Leasing a Pub...

[FuzzyDunlop2013]

Hi,

I am interested in leasing a bar/pub in London next year. I have recently lefty career(advertising) and will go work in a bar to gain more experience on the management side of things. I have somewhat managed the running a few bar in Ireland when I was a student but not to the extent of knowing the ins ad outs of the business side.However it was the only job I have ever got a buzz from and life is too short to be in a job you don't enjoy! I have a few good ideas for the bar too that I think are unique.

So I was wondering if anyone here has done anything similar to that. What was the outcome? What are the advantages, disadvantages, pitfalls I should look out for? Should I go with a brewery or lease a bar direct? What are my options?

Any and all help greatly appreciated,

A

 

[businessfunding]

Read, question & fully understand the contract - the key reason pub leases fail is because the tenant rushes into their 'dream' without understanding the terms.

Pubco leases are negotiable.

Understand the business behind the pub, not just the 'front of house'.

 

[vvaannmmaann]

http://howtorunapub.co.uk/

 

[David Griffiths]

If you are thinking of leasing a pub from one of the pub chains, the advice is simple.

Don't do it.

You will be tied into purchasing from them at a price that is well over the odds. That also means that they know exactly how much trade you are doing and will screw every last farthing out of you in increased rent at the appropriate time

Even if you can find somewhere with no tie to purchases, don't underestimate the amount that needs to be spent on refurbishment or redecoration before you start

 

[FuzzyDunlop2013]

If you are thinking of leasing a pub from one of the pub chains, the advice is simple.

Don't do it.

You will be tied into purchasing from them at a price that is well over the odds. That also means that they know exactly how much trade you are doing and will screw every last farthing out of you in increased rent at the appropriate time

Even if you can find somewhere with no tie to purchases, don't underestimate the amount that needs to be spent on refurbishment or redecoration before you start

Thanks for that, it seams to be the general consensus amongst some people I have spoken with. Are all pub chains bad? Obviously I am not interested in Wetherspoons or similar but I was going to consider smaller groups who would have a more hands on approach initially to get more experience of running a bar front and back before getting my own free lease in a few years.

Thoughts?

 

[Anonymouse72]

PubCoReviews might help?

definitely search on any specific one after you've narrowed it down, plenty of reviews/cries for help online to give you some feedback.

 

[businessfunding]

If you are thinking of leasing a pub from one of the pub chains, the advice is simple.

Don't do it.

You will be tied into purchasing from them at a price that is well over the odds. That also means that they know exactly how much trade you are doing and will screw every last farthing out of you in increased rent at the appropriate time

Even if you can find somewhere with no tie to purchases, don't underestimate the amount that needs to be spent on refurbishment or redecoration before you start

I disagree

I know of many successful tenanted pubs - as per my previous post it boils down to taking a tough commercial approach from the outset,

Pubcos are listed under property for a reason, but that doesn't mean you can't do a decent deal.

 

[tony84]

Look at this from the other side...

The company who you intend to lease the pub from, do they have managed houses?
If the answer to that is yes, why are they prepared to lease out the pub you go for?

Having been in a pub, I loved it but i would never do it again.
Men on the roof with hammers and crow bars.
Being raided.
People hiding in places you never knew existed in order to rob you.
Fights.
Being up to let the cleaner in and being up to kick the last person out, day in day out.

But im sure thats the side you have seen.

The side you may not have seen:
Going to court to fight over money you are owed at the end of the lease with the pub company.
Being tied in (and finding ways around brewlines - always fun).
Arguing/fighting/debating with utility companies (in particular i would avoid Opus energy).

Just the thought of running a pub again makes me shudder. I dont think I will ever forget the first night after handing the keys back. There was a MASSIVE weight off all of our shoulders.

 

[David Griffiths]

I disagree

I know of many successful tenanted pubs - as per my previous post it boils down to taking a tough commercial approach from the outset,

Pubcos are listed under property for a reason, but that doesn't mean you can't do a decent deal.

Tenanted pubs with a tie to buy their stock from the landlords?

 

[David Griffiths]

Just the thought of running a pub again makes me shudder. I dont think I will ever forget the first night after handing the keys back. There was a MASSIVE weight off all of our shoulders.

There's the old chestnut about running a pub giving you the two happiest days of your life - the day that you opened it and the day that you got rid of it.

Even with the downsides it can make money, but that's very rarely possible with the pubcos - high rent and low margin see to that.

I've had one pub where they needed to take £5,000 each week on beer sales just to make enough to cover the rent and rates.

 

[businessfunding]

Tenanted pubs with a tie to buy their stock from the landlords?

There are variations in stock clauses - the ones in question have negotiated down to parts of their wet stock (mostly lagers)

If you question the tenants you will find that many never read the contrast, few fully understood it and virtually none made any real attempt to negotiate - sadly this important (fundamental) contract is to many people the first dose of commercial reality.

As a slight aside I was approached recently by someone looking to buy a pub lease. I urged extreme caution & legal advice prior to signing, to which the response was 'It wouldn't be in their interest to put bad terms in'.

 

[Chris Ashdown]

People leave pups for two main reasons, no 1 is they have done well and moving on No 2 they failed and lost all their money

What happened to the landlord you will replace and why are you more skillful then them at running a pub

 

[FuzzyDunlop2013]

Hi folks,

Firstly thank you for your replies. This was not a decision I have taken lightly. I will be taking the best part of a year to train up a bit more in a bar here in London as the only exp I have is in Ireland and while it may be relevant I don't exp in cask ales, ciders etc. After the summer I intend to start writing up my business plan, get my licence and any other regulatory stuff I require. Because I want to do this right I will be taking my time making decisions, I want this move to be a success!!

 

[ethical PR]

Good luck do your research well to make sure you understand any issues in terms of the customer base, you have a well thought out, funded marketing strategy to attract customers you want to target and you have the funding available to make any changes and can underwrite your running costs for the first six months or so.

 

[Socio South West]

There was a thread on here last year sometime about a guy who was having to shut up shop and leave everything because he was losing so much money, and the landlords were being inflexible.

Although a pub with good business figures looks a good buy. it's hard to maintain: I would be advising you to look lower down the market at something you can build up into a successful business to sell on. However, there are a stack of pitfalls along the way - so called 'tied' houses being one of them, which will usually mean obligatory ingoing payments to the outgoing tenant which can cripple a business plan.

You are right to be asking questions early - I'm all for someone wanting to do something they enjoy: Just try and keep it that way.

 

[fairdealworld]

If you run a pub you'll be married to your business. It is a way of life rather than a job and not being married to it will mean the business quickly goes downhill. But many people LIKE being married to their business and prefer this 'marriage' even to a much better paid job + free time. Let's face it lots of small business owners, not just pub owners, are married to their business, in some cases in desperation because they can't find a way out but in many cases they are very happily married to their business and feel really fulfilled pushing their own business forward no matter how early the start or late the finish or how many challenges lie between the two. If you've realised that you are one of these people as long as it is a pub then it would be stupid not to try it, particularly as you've got the sense to build up your expertise by doing more pub work first.

But being leaseholder of a tied pub is the way to ruin for many no matter how great their enthusiasm. It can be salutary to look at the ads in local newspapers for people to come to presentations (by a Pubco) to see if they'd like to lease a pub! Why are there so many leases available that the companies need to put on these big presentations?

I'm not saying don't do it, in fact I'm saying really maybe you should do it. But you need to be fiercely realistic about the realities of running a pub today and not just about the reality of running a tied house. People drink more at home, they are put off trips to pubs by the drink driving laws, supermarkets sell drinks so cheaply. Plus of course, even until relatively recently, pubs offered things that most homes didn't. Warmth was one at a time when many homes were icy once you got more than a few feet from the open fire. In more recent times pubs had TV and then big screen TV, in even more recent times a lot of homes have acquired remarkably large screens of their own plus smaller screens around the house. You can see closed pubs all over the place and doubtless some of them deserved to close while others maybe were victims of Pubco owners who actually didn't care whether they closed or not as someone new could always be found to be fleeced.

I think to make a pub work today you've got to be very creative about working out what would bring people in sufficient quantities. I suspect that most pubs have to have specific character. For example once upon a time I liked going to pubs and often did so with friends or colleagues. But gaming machines, big screens and a limited choice of drinks + those microwaved warmed up meals are all a no no for me and so many pubs now fit into that category and I've dropped the habit of pub going. I'd be attracted by good food, craft beers, interesting non-alcoholic drinks, cleanliness (especially clean toilets!) comfortable seating, pleasant service + no gaming machines or screens. But maybe there aren't enough of 'me' to make a pub viable or maybe there are? My point is simply that a pub has to have character and the owner has to work out if enough people will be attracted by that particular 'character'.