Opening my own pub

[Patrick21]

Hello everyone,

I'm in the process of opening my own pub and I've already done quite a bit of research, found wholesalers near me, a company that provides pub dispense equipment, created a business plan and I'm on cash flow forecast now. My idea is unique (there is no similar pub in the city, possibly country) and not very complicated, therefore I believe I can succeed. I'm applying for a loan, however I've got half or maybe even most of the amount (will see when I finish the cash flow forecast) needed to open it and keep it running, so I guess I'm in quite good position. I've also booked myself a course needed to obtain personal license. But before I would like to know a few things such as, how does leasing an equipment work? I've heard from a friend of my parents that it is possible to lease the equipment and that this is the best way to begin with. Also, how much gallons of beer mid-size pubs usually order/sell? If you're owning a pub, how many clients have you had in your first year? Is it possible to check if the building I want to rent will get the premises license or is it possible not to get the license just because of where the building is located? (I assume if it is near the neighbourhood then the people living in that area would be against us opening a pub, fortunately for us the building is close to the sops but not that close to houses) And I've heard the business rates are raising, so I want to know how big of a threat are they?

Thanks for your attention, I'd be grateful if someone who owns a pub answers my questions.

 

[Scalloway]

I haven't owned a pub but I have been a bookkeeper for a few licensed premises.

how does leasing an equipment work? I've heard from a friend of my parents that it is possible to lease the equipment and that this is the best way to begin with

You select the equipment and the leasing company pays the supplier. You then pay a monthly sum to the leasing company.

Is it possible to check if the building I want to rent will get the premises license or is it possible not to get the license just because of where the building is located?

Your local council will have a licensing department who will be able to give you guidelines. This is a random sample of a council licensing department.

https://www.southwark.gov.uk/busine...t-and-entertainment-licences/premises-licence

But the first question I should ask is what experience do you bring to this? If you haven't got any licensed trade experience what business experience do you have?

 

[ethical PR]

Oh dear it sounds like you don't know too much about running a pub.

Have you never managed one? Or run your own business?

If not, what do you feel gives you the skills and experience to run a successful pub which will be starting from scratch?

1. My idea is unique (there is no similar pub in the city, possibly country) and not very complicated, therefore I believe I can succeed.

Stop right there. There are very few unique ideas. If your concept is such a great one - why are none of the big brewery chains or individuals pubs doing it.

Being 'unique' doesn't automatically equal success. In fact it could spell disaster. As it means there is no demand for the concept.


2. I'm applying for a loan, however I've got half or maybe even most of the amount (will see when I finish the cash flow forecast) needed to open it and keep it running.

So you don't have half the money you need. And you haven't even finished your business plan. Base what you need in terms of a loan on not turning a profit for at least a year and running at a loss for most of that time. Can you cover that?

3. So I guess I'm in quite good position?

No you aren't. You don't have the money you need. You don't have any experience of managing a pub. You don't have the appropriate licence. You don't understand about footfall and how to order stock. There is no 'average amount of beer' that a pub orders. There is no average number of clients. It depends on location. Size. Whether it is a pub that focuses on selling beer etc.

4.Is it possible to check if the building I want to rent will get the premises license

No. The only way of knowing is to apply if the building doesn't already have appropriate licensing. However in some areas you will never get it, or your opening hours and other restrictions will be put in place.

 

[Blaby Loyal]

I can't emphasise enough the need for you to get some 'hands-on' experience before you go ahead with what your planning.

From my experience, the licensed trade demands unique skills: if you don't have them you're in danger of being worked over by all and sundry right from the outset (staff, security, suppliers and customers alike).

Don't give up on your idea by any means but please do get some experience so that you can see what's involved from the 'inside'. You'll be getting paid training in effect and will come into contact with people, suppliers and other businesses who might prove invaluable to you when you do set up on your own.

Good things sometimes take time.

 

[MBE2017]

I would echo the above advice, gain some experience.

I was invited to a friends pub opening, Unknown to myself as muscle along with many other ex coppers etc. I ended up concussed, the landlord went to hospital with a brain injury, many windows and cars were totally busted.

The culprits were the daughters of a local hard estate family, who had an arrangement to work the pub from the previous landlord in return for no trouble, but they also took whatever they felt from the tills every night.

It was the toughest six months of my life helping my friend with his new venture, and I was very happy when he sold the business. Some things have to be learned the hard way.

 

[Mark T Jones]

I don’t necessarily agree that you need hands-on experience to run a pub though it certainly doesn’t hurt.

What you absolutely do need is some business acumen and in this respect your questions are frankly frighteningly naive.

Before you rake on loans and leases , draw a deep breath and question whether you really want this commitment hanging over you for what appears to be little more than an experiment.

 

[AnneLou]

See, right from the start I have a problem with this! I don't see your definition of your proposed business as a pub - it's a bar!
Pubs are generally already established places - serving locals food and drink. Locals know where they are usually because they have been around for a while. An outdated pub might change hands and a different offering of food and drink might occur - attempting to entice new customers. But it's still a pub - still serving probably the locals. You know you own a "pub" when you receive a letter/email/voicemail from a local regular venting that you have abandoned their much-loved pie/real ale/favourite chair/etc. for something new and unique and you will apparently be closed and gone by Christmas! Do be sure to save and frame that priceless first "complaint" as no other will have quite the same effect on you.

A bar! Back in the eighties/nineties, these were massive sites in converted banks and factories - big operators making big money on huge volumes. In more recent times they have been what can be described as "pop-up". Teeny, tiny little high street former boutique premises converted to real ale or gin shops selling trendy halloumi and chickpea tapas to accompany 50 different gin types!

Big difference - huge. You're looking to start a new bar business because you are considering premises which don't have existing licences in place. I own an historic pub on a busy village high street. A street which has been battered over the last five years with the introduction of many new licensed premises - to the detriment of retail. At first the other retailers weren't bothered when each new licence was sought and granted. Then they saw for themselves the effect that had on their own trade - lack of general retail, lack of customers as the village doesn't have enough to entice. Too many "pop-up" bars are in darkness during the day because there is not enough trade to go around and then the village suffers the backlash of undesirable behaviour at night because of the glut of bars! It's a vicious circle. The result has been that the retailers and locals are putting pressure on local government to refuse permission to any new licences because saturation has been reached.

In effect, it's not just as simple as saying "I'm going to open a pub in that location and it's going to work because I have a unique idea"! I had one of those idea things 20 odd years ago - I sold wine.....by the glass....lots of choices....in a village pub! Imagine that! It was revolutionary in its time. And, we even went one step further when we sliced actual fresh lemons and limes to accompany drinks instead of cracking open a tub of anemic cherries. We filled the place to the rafters with our hip new trend....aw, happy, happy memories.

So back to harsh reality - you can't really have a pub/bar without premises and that all important license. You will have to have excellent credit or good guarantors to back your leasing plans and when working on a business plan for a pub/bar, it helps to work backwards - i.e. what do you hope to realistically earn from the place? What do you need to achieve to meet the financial commitments you make to the business - paying the rent and utilities, leasing the equipment, meeting wages, servicing debt, etc. Try looking at the sales particulars of a real pub! Do some viewings and request accounts - although I would warn you that us long-suffering "real publicans" can sniff out tyre-kickers and may be reluctant to supply figures!

In pecking order of costs/expenses to my pub:-
1. Cost of sales. Dead obvious because I need the items to sell!
2. Employee costs.
3. Rent
4. Utilities - gas, electric and water
5. Business rates
6. Maintenance and repairs - because my building lease dictates I am responsible! It's pretty common.
7. All other scary costs - god, you would not believe what I have spent in replacing missing/broken glassware! And don't even let me loose on the waste of "blue roll" - what do the staff do with the that stuff? It's eye-watering. I could ramble on about insurance, waste costs, banking charges, toilet rolls, cleaning materials, equipment maintenance, dispense gas......but you might get scared!

Seriously though Patrick - you are still probably a long way off realising your dream if you want it to be a success. Concentrate really hard on "due diligence" because if being in business was so easy, then more people would do it and even more would actually be successful at it!

 

[Chris Ashdown]

Many of these landlords were probably experts in there field yet they failed which should make you think why you are above avaerage enough to make it work with no knowledge of the trade

Pubs are closing their doors. In 2016, 500 pubs across the UK called last orders for the final time. Since 2000, the number of pubs in the UK has fallen by 17%, or10,500 pubs, according to the British Beer & Pub Association (BBPA).27 Mar 2018

The number of pubs closing every week has remained at around 18 amid evidence that more people are choosing to drink at home, according to a new report.

There were 476 closures in the first six months of the year across the UK, 13 more than in the last six months of 2017, said the Campaign for Real Ale (Camra).

There were more than 60 pub closures a week in the North West and South East this year, with more than 50 in Greater London and the South West.

Camra also reported that four out of five people had experienced a local pub closure in the past five years.

 

[Mark T Jones]

Many of these landlords were probably experts in there field yet they failed which should make you think why you are above avaerage enough to make it work with no knowledge of the trade

Pubs are closing their doors. In 2016, 500 pubs across the UK called last orders for the final time. Since 2000, the number of pubs in the UK has fallen by 17%, or10,500 pubs, according to the British Beer & Pub Association (BBPA).27 Mar 2018

The number of pubs closing every week has remained at around 18 amid evidence that more people are choosing to drink at home, according to a new report.

There were 476 closures in the first six months of the year across the UK, 13 more than in the last six months of 2017, said the Campaign for Real Ale (Camra).

There were more than 60 pub closures a week in the North West and South East this year, with more than 50 in Greater London and the South West.

Camra also reported that four out of five people had experienced a local pub closure in the past five years.

Like all stats, these need context and relevance (and understanding of the originator’s motivation)

It is telling that a lot of VC money is going into the trade - in the broadest possible sense. You can safely bet that it isn’t going into local boozers where blokes drink beer and swap jokes.

 

[The Byre]

Dear @Patrick21, please read and then reread the posts from @ethical PR and @AnneLou.

 

[Mitch3473]

Many of these landlords were probably experts in there field yet they failed which should make you think why you are above avaerage enough to make it work with no knowledge of the trade

Pubs are closing their doors. In 2016, 500 pubs across the UK called last orders for the final time. Since 2000, the number of pubs in the UK has fallen by 17%, or10,500 pubs, according to the British Beer & Pub Association (BBPA).27 Mar 2018

The number of pubs closing every week has remained at around 18 amid evidence that more people are choosing to drink at home, according to a new report.

There were 476 closures in the first six months of the year across the UK, 13 more than in the last six months of 2017, said the Campaign for Real Ale (Camra).

There were more than 60 pub closures a week in the North West and South East this year, with more than 50 in Greater London and the South West.

Camra also reported that four out of five people had experienced a local pub closure in the past five years.

All well and good offering stats on pub closures but let's look at it another way....how many new pubs, drinking establishments opened in the same period..??

 

[Alan]

All well and good offering stats on pub closures but let's look at it another way....how many new pubs, drinking establishments opened in the same period..??

Or just look at total numbers between two points in time.

It seems the total number has declined from 75,000 to 45,000 in 50 years.

That is 30,000 less in 50 years or an absolute loss of on average 11.48 pubs per week. If the number of pubs closing per week stays constant at 18 - then the number opening per week to balance the books could be 6.52.

All in all, it doesn't say much, except it is a tricky business.

 

[Mr D]

Some of those closing will be ones opened that year.

Cashflow problems, simply not enough trade, whatever.

Been some weeks since I was last in a pub and that just to meet up for a night out. Pub was the only one left in its village and on an evening it was quiet.

 

[Mark T Jones]

Or just look at total numbers between two points in time.

It seems the total number has declined from 75,000 to 45,000 in 50 years.

That is 30,000 less in 50 years or an absolute loss of on average 11.48 pubs per week. If the number of pubs closing per week stays constant at 18 - then the number opening per week to balance the books could be 6.52.

All in all, it doesn't say much, except it is a tricky business.

A ever, there are numerous stats within the stats. One of the big drifts was for youngsters to move away from suburban locals and share cabs into town where they could drink cheaply in Wetherspoons etc - these big town pubs were branded ‘superpubs’ - they accommodated up to 5 times more clients than the old ‘local’ So it would appear that pub attendance and spend was actually quite constant

Meanwhile, village pubs moved first to gastro, then to pubs with rooms.

So yes, it is very much a changing industry, but despite headline statistics it is by no means a dying one.

 

[patientlady]

Most of the comments have been pretty negative towards your questions, and unfortunately there is good reason. As said please take serious note of the comments from @ethical PR @AnneLou @The Byre and others.
For my two penneth as I have said many times on here regarding this subject - this is the easiest business sector to get into and the hardest to get out of!
If you do decide to plough on with this venture make sure you have an exit plan! If you have partners - a partnership agreement.
In my 12 years experience, many spend there first six months after opening counting the cash, the next six months realising that its not all rosy, the third six months trying to get out, and the fourth six months possibly facing bankruptcy.
Just a thought I presume the premises has at least A3 planning?

wishing you good luck p/l

 

[The Byre]

When people tell me that they are going to fulfil their dream and open a pub/bar/restaurant/whatever, I ask a series of questions, such as -

'Why does the barkeep have a jar full of straws or pennies next to the till?'
'Why is there so much ice in the cokes?'
'Why are cut-price equipment suppliers usually the most expensive?'
'Why does the waitress enter orders in her ePoS tablet away from the tables?'
'Why are some staff happy to come in early?'
'Gas or induction - what is the real difference in costs?'

You only get to know the answers through experience. Those questions bring wry smiles to the lips of weathered and experienced people in the bar trade and very often, hilarious stories of major screw-ups and catastrophes they have experienced.

Some will even offer questions of their own about noise abatement orders, customers doing a runner and all sorts of incidents like that.

It is obvious that the OP has not got a blind idea about the bar trade - he even asks 'How does leasing work?'* Wannabe business people are targets for every trickster out there. In fact, when one reads some of the disaster postings on this very forum, it would seem to be pretty much open season! And no business I know, has so many tricksters lurking, waiting to pounce like a tiger on a passing coolie, as the bar trade.

It is not a trade for the virginal!

*How does leasing work? Easy! You sign a piece of paper and some third rate equipment turns up a month or two later. After a few months, you learn how the 0%-APR finance scam works!

 

[Energise Accounting]

Ok i will try and pub some light on the subject. Pubs who have adapted over the years to various trends are doing well.

One demise in the trade is draught products in the late 80's to mid 90's draught products were responsible for around 80% of a pubs trade. In today's market draught products are responsible for around 48% of trade. However they have been replaced by food,wine and spirits.

Unfortunately the traditional and country pubs are the pubs that have suffered the most as peoples drinking habits have changed and the smoking ban did not help either.

The truth is the customer has more choice where he or she wishes to have a drink nowadays. If you want some statistics here we go.

• The average pub manager earns around £30,000 if they are any good.
• The average tied pub couple will earn around £32,000. £16,000 each this will include the benefits of the living accommodation.
• The average free of tie leased pub will generate between £50,000 and £80,000 in profit
• A freehold pub will generate anything from £30,000 to well over a £100,000 in profit

As for some of @patrick21s questions you should always look at the demographics of an area before even starting to look at the numbers no point in having a lovely pub if no one can afford to use it. Then the following.

1. Decide on what type of pub you intend to open based on your demographics.
2. Do a detailed SWOT analysis on your local competition. After this step this should identify if it is worth carrying on.
3. Then do the numbers

A average pub should be able to achieve 200 composite beer barrels a year making up around 70% of the trade. The other 30% should come from food.

Wet sales around £ 245,000 Net of VAT
Food Sales £ 50,000 Net of Vat

As for other questions
In my opinion it is best to buy all the fixtures and fittings. Leasing can become very expensive.

Your business rates will be valued on what is called a Fair maintainable trade this is done by the VOA and your rate able value will be between 10% and 12% of total turnover.

 

[AnneLou]

Energiseaccounting - where were you when I started out! I bought my first pub with the benefit of youth and naivety but I don't know what went wrong in my head with the next one! You should of been around to advise me.
I was called a "#snowflake" this morning so I'm taking a while to adjust to my new status in life - a pub owner being called a snowflake?
I have earned a living from my businesses but I don't know who I am anymore and I have to admit that spending my days in a complete cycle of constant apologising is very wearing:-
- oh, I'm sorry your steak was tough. You did ask for it very well done.
- oh, sorry the light wasn't working in the bathroom. We try and check every single one every day!
- oh, sorry for the delay in service. Everyone called in sick today.
- oh, sorry the lemonade is so expensive now. Its called the sugar tax.
- sorry you felt the need to swear at me sir because you were woken from sleep by a car revving its engine in the public street. I am personally responsible for that.

Its not really a nice life and no longer even has the benefit of a decent living but of course, when I sell my business, it will be the bestest, most stunning business around. My accounts will be polished and rosy smelling and I will be bragging about the extensive foreign holidays I take whilst only working very limited hours and gliding along like a swan!

 

[Energise Accounting]

@AnneLou looking at your post i think it is time to get out, and let a new enthusiastic person take over your pub.

You have pointed some other areas which will come as a shock for some people for E.G long hours, dealing with the public will take its tole over the years.

As for a decent living that is a personal thing. some people are happy to earn £15,000 a year if they enjoy there job and others want to earn more.

When a client comes to me who has never run a pub before (not a good idea) i look at there current lifestyle and if they will be able to maintain it and explain the upsides of the business and the downsides.

I am able to give realistic advice as before studying and training as a accountant i actually run pubs and still have one today although my Daughter runs it for me.

If i have 10 inquires about pubs and do the business plan etc and i do really get to know my potential clients and i take on a average of 2. For the other 8 it is roughly a 50/50 split the pub would put them at financial risk or in my opinion they will not be suited to the trade based on my 30 years experience.

 

[AnneLou]

Thats my plan EnergiseAccounting! I'm hoping Patrick will see sense and decide he needs to buy it!

 

[aleksandrkop]

Does a SWOT analysis really help to understand competition? I mean... I see it as an useful tool, but mostly to make some powerpoint presentations – not for in depth analysis.

Dont get me wrong: I'm pro SWOT (I even made a list with good looking SWOT PowerPoint templates) – but I'm always questioning its real value.

 

[Newchodge]

Why respond to a thread that has been dead for 4 months?

 

[aleksandrkop]

Why respond to a thread that has been dead for 4 months?

Because a FORUM is a async. communication/knowledge management tool. You can attach information to an existing thread, and not just engage in current discussions.

 

[kulture]

Because a FORUM is a async. communication/knowledge management tool. You can attach information to an existing thread, and not just engage in current discussions.

No, not in this forum please. We don't like old threads being dug up. Please only post in current threads or start new ones.

 

[aleksandrkop]

No, not in this forum please. We don't like old threads being dug up. Please only post in current threads or start new ones.

Got it.

 

[Patrick21]

I appreciate all the help from you guys. I know I haven't been replying for quite a while and I'm sorry for that. You and Brexit convinced me to re-think the idea of having a pub and I don't want to risk it at the moment. I have other sources of income (including passive income) and based on what you showed me in these few posts, putting my own money and taking a loan is way too risky. I mean I still believe in my idea, however my whole business plan was highly based on imported goods and if we don't get a deal, then god knows how much they're going to cost. Of course this isn't the only reason, although it's the most important one. I would love to do something for community and make money at the same time, however without experience and with Brexit coming up, I would probably lose all the savings I've got. Pointless. Thank you lot once again for shedding me some light on this matter.