What to Think About When Buying a Pub
The pub industry is growing, led by an increasingly interested younger crowd. Find out more about the resurgence, and what you need to think about if you're buying a pub, here.
Author: Mr Tom Jeffries
This post has been written by Richard Payne, a Regional Business Manager at Intelligent Business Transfer
As I predicted this time last year, pubs are selling again. Both leasehold & freehold pubs are selling, and the licensed property market is once again buoyant.
This isn’t just in certain areas, but is being seen across the country; personally I’ve seen three landmark dry-lead houses within 1.5 miles of my own home sell inside the last nine months.
This resurgence is being led by the younger generation, as they continue to pour into what has long been considered the more ‘sociable’ and ‘sexy’ sector in search of self employment and their own businesses. This has been seen so much so that more recently young people are making up more than 50% of all applicants to pubco’s and brewers for leases and tenancies.
One of my personal favourite tenancies at the moment is the Enterprise Inns Beacon Tenancy, which takes me back to pre ‘beer orders’ days when managed-style operations were self motivating, profitable, centrally well supported by the pubco, and offered a superb lifestyle.
The Beacon tenancy offers all the above and more to any potential new business owner, with a trial basis, and complete regard to the new pubs code of practice that has been heavily discussed throughout many a parliament the past few terms.
Buying and running a pub isn’t as simple as just pulling pints and taking orders – there’s a lot to think about and a lot to ask when looking at taking one over. So what are the most important things to consider when buying a leasehold pub?
- Check the tie; what are you committed to buy from the pub company, is there any room to renegotiate, and what annual rent implications will that have? Is there a guest ale/real ale provision available (key in the provincial regions) ?
- Who is the supply line through, and what cost implications will that have? How much will a typical barrel of beer cost you versus a none-tied competitor in your town (think gross profit margin versus what your average price per pint will have to be).
- What is the role of your Business Development Manager and what level of support is on offer centrally?
- Do your local research into the competition and find out what the wet & dry split is. What are the growth areas (think letting rooms, food offering, pub sports teams)?
- Try and obtain a copy of the pubco application form or blueprint, prior to lodging your interest (you're going to have to meet the BDM in an interview scenario, especially if it's an assignment).
- What is the initial term, is there an ‘at will’ deal (a kind of try before you commit scenario).
- Is the lease you’re buying assignable, and is there an initial none assignable period?
- Most leases are marketed by transfer agents. Who is the agent, how realistic is the value/ asking price versus any lending criteria if you are financing?
- How much is the bond, deposit, or advance rent?
Finally, become a member of the British Institute of Inn keeping. They offer vast support, advice, and assistance, and you're going to have to obtain a personal license before anything else.
Running a pub can be an enjoyable and rewarding experience, allowing people both young and old to become their own boss and run their own business. If you’re looking to buy a pub, you can see our full range of pubs for sale here.