Anyone Invested in a Punch Pub/Tavern recently?

[Lindzlashes80]

I've searched the forums for previous threads regarding the above and there from a long while ago.

I'm interested in if anyone has taken on a Punch pub and what their experiences have been like?

The reason being there is one in my area that looks promising, however that is going on Punches forecasts and support.

I have searched the internet for reviews of either being a landlord or being tied into an agreement and cant find anything.

Any information will be helpful.

 

[JEREMY HAWKE]

I have not see a Landlord driving a decent car for decades
That would be enough for me to walk away

 

[Mark T Jones]

I spent the decade prior to Covid banging the drum that the pub trade wasn't dying, it was changing and operators needed a different vision.

That's currently incorrect. It's incredibly tough - with all of your core overheads (except rent) being hit, huge staffing issues and a cost of living crisis. (Curiously, demand isn't being hit too hard, but there is a drift away from pubs)

Similarly, Punch are neither angels nor demons, they are a property company with a duty to make money from property - yes they will sell you the dream. Yes they will try to create urgency to sign.

You need to fully understand the nature and the detail of the contract you are entering into. They are negotiable (but they won't tell you that)

But mostly you need to understand the nature of the pub industry, because it's not about making 'great food- or serving beer to locals...

 

[Mark T Jones]

I have not see a Landlord driving a decent car for decades
That would be enough for me to walk away

When I started in finance in '83, one of the first things I learned was that landlords are a bad risk on car finance (usually Jags or even Bentleys back then)

First, big insolvency rate - that was brewery ties, pre Pubcos.

Second, they would usually lose their licence for drink driving. In one case, ended up in prison for multiple offences.

 

[fisicx]

Ask the current landlord why they are leaving.

If the pub is already vacant making it work becomes even harder.

The pubco will control everything. Essentially you are just buying a franchise.

 

[Newchodge]

I've searched the forums for previous threads regarding the above and there from a long while ago.

I'm interested in if anyone has taken on a Punch pub and what their experiences have been like?

The reason being there is one in my area that looks promising, however that is going on Punches forecasts and support.

I have searched the internet for reviews of either being a landlord or being tied into an agreement and cant find anything.

Any information will be helpful.

Do you have exerience in the pub trade? I would siggest that is far more important than others' views on what a particular Pubco is like.

 

[fisicx]

A couple of years back a local pub wanted to run an music festival. He got local bands and a mobole BBQ thing and sold loads of tickets. The pubco heard what he was doing and increased the price of a barrel and insisted he brought double the normal quantity. There was some vague reason about commercial enterprise or something.

After the event his profit was less than £100.

If you read Private Eye they have been telling to woes of pubco landlords for years.

 

[Mark T Jones]

Do you have exerience in the pub trade? I would siggest that is far more important than others' views on what a particular Pubco is like.

Whilst it's useful, I'd actually put business acumen and understanding contracts higher on the agenda.

 

[Newchodge]

Whilst it's useful, I'd actually put business acumen and understanding contracts higher on the agenda.

I agree, but that is true of every business proposal, I think. And if you have the business acumen you will know you need an understanding of the pub trade.

 

[FreddyG]

I was involved in a nightclub back in the late 70s and into the early 80s. We earned a bomb. That was the era in which to earn money and we were all young enough to stay the course and outsmart the various bodies that do their level best to cheat you. And that's all of them - drinks companies, building owner, beer supplier, staff, competition, gaming machines and dispenser machine owners - you name 'em and they want whatever you earn. And they'll do anything to get it!

The one thing we learned, day one, lesson one, was to stay away from pubcos. OK, they were not called pubcos back then and this was not in the UK anyway - but the structure was about the same - give a sucker a bogus "business opportunity" that is really a badly paid job, but without any of the protection of a work position.

That scam is as old as the hills. No doubt, some stone-age mead-maker decided to give some young hopefuls an "opportunity" to open their own mead-taverns and work some scheme to tie them exclusively to his meads and ales and use his trading name and sell a minimum amount of his merchandise every lunar period.

So, quite apart from this being the wrong period, the wrong structure, the wrong business model, the wrong industry, and the wrong business partner - go for it and fail, along with all the others!

P.S. There are ways to make a pub work in today's market, but they require capital and know-how.

 

[pentel]

Freehold is the way to go if you want to run a pub.

 

[FreddyG]

Freehold is the way to go if you want to run a pub.

This + either teaming up with a microbrewery or opening one yourself, together with a decent kitchen staff serving good food. That means a hefty own-capital outlay and a few decades of experience.

 

[Mark T Jones]

Freehold is the way to go if you want to run a pub.

There are a number of reasons why I'd question that as universally good advice

However as a consideration its way below why and how they plan to run a pub.

 

[FreddyG]

There are a number of reasons why I'd question that as universally good advice.

Universal - no. Definitely not universal - but then, nothing is. But it is a good starting point. Other points then follow!

 

[Michael Loveridge]

Over the decades I've seen far too many naïve people, often with a redundancy cheque burning a hole in their pocket, fleeced by pubcos. The deals they offer are incredibly one-sided, and the relationship is more like master and slave than landlord and tenant.

Many people who sign up take no legal advice, and then find themselves with a full repairing lease on a pub that's falling down. I used to get involved when they received a letter from a firm of surveyors saying they needed to spend £50k on repairs to comply with the terms of the lease.

So bear in mind that whatever the pubco tells you is probably a lie, and if you do decide to go ahead anyway then get competent legal advice before signing anything.

 

[Newchodge]

Over the decades I've seen far too many naïve people, often with a redundancy cheque burning a hole in their pocket, fleeced by pubcos. The deals they offer are incredibly one-sided, and the relationship is more like master and slave than landlord and tenant.

Many people who sign up take no legal advice, and then find themselves with a full repairing lease on a pub that's falling down. I used to get involved when they received a letter from a firm of surveyors saying they needed to spend £50k on repairs to comply with the terms of the lease.

So bear in mind that whatever the pubco tells you is probably a lie, and if you do decide to go ahead anyway then get competent legal advice before signing anything.

Your own competent legal advice. Do not use the solicitors who are advising the Pubco, for reasons that should be obvious but, incredibly, have not been to far too many people who take on pubs.

 

[Chris Ashdown]

Our village about 4000 people had 4 pubs, now just one, over the last year we have had 3 landlords for that one pub, which has outside and inside eating area good modern interior. does not seem very profitable to me

 

[Newchodge]

Our little town has about 10,000 inhabitants, currently 6 pubs, 1 Working Men's Club, Rugby Club, Cricket Club. Only two of the pubs do food. Pint of John Smiths in our favourite place is now £2.60
There were 7 pubs until late last year, It is unlikely that the closed place will reopen. 1 is open but looking for a new tenant.

The pub business is extremely varied.

 

[Mark T Jones]

So bear in mind that whatever the pubco tells you is probably a lie, and if you do decide to go ahead anyway then get competent legal advice before signing anything.

This is the absolute crux. Also, before doing that, read it and try to understand all the implications - then you will ask your advisor good questions And have some idea of the scope of their control.

Remember, it is negotiable.

By way of background, I've funded several successful small pub chains based on pubco tenancies - the nature of tenancy was what enabled them to grow - and to drop non-performing sites quickly & easily.

On the other hand, i won't fund 'Mr & Mrs' single-site tenancies, because the easy nature of tenancies is magnet for those who don't understand the business

Here are some trigger words and phrases which will nudge a hospitality business plan towards the bin:

Passionate

Good food / good cook / top chef

Hard working

5 real ales / range of gins / cocktails (if your plan includes a menu or drinks list, it's almost certainly missed the point)

People person

Loyal locals

And one word that will fast-track it directly to the bin

DREAM!

 

[Chris Ashdown]

Our little town has about 10,000 inhabitants, currently 6 pubs, 1 Working Men's Club, Rugby Club, Cricket Club. Only two of the pubs do food. Pint of John Smiths in our favourite place is now £2.60
There were 7 pubs until late last year, It is unlikely that the closed place will reopen. 1 is open but looking for a new tenant.

The pub business is extremely varied.

Wow £2.60 how do they make a profit on that, must be a club

 

[FreddyG]

Wow £2.60 how do they make a profit on that, must be a club

Beer's marginal costs are between 5p and 10p a pint to make. The rest is taxes, packaging and getting that stuff to market. Everyone piles costs onto the poor old pub-keeper, so the poor devils don't really stand a chance today!

 

[Newchodge]

Wow £2.60 how do they make a profit on that, must be a club

No, that's the Crown and Cannon. Prices went up for the first time in 3 years a couple of months ago. And they are closing for August for a complete refurb.

 

[Nathanto]

Wow £2.60 how do they make a profit on that, must be a club

We were on holiday in the Cotswolds last week and walked to a local pub where two drinks (a large glass of wine and a pint of lager) came to £18.50 which raised an eyebrow or two.

It did make me wonder how people could afford those sorts of prices yet most of the outdoor tables were occupied. Similarly we went back a couple of nights later for a meal and the place was full inside with almost everyone dining.

When possible we take our Doberman with us on holiday and so I would suggest to anyone in the hospitality business to consider making their premises dog-friendly. Our entire holiday revolved around finding dog-friendly accommodation and eateries and the premise was quite simple; if you weren't dog-friendly then we didn't visit and didn't spend a penny with your business...

 

[fisicx]

There’s a pub up near Reading that gets end of life barrels. Which means it’s a bit of a lottery as to what’s on sale but his prices are very low.

Pub I went to last night wasn’t bad, a pint for £3.80.

So it is possible - if your prices aren’t dictated by a pubco.

 

[Newchodge]

We were on holiday in the Cotswolds last week and walked to a local pub where two drinks (a large glass of wine and a pint of lager) came to £18.50 which raised an eyebrow or two.

It did make me wonder how people could afford those sorts of prices yet most of the outdoor tables were occupied. Similarly we went back a couple of nights later for a meal and the place was full inside with almost everyone dining.

When possible we take our Doberman with us on holiday and so I would suggest to anyone in the hospitality business to consider making their premises dog-friendly. Our entire holiday revolved around finding dog-friendly accommodation and eateries and the premise was quite simple; if you weren't dog-friendly then we didn't visit and didn't spend a penny with your business...

At least 25 years ago I went to a pub in, I think, Penrith. I ordered a pint of lime and soda and a jacket potato with cheese. The potato was about 3.25, the bill was 6.80. When I queried the price, thinking they had charged for 2 potatoes, I was told the drink was 3.55. For a shot of lime cordial; and nealy a pint of fizzy water out of a pump. I cancelled the order. The barstaff said I couldn't as they had poured my drink. I suggested they throw it away and waste 2p.

 

[Mark T Jones]

Everyone knows how to run a pub. Which makes it more surprising that 80% will fail if they actually do it.

Leaving aside business matters, the first mistake most novices make is having lots of ideas.

The second mistake is listening to it other people's ideas..

Result- a mish-mash of ideas with little or no context to the business they are trying to create.

 

[pentel]

if you weren't dog-friendly then we didn't visit and didn't spend a penny with your business

At least as many people would avoid dog friendly places as they don't want to eat or drink in an establishment with a background smell of dog. Many dog owners don't seem to be aware that such a smell exists.....

There is a halfway house where dogs are allowed in some areas but not others.

 

[Nathanto]

At least as many people would avoid dog friendly places as they don't want to eat or drink in an establishment with a background smell of dog.

Granted some people will be like that but I can honestly say that in my fifty-odd years on this planet I have never once heard anyone say they won't go somewhere because they allow dogs; so I really can't believe it's anywhere near at least as many as those who actively look for dog-friendly.

Anecdotally every single place we ate at with our dog was full by the time we left (we generally eat early) so clearly no shortage of customers for those particular dog-friendly establishments...

Many dog owners don't seem to be aware that such a smell exists.....

Well, yes, ours smells "Baby Fresh" as she always has a shower before we go anywhere.

Baby Fresh Dog Shampoo

There is a halfway house where dogs are allowed in some areas but not others.

Agreed and this is the norm; most pubs we go to allow dogs outside and in the bar food area but not in the restaurant.

 

[Lisa Thomas]

Do you have any experience with running a pub? Do you have the capital to invest in one, especially the legal and accounting fees that will be vital for your due diligence?

 

[Drax35]

There's a few businesses that almost everyone has a little dream in the back of their mind about running. Pubs, cafes, restaurants, perhaps a village shop. Almost all of them fail and almost all of them were convinced everyone else just wasn't great at it, but they were somehow different.

Much like when buying any business, if the previous operator is giving up, it isn't because they're making loads of money and the lifestyle is great.

There's a very prominent pub near me (pubco owned) that was wildly successful for many years. I've seen the accounts and it was making an absolute killing. The pubco booted out the operator in order to change the terms under which it was run. Someone else took over, ran the business in an identical fashion to the incumbent and didn't even last 12 months.

Someone else then took over and completely changed the focus of the business. I'm sure their ideas made sense in their own head, but they p*ssed off almost everyone with their changes and in Yorkshire, there's a limited market for people who want to pay nearly eight quid for a Moretti. Guess what, it's being advertised as vacant again.

Moral of the story, don't run a pub. Or a cafe, restaurant or village shop!

 

[FreddyG]

Moral of the story, don't run a pub. Or a cafe, restaurant or village shop!

That is not the right advice!

The right advice is very similar, but first, the would-be proprietor must be sitting on the correct side of the real-estate desk and the correct side of the experience fence.

A guy I used to know ran a medium-sized recording studio in North London. I cannot think of a business that is more doomed than running a medium-sized recording studio. Long story cut very short - he was able to retire in 2003 at 65 with £4m in his back pocket (which he quickly turned into something else of real value).

But he was sitting on the correct side of the real-estate desk!

Because he knew what he was doing, he was experienced and knew how many beans make five and owned the building outright, his many years slaving over a hot mixing desk paid off. But the clue is knowing how many beans make five.

The objective in business is NOT to earn money. The objective is to earn a profit - i.e. the real-world value of your assets must grow at a greater rate than the real-world value of your liabilities.

Currency cannot be an asset. Currency is merely a credit agreement - it is simultaneously a debt and a credit note. It is a token with a counterparty and with counterparty risk. One must never lose sight of the fact that what we call money is just that - a token of exchange.

People running pubs and restaurants tend not to know this and assume that loadsamoney means they are turning a profit. The problem that whacks them on the back of the head is that they are also running up loads-a-liabilities - and often unknown, unseen and off the books.

 

[Chris Ashdown]

People running pubs and restaurants tend not to know this and assume that loadsamoney means they are turning a profit. The problem that whacks them on the back of the head is that they are also running up loads-a-liabilities - and often unknown, unseen and off the books.

Sorry confused by this , please can you explain maybe with a example

 

[Mark T Jones]

This thread could actually be a case study in what goes wrong when inexperienced people take on pubs.

The OP has long disappeared (hopefully having concludes it's a bad idea), yet the thread continues with opinions, ideas and debates around what they should or shouldn't do, without even a nod towards the pub itself, target audience or the plan

 

[Lisa Thomas]

I inherited a case where the company was successful.

The directors' son always fancied himself as a pub owner. So they found him one and for some bizarre ran it through their existing company, instead of a separate entity. The pub made significant losses. The son got bored and left the mess for parents to sort out.

The pub dragged down both business and the directors lost everything, including their pensions.

 

[FreddyG]

Sorry confused by this , please can you explain maybe with a example

I should have been clearer - "unfunded liabilities" is the kind of economic gobbledygook I allow myself to be drawn into, which, to be honest, I should try to avoid!

The simplest is rent. It is not a debt, so it appears only as a monthly payment in the books. But that is a payment that stretches far into the future, just as a £100,000 debt that is entered into the books would do. Being tied to a brewery and therefore having to use a less popular beer or a beer at higher prices is another example.

The more naive pub operators load themselves up with vending/gaming machines, pinball tables, condom machines - you name 'em and they're there. They get a cash injection and for the next ten years or longer, those things live like parasites all over the pub.

Even the best-run pubs can go under water in an instant, when fixed costs overtake falling turnover.

The pub made significant losses. The son got bored and left the mess for parents to sort out.
The pub dragged down both business and the directors lost everything, including their pensions.

One should always try to avoid having stupid offspring - though this is not always possible! And if they do make a mess of things, don't get too involved!

There is a magnificent German rhyming saying "Wer nichts wird - wird Wirt, und wem auch dieses nicht gelungen, der macht in Versicherungen." (He who amounts to nothing, runs a pub. And if even that doesn't work, he ends up in insurance!)

 

[Drax35]

I inherited a case where the company was successful.

The directors' son always fancied himself as a pub owner. So they found him one and for some bizarre ran it through their existing company, instead of a separate entity. The pub made significant losses. The son got bored and left the mess for parents to sort out.

The pub dragged down both business and the directors lost everything, including their pensions.

Sometimes I think I was never the perfect son, but wow!

 

[DontAsk]

BBC News - 'All my savings are going': Pub landlords fear closure as costs rise
https://www.bbc.com/news/articles/cvg8llxmnx7o

 

[Mark T Jones]

BBC News - 'All my savings are going': Pub landlords fear closure as costs rise
https://www.bbc.com/news/articles/cvg8llxmnx7o

These articles appear on an almost daily basis, invariably with a picture of a smiling simpleton or simpleton couple whose dream was to serve beer to locals.

It doesn't take Sir John Harvey-Jones to tell you that's not a solid strategy.

Whilst I'm not in the anti pubco camp, I do believe strongly that they should weed out the obvious dreamers

 

[Nathanto]

At least as many people would avoid dog friendly places as they don't want to eat or drink in an establishment with a background smell of dog.

It seems it's not just the Cotswolds that doesn't share your views on dog-friendly places.

The other week we spent a few days on the Welsh coast with our Doberman and had to settle for our third choice for dinner as not one but two of our preferred dog-friendly restaurants were already fully booked...

 

[The Resolver]

The approach of Punch may be seen by the sign I have seen outside some closed down pubs ..."Fancy Running A Pub?" , In other words they seem to market specifically to people with no experience.