Advice for a new pub business please!

johnsmith5001 · Feb 8, 2024

Hi all! Right, so, essentially an opportunity has come up to take over the lease of a rock music bar near me. The existing lease only runs until March 2025 but is able to be renewed (subject to rent being paid on time etc). The lease is available as the existing owner has developed a personal health issue. The cost of the lease is £25,000.

I'm in the process of finding out key financials, but I understand the bar most recently was averaging between £4000-£6000 weekly turnover. It currently opens 3 days a week. The lease is free of tie to any brewery and the license is 7 days a week and can potentially open until 6am, neither of which are being explored so I see room for growth.

The city is a large student city and the venue sits opposite an O2 Academy with almost daily major musicians playing, as well as being located near the train station/coach station and in the town centre. The venue is something of a brand in the local area, known for hosting lots of up and coming live music acts etc.

I have worked in pubs before and currently work as a DJ in a (different) rock music venue. I would likely look to hire a friend of mine who works as a bar manager where I DJ as the general manager if I took on the lease as he has years of bar management experience.

I have a number of questions for you all if you don't mind.

1) Should I do it?

2) I have a small amount of money saved, a few thousand, but would need a loan to purchase the lease and have working capital going in. Any advice as to the best ways to go about this? I've recently registered a limited company and would potentially be eligible for a start-up loan. I don't know whether an unsecured business start up loan or pub mortgage or whatever would be most suitable. Any advice welcomed.

3) The potential capacity for the venue is, I believe, approximately 300. What is the kind of turnover/profit I could expect off this, given the turnover as mentioned above. I see room for growth, but when I speak with the existing leaseholder in the next day or so, I want to be able to know what to expect in regards to profits etc.

4) Similarly, what kind of rent would likely be due on this property? I will be finding out shortly, but I'd like to know advice on what to expect.

5) How much realistically am I going to need for this venture if I go for it? I was expecting to try a loan of £35,000. £25,000 for the lease and £10,000 working capital, plus the small amount I have personally if required. Obviously I want to balance erring on the side of caution in terms of not being short with what I could realistically afford to borrow in loan terms.

6) There is an existing structure in place, in that there are staff who have worked there until quite recently when the bar closed its doors just before christmas. If possible, would you recommend keeping on as much of the existing structure and staff as possible, assuming the bar is turning a profit?

7) Any other hints and tips would be most welcome. I imagine many will warn against the perils of pub/bar ownership generally, but would appreciate critiques/advice on the specifics provided if possible.

Thank you all so much. Apologies for the lengthy post, it's my first time, so please be nice.

Mark T Jones · Feb 8, 2024

There are many threads on here about buying pubs if you do a forum search.

This is somewhat different, but also similar in many ways.

Some broad points.

- don't do anything at all without a 5 year spread of up-to-date, detailed financial,s including bank statements.

- Get details of all neighbours complaints and outcomes - I'm guessing there will be a lot (like hundreds)

- Based on the above, do your own set of detailed projections, which should address your funding questions.

- You may qualify for a srart up loan. They will also appoint you a mentor. I believe there is a company who funds pub leases, but know nothing about them. Beyond that, without security your options are extremely limited.

-

fisicx · Feb 8, 2024

Turnover is irrelevant. How much profit do they make?

If the place closed before Christmas and hasn’t reopened, find out why.

Staffing is a constant battle. Almost all pubs and venue struggle to get enough reliable staff.

Mark James · Feb 8, 2024

Get full accounts off previous owner and understand what your looking at when going through the numbers. 300 cap venue if full will net you approximately £600 a night profit on tickets plus what you take over the bar.

Socio South West · Feb 8, 2024

Unfortunately most of the questions you ask are specific to the business in question and not to taking on a pub in general, so its extremely difficult to answer a lot of your questions.

The big one is no 3) - As @fisicx says, turnover is only a guide to the size of the business and not relevant; The key thing is what profit is there in the business?

The drinks side of the business is notoriously low margin and very fickle: You need to be looking at food and other higher margin items to get the foundation into the business: A strong student population suggests something cheap but with good margin would be the way forward.

Staff can be a problem, but on the other hand in a student area there is usually a fairly steady stream of job hunters, some of which will have some bar experience already.

Taking over a lease is always a potential minefield - In particular check the lease carefully for dilapidations and repairing clauses: You could be buying a lot more than £25ks worth of building work if you don't have your eyes open and use a surveyor.

IanSuth · Feb 8, 2024

Security security security

Find out who does the security and what they charge plus more importantly what costs for extra days and hours would be as the coverage you need will be spec'ed by council. Also check noise restrictions on licence as 6am pointless if no amplified after 2am

johnsmith5001 · Feb 8, 2024

Thanks for the tips so far.

So from the preliminary chat I had with the existing leaseholder, the profit at the moment is about £1000 per week, but as I said above, there's potential to grow that.

I'm currently doing a general breakdown of costs for my own research before I see the books in a few days. One thing I really want to know that is difficult to find is the cost of stock.

The bar capacity is 300, wet-only sales. Turnover of £4000-£6000 a week. What can I roughly expect the yearly/monthly/weekly cost of my stock replenishment to be? That's alcohol, mixers, garnishes, crisps etc.

The bar is free of tie if that helps. Obviously not looking for an exact amount, just a ballpark figure at this stage to do some early financial breakdowns.

Please advise. Any help would be much appreciated.

Mark T Jones · Feb 9, 2024

Your margin on wet sales sales should be a little over 50% - 65% if you buy smart and have excellent systems in place.

Given that your customers are students you will struggle to charge top dollar.

Also, of course prices are being forced ever upwards.

When buying any businesses, here are 3 rules:

1. What the owner / agent tells you is just chat. Hard information is all that matters.

2. You don't pay for potential- that's your reward.

3. Their job is to sell it. Your job is to question and challenge everything.

Socio South West · Feb 10, 2024

johnsmith5001 said:
I'm currently doing a general breakdown of costs for my own research before I see the books in a few days. One thing I really want to know that is difficult to find is the cost of stock.

Three brilliant points from @Mark T Jones above. Look beyond what it being presented to you - that is history. Its where you are going to pick it up from and want to go with it that matters.

When you get the books also ask for the VAT returns as a verification check for the turnover figures.

Newchodge · Feb 10, 2024

You are paying £25,000 for a lease that will last a year, plus rent? What, exactly, do you get for that £25,000?

fisicx · Feb 10, 2024

johnsmith5001 said:
So from the preliminary chat I had with the existing leaseholder, the profit at the moment is about £1000 per week, but as I said above, there's potential to grow that.

No it isn’t. It’s a lot less than that. I bet if you subtract all costs and all wages (including the landlord) it doesn’t come to anywhere near £1000/week.

As to your other question about stock. Only the accounts will give you this answer.

Paul Kelly ICHYB · Feb 10, 2024

1) Should I do it?
Probably not. You do not have any bar experience - you have also said that you will DJ whilst someone else (who has no skin in the game) runs the bar. You either run the place or not - this is not an opportunity to be the next Tony Blackburn or Pete Murray (awaits ageist comments!)!!

2) I have a small amount of money saved, a few thousand, but would need a loan to purchase the lease and have working capital going in. Any advice as to the best ways to go about this? I've recently registered a limited company and would potentially be eligible for a start-up loan. I don't know whether an unsecured business start up loan or pub mortgage or whatever would be most suitable. Any advice welcomed.

You would be best to arrange a payback over time, to get confidence in the sellers claim! This will reduce your initial outlay

3) The potential capacity for the venue is, I believe, approximately 300. What is the kind of turnover/profit I could expect off this, given the turnover as mentioned above. I see room for growth, but when I speak with the existing leaseholder in the next day or so, I want to be able to know what to expect in regards to profits etc.

Expect nothing - use the data available (daily sales reports, P&L etc) to tell you facts.

4) Similarly, what kind of rent would likely be due on this property? I will be finding out shortly, but I'd like to know advice on what to expect.

No idea - depends where you are and how greedy the landlord is.

5) How much realistically am I going to need for this venture if I go for it? I was expecting to try a loan of £35,000. £25,000 for the lease and £10,000 working capital, plus the small amount I have personally if required. Obviously I want to balance erring on the side of caution in terms of not being short with what I could realistically afford to borrow in loan terms.

No one can answer until you know more facts.

6) There is an existing structure in place, in that there are staff who have worked there until quite recently when the bar closed its doors just before christmas. If possible, would you recommend keeping on as much of the existing structure and staff as possible, assuming the bar is turning a profit?

Why did the bar close and not re-open - RED FLAG!
Are you actually taking over the business or just the lease i.e. starting a new business. You will need a lot of guidance and advice on this, especially on things like TUPE. Ideally, they staff in place know how things work, but you may not get them!

7) Any other hints and tips would be most welcome. I imagine many will warn against the perils of pub/bar ownership generally, but would appreciate critiques/advice on the specifics provided if possible.

Without experience of running a bar, you have a far greater chance of failure if there isn't someone who knows the ropes you can trust to be involved?

So from the preliminary chat I had with the existing leaseholder, the profit at the moment is about £1000 per week, but as I said above, there's potential to grow that.

Is that gross or net? Does that include ALL wages (even the owners).

Fag packet calculation:
Friday, Saturday + one other (concert) = capacity, other 4 days 20% - that's 1140 covers at 2 drinks (£5 each?) = £11,400 t/o @ 50% GP = £5,200 inc VAT/£4200 ex.
Staff @25% of t/o=£2500?
£1700!
Then:
Rent
Rates
Licences
Security
Entertainment
Utilities
etc
etc!

johnsmith5001 · Feb 11, 2024

Hi Paul. Thank you so much for your reply. Here were my fag packet calculations. I wonder if you could possibly advise as to where I'm likely going wrong/what I've missed out. I'm sure there are glaring errors but if you can advise it'd be really appreciated.

So: If we assume 1200 covers per week.
Each customer buying on average 2 drinks.
That's 2400 drinks sold per week.
Assume a fiver per drink price.
Assume £2 profit on each drink (after purchasing cost and tax)
That's £4800 in drink sales per week.

£4800

Costs per week:

Cleaning/waste disposal - £70
DJ's - £300
Security - £720
Staff - £1923
Rent - £462
Premises license - £2.30
Total insurance costs - £135
Utilities - £481
Business rates - £125
my income - £385
Other - £200

Total: £4803

Potential extra costs include the cost of live bands performance fees which would be offset by entry fees to venue/gig ticket prices

Other smaller revenue streams the bar has already are games machines and a jukebox.

I'm assuming a £20,000 income for myself for at least the first year. As I say, room for expansion of sales over time I believe, with more days opening and events etc so I would likely want to increase that a bit over time if possible.

Paul Kelly ICHYB · Feb 11, 2024

Good, you have started to see a picture i.e. no profit.

There will be other costs like maintenance and revenue, like food, but your £20k take isn't viable.

It is so important you get the numbers buttoned down.

Mark T Jones · Feb 11, 2024

johnsmith5001 said:
Hi Paul. Thank you so much for your reply. Here were my fag packet calculations. I wonder if you could possibly advise as to where I'm likely going wrong/what I've missed out. I'm sure there are glaring errors but if you can advise it'd be really appreciated.

So: If we assume 1200 covers per week.
Each customer buying on average 2 drinks.
That's 2400 drinks sold per week.
Assume a fiver per drink price.
Assume £2 profit on each drink (after purchasing cost and tax)
That's £4800 in drink sales per week.

£4800

Costs per week:

Cleaning/waste disposal - £70
DJ's - £300
Security - £720
Staff - £1923
Rent - £462
Premises license - £2.30
Total insurance costs - £135
Utilities - £481
Business rates - £125
my income - £385
Other - £200

Total: £4803

Potential extra costs include the cost of live bands performance fees which would be offset by entry fees to venue/gig ticket prices

Other smaller revenue streams the bar has already are games machines and a jukebox.

I'm assuming a £20,000 income for myself for at least the first year. As I say, room for expansion of sales over time I believe, with more days opening and events etc so I would likely want to increase that a bit over time if possible.

Your list is more comprehensive than many. But if you wait for actual figures you will be dealing with historic reality, not guesses.

I see no allowances for repairs/maintenance/upgrades. As a friend in the trade ones said "every single day, something will break - it might just be a hammer and screwdriver job, or it might be replacement"

Also no loan repayments (not p & l, but cashflow)

If you're just about breaking even on optimistic estimates (all estimates are optimistic) what will your contingency be?

fisicx · Feb 11, 2024

You mentioned students in an earlier post. Which means trade could be very seasonal.

You also need to find out why they haven’t reopened.

And why £25k for such a short lease. You will be paying out a potentially much larger amount on renewal.

IanSuth · Feb 12, 2024

You mention gaming machines - check them CAREFULLY

1. a lot are leased not owned, check those in the premises are owned by it and are not someone eases who will try and sting you for taking over a lease/just remove them.

2. Maintenance - do they work and who will upkeep them, factor in that cost

3. Licence - depending upon the machines you may need a licence from your council to allow their use.

Also tell me how you get £1923 for weekly staffing - that looks low. How many staff, how many hours, what pay rate, did you factor it holiday pay, employers NI etc.

Also glasses/plastic equiv - depending on the type of events this can add a lot of cost, reusable plastics are not cheap and break, what rules do the council have re type of vessel you can use on gig nights ?

From personal experience my son got a job in a reopening student aimed venue in the midlands, within a month they tried to make him a supervisor - at that point he was also told to do pre poured vodka redbulls with supermarket energy drink and cheap vodka and line them up behind the bar that had Smirnoff bottles on optics and redbull cans stacked up - he was told to get a min of 50 shots out of each litre bottle.

What he actually did was ring trading standards and tell them then walk out of the job as being a student the punters contained mates of his. You want to make money ethically you need to do your sums carefully so you are not tempted off down the route above.

As a DJ I assume you have your own kit, otherwise renting in a PA for events will also add up, if there is anything in there ensure it works and is included in the deal, inventory it NOW with agreed condition. I used to do local crewing for gigs and the number of stories i heard about amp racks with the insides removed or lighting rigs with the expensive controllers going walkies was huge.

johnsmith5001 · Feb 16, 2024

Hi guys. Little bit of an update now I've seen the books. We're quite likely to go for it. I wonder if you could advise me about costs of the following:

surveyors report
accountant fees
solicitors fees

for taking on the lease. I've obviously factored in the general running of the place costs and ingoing stock/launch event costs, floating the till etc but in terms of ingoing professional expenses, what are the likely costs and am I missing things, if so, please advise. Thanks so much!

Newchodge · Feb 16, 2024

Newchodge said:
You are paying £25,000 for a lease that will last a year, plus rent? What, exactly, do you get for that £25,000?

Do you know the answer to this question?

Mark T Jones · Feb 16, 2024

johnsmith5001 said:
Hi guys. Little bit of an update now I've seen the books. We're quite likely to go for it. I wonder if you could advise me about costs of the following:

surveyors report
accountant fees
solicitors fees

for taking on the lease. I've obviously factored in the general running of the place costs and ingoing stock/launch event costs, floating the till etc but in terms of ingoing professional expenses, what are the likely costs and am I missing things, if so, please advise. Thanks so much!

£5k should get you some rudimentary, not detailed advice.

When you say you will be going for it, how will you be funding the purchase?

johnsmith5001 · Feb 16, 2024

So essentially the situation is:

The lease runs until end of March 2025. It's 99% likely to be renewed as the existing company that share the building during the day (an office) have been there 15+ years and are not likely to be going anywhere, but due to them not making a final decision for a couple of months, by which time the venue will have been sold, it's not 100% written guarantee, and I am aware of the risk of that going in and have factored it in.

The current holder is selling the lease, all stock, equipment, fixtures and fittings for £25,000. They have serious health issues that have prompted them to sell early. Their previous manager, who ran the place for them, had left, and they opted to sell it and retire as they're in their 70's and not well.

The deal is likely to be that we would pay £15,000 over the course of the year, paid for by renting out the 2 bedroom flat upstairs (likely to my bar manager and another tenant) plus about £3000 from bar sales.

The other £10,000 we are likely to agree with an investor on Monday. If this fails, the investment is a no-go due to the terms of the lease, so a bank is unlikely to offer a loan.

The rest of the funding, i.e the ingoing costs of stocking the place, launching it, floating the tills, professional fees etc, I am paying. This is why I want to know what I'm likely looking at, particularly in terms of the professional fees, i.e accountant, solicitor, surveyor ahead of the transaction.

I've seen the books and the place makes a profit. With the 12 month of repayments, that is obviously considerably dented, but if, as expected, the lease is renewed, we have considerably more leeway after March next year. Essentially going from the business making about £5000 profit (after all our salaries inc mine), to about £25-30,000.

Mark T Jones · Feb 16, 2024

Well, it's a punt.

On the other hand, you'd probably have more fun in Vegas.

johnsmith5001 · Feb 16, 2024

Ha. Scared of flying unfortunately. Vegas a no-go.

Within what they're currently doing in terms of sales etc, assuming no expansion or improvement, and assuming the lease were not renewed, our creditors would be paid in full so the only person losing out would be me and whatever the ingoing costs are. Is it a risk? Sure. But I think a calculated one. Realistically nobody is selling a profit making business for less than it's worth. Every venture has risk attached. The primary risk as I see it is debt, owing to creditors. If I can ensure they're covered within the existing lease, then my own money I'm willing to put on the line for a venture I believe can succeed.

johnsmith5001 · Feb 16, 2024

Please if you can though, what am I likely looking at in terms of the professional fees of accountants, solicitors and a surveyor for the transaction? I've emailed off for quotes but as it's the weekend, I'm unlikely to hear back and would like some idea of what experienced people would expect the costs to be so I know what to look out for. Thanks!!

Socio South West · Feb 17, 2024

johnsmith5001 said:
Please if you can though, what am I likely looking at in terms of the professional fees of accountants, solicitors and a surveyor for the transaction? I've emailed off for quotes but as it's the weekend, I'm unlikely to hear back and would like some idea of what experienced people would expect the costs to be so I know what to look out for. Thanks!!

You are asking 'devil in the detail' questions again here without too much detail to go on.

Much will depend on the situation on the lease and how it relates to the other tenants and the condition clauses.
As previously suggested, a budget of £5k is a sensible figure to budget with

With absolutely no disrespect to the knowledge and experience of the members of the forum please consider the advice and opinions you are getting here as of limited value as we are relying totally on what you are choosing to present to us to base our thoughts on: We have no opportunity to examine the whole case and espy the skeletons in the cupboard and pitfalls that you may be missing or ignoring.

Mark James · Feb 17, 2024

Just go for it Smiffy sounds like your buzzing and life seems exciting to you at the moment and that feeling can’t be beaten, life’s boring otherwise. Just MAKE it work once your in. Good luck and keep us informed. Btw where is this venture? As one of my sons runs a drum and bass night and it’s very popular especially with students. Dm me and I will send you his insta if you want. Anyway keep positive and enjoy the experience whatever happens.

pentel · Feb 17, 2024

johnsmith5001 said:
The primary risk as I see it is debt, owing to creditors

Does this mean you are taking on existing debts?

Paul Kelly ICHYB · Feb 17, 2024

At least the seller will.make £25k.

You are not at least suspicious of the 1% chance the lease will not be renewed?

Why can't you get a guarantee from the owners that it will be renewed (who knows, they may not put the rent up by 50-100%)? This is actually the time to start the renegotiation.

BTW, you have seen the lease?

Mark T Jones · Feb 17, 2024

Socio South West said:
With absolutely no disrespect to the knowledge and experience of the members of the forum please consider the advice and opinions you are getting here as of limited value as we are relying totally on what you are choosing to present to us to base our thoughts on: We have no opportunity to examine the whole case and espy the skeletons in the cupboard and pitfalls that you may be missing or igignoring.

My interpretation is that most of the advice on here revolves around research and due diligence - which I support 100%

That will take far more than a week to achieve. A rushed version will take an intensive months work, a comprehensive version probably 6 months or more.

@johnsmith5001 most of my business is done in the hospitality sector. Whilst I'm definitely not the person to get you funding, I do have a good connection who is a consultant to hospitality and who actually owns a music venue (as a sideline). I'll happily put you in touch to give you a better chance of success.

Mark James · Feb 17, 2024

Just go for it Jonny Boy, like you said you believe in it and you understand it’s a risk and you could lose with all creditors covered.

Trust your gut and instinct otherwise you will only regret it.

Success is a destination with a path filled with failures. If you want to succeed at anything—whether it’s a business, an ambitious goal, or personal record—you need to encourage risk and failure. Because you will never succeed if you don’t fail. So don’t be scared to fail. Failure is actually one of the best lessons you will ever be taught.

As Del Boy once said ‘He who dares wins’ not the SAS as is often confused with them ?

Paul Kelly ICHYB · Feb 17, 2024

Mark James said:
Success is a destination

And if you travel without a map, route and an understanding of what you will see when you get there, you will.probably be disappointed.

Always consult a tour guide or at least a good travel agent.

Mark James · Feb 17, 2024

Don’t listen to em Johnathon, lots of fuddy duddies on here.. A opportunity has shown itself to you, you’ve run the worse case scenario and your happy with that potential outcome now go take action and enjoy the ride.

johnsmith5001 · Feb 17, 2024

Hi Mark,

That would be amazing thank you! Would you possibly mind messaging me your friend's email, ideally with an introduction? I'm new to this site, is it possible to direct message on here and exchange email addresses?

Mark James · Feb 17, 2024

Hi JS

Basement sessions on instagram if you can’t get him from that come back to me.

Porky · Feb 18, 2024

Well the OP can certainly give it a go, I'm all for that and see how it works out why not? They are certainly fired up about it and i wish them good luck.

It wouldn't be for me personally, every person i know involved in this sector has either lost money on it and closed down or grafting non stop to try and make their venue viable but if the OP is not frightened of hard work and can limit exposure to longer term debts and PGs

Mark T Jones · Feb 18, 2024

Porky said:
Well the OP can certainly give it a go, I'm all for that and see how it works out why not? They are certainly fired up about it and i wish them good luck.

It wouldn't be for me personally, every person i know involved in this sector has either lost money on it and closed down or grafting non stop to try and make their venue viable but if the OP is not frightened of hard work and can limit exposure to longer term debts and PGs

As a rule 'give it a go' is what you do with some spare cash and a bit of casino fund, not your life savings plus an unknown set of potential liabilities.

There is a set of 'groan words' on a hospitality business plan, they include:

Hard working
People person
Passionate
Good cook

And the winner, by a country mile - dream.

None is inherently bad, but they nearly always distract from what actually matters, namely a comprehensive, researched business strategy and some business acumen (even hospitality experience doesn't score very high)

In this case, to give it a go, the OP should reach an agreement to run the place on behalf of the current owners until the lease expires. You can be pretty sure ghe extension will require a PG

fisicx · Feb 18, 2024

And the big red flag is still: why did the pub close? If it were profitable, fully staffed and popular they wouldn’t have locked the doors.

BusterBloodvessel · Feb 18, 2024

I can see you're enthusiastic about this and want to make it work. It's a considerable chunk of money to lose but it's not house buying amounts and if you feel you're happy to risk that money then I do wish you good luck and you never know. People are pessimistic on here but only with good reason and experience - it's a tough, tough industry you're entering!

Could I just add 2 words of caution/advice;

- I don't understand why you can't be negotiating with the landlord now about the lease? Even an agreed 12 months extension at this stage would give you some time to get things going. The 12 months (or less, by the time you complete and take over) I promise you will fly by! Why not make that 99% into 100%.

- You mention you will cover some of the £15000 by renting the flat upstairs to a member of staff. Have you got any agreement on this, or was any previous staff member PAYING for the flat? The reason I mention this is that I have been involved in numerous pubs - as both staff, and a drinker! - and the agreement was always that staff basically lived upstairs for free. Now you could argue that it's a perk and you could save on their salary (e.g. pay them minimum wage as a manager as oppose to say £15 an hour, but they get the flat "free"). So you might save money there, but I wouldn't bank on getting rental income of say £500 a month or something as you may find they're just not interested. Don't forget that in return for giving it them "free", you will have a tenant that;

A) Will put up with the noise and late nights and live music
B) Will be on hand and inevitably WILL be asked to "just do this" or "can you check why this is not working" or "can you open up for the dray" - even on their so called days off!
C) Will cover you insurance wise, as it's my understanding that in many cases the insurance requires somebody to be living on site (I may be wrong on this but it's something I've heard)

You may not get someone to do all of the above, AND pay you for the privilege!

Newchodge · Feb 18, 2024

BusterBloodvessel said:
I can see you're enthusiastic about this and want to make it work. It's a considerable chunk of money to lose but it's not house buying amounts and if you feel you're happy to risk that money then I do wish you good luck and you never know. People are pessimistic on here but only with good reason and experience - it's a tough, tough industry you're entering!

Could I just add 2 words of caution/advice;

- I don't understand why you can't be negotiating with the landlord now about the lease? Even an agreed 12 months extension at this stage would give you some time to get things going. The 12 months (or less, by the time you complete and take over) I promise you will fly by! Why not make that 99% into 100%.

- You mention you will cover some of the £15000 by renting the flat upstairs to a member of staff. Have you got any agreement on this, or was any previous staff member PAYING for the flat? The reason I mention this is that I have been involved in numerous pubs - as both staff, and a drinker! - and the agreement was always that staff basically lived upstairs for free. Now you could argue that it's a perk and you could save on their salary (e.g. pay them minimum wage as a manager as oppose to say £15 an hour, but they get the flat "free"). So you might save money there, but I wouldn't bank on getting rental income of say £500 a month or something as you may find they're just not interested. Don't forget that in return for giving it them "free", you will have a tenant that;

A) Will put up with the noise and late nights and live music
B) Will be on hand and inevitably WILL be asked to "just do this" or "can you check why this is not working" or "can you open up for the dray" - even on their so called days off!
C) Will cover you insurance wise, as it's my understanding that in many cases the insurance requires somebody to be living on site (I may be wrong on this but it's something I've heard)

You may not get someone to do all of the above, AND pay you for the privilege!

If you are renting the flat to a member of staff, do be aware of the NMW regulations with regard to charging for accommodation.

johnsmith5001 · Feb 19, 2024

Hi all. So a few more details to what people have commented so far (and yet more questions, sorry!!)

So... the situation is, the bar was running for several years. The current leaseholder wasn't directly involved with the day to day running of the place, they had a manager doing it for them. That manager left a month or two ago and, due to health reasons and age, the guy who owns the lease wanted to retire rather than taking another manager on etc. As a result, the bar closed in mid-jan (I mistakenly thought before xmas, but it was mid-Jan).

The leaseholder wanted £25,000 for the lease lasting until 2025, the existing stock, the music equipment etc etc. Although I had been putting together money for a while to go into this business, when this particular venue came up, I thought I had to move on it as it was very similar to what I'd been looking out for.

I offered a deal in which I'd pay £10,000 up front, plus £15,000 in monthly installments until the lease expires at the end of March 2025. For this, I'd technically be sub-leasing it for a year instead due to this deal. I would the look to renew the lease myself from next year.

Now, obviously I'm not going to pay £25,000 for a year of trading, so I've been looking to contact the owner of the venue, who I'm told is a large property portfolio company based in London, with a local agent in our region who manages the properties here. I've submitted references to the current leaseholder for myself, and in return should be getting the contact details of the agent tomorrow to speak things through with them.

Now. IF they say they the lease renewal is unlikely, or IF they say it would be extortionate, then obviously this is a no-go.

So if anyone has any more comments on this, that'd be great. If anyone knows the like costs of solicitors for instance for the initial transaction as well, that'd be appreciated. As I say, I wasn't expecting to do this quite so soon, hence the busy last few weeks, but the venue was very suitable, so time became a bit more pressing. Also, obviously with a limited lease until renewal, I'd want to maximize trading time between now and then.

I have my own bar manager coming on board, a former colleague at a similar venue, who basically already does the job I'm requiring but for more hours (they run quite late every night and frequently open until 6am) we, at least at first, wouldn't be doing that. Also I've factored in a better salary for him than he's currently on. From what I've gathered from the leaseholder, I know which of the staff/dj's/security to try and keep on and which to replace, but I'd be looking into that myself with the bar manager if I deal is done.

Again, please advise!

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Advice for a new pub business please!