. Credit is considered very high risk to a pub so if they don't have to give it to you then they won't have to factor in a little extra to cover their risk. Before you negotiate, make yourself aware of the non offer prices in the supermarkets. They of course have to deliver to you etc but anything more than £1 a litre then you know to haggle.
    Last edited: Nov 20, 2008
    Posted: Nov 20, 2008 By: snipe12 Member since: Nov 2, 2007
    #6