Buying a Public House in the UK

[Glue_Sniffer]

There used to be a cracker of a flat roof pub on a notorious housing estate in Hanwell, West London about ten years agon. Selling beer was an inconvenience. It made far more from selling class A drugs.

We eventually managed to close it down (which was actually more difficult to do than it should have been). Unbelievably, the pubco appealed the closure. They lost the appeal and it was put up for sale. Nobody wanted to know and it was pulled down. One less to worry about.

Why would you want to go to one of those places when there are park benches and pigeons to shout at?

Much safer for the dealers to use anonymous cut outs, i.e. a kid on a bike with a PAYG mobile phone. The kid is hard to follow and legally they're pretty exempt from most police actions. Selling drugs in pubs would be needlessly risky these days.

 

[Glue_Sniffer]

yes

The Dog and Handgun

 

[Zulu_w]

@Zulu_w how long have you been away from the UK?
Lots of changes to UK society in last few years. The pub no longer has the place it used to.
Yes, some will do ok, in the right places. But many will just no longer be used by the public.
The reason many have become take aways, barbers etc, is because that is what the public now (well, pre Covid) wanted.

I have worked overseas for some time but tend to spend each summer in the UK, which I admit, gives me a somewhat biased view of life.

Working overseas is not bad for all sorts of reasons, but it cannot last forever. I can quite easily do the same type of work in the UK if I wanted as I have kept up to date but wanted to test the water in terms of finding the next thing to do.

I have always truly admired those people who have the self belief and courage to strike out on their own to do something that they really want rather than just talking about it. I am still in the talking phase and this might not be for me for many of the excellent reasons that have been highlighted in this thread. Still looking though.

 

[gaijin]

.... and lend the place the ambience of a bookmakers.

Just like every other Wetherspoons from about 9am onwards then

 

[monkey123]

We eventually managed to close it down (which was actually more difficult to do than it should have been).

I thought these place where tolerated to keep all the ********* in one place ?

 

[Provost]

Much safer for the dealers to use anonymous cut outs, i.e. a kid on a bike with a PAYG mobile phone. The kid is hard to follow and legally they're pretty exempt from most police actions. Selling drugs in pubs would be needlessly risky these days.

Normally, yes. But the Copley Estate was like Dodge City.

 

[Social_Handgrenade]

Just to add to this... If you want to go down the Olde Worlde Pubbe route, make sure to investigate the building and possible implications that come with it. I'm not talking about listed buildings here either...
I know of one city centre pub that has to jump through so many hoops/red tape before they can undertake any sort of refurbishment that it's just not worth the hassle. I'm not talking major structural changes either... replacing the carpet was one idea that got binned because the local archaeological society demand a full on survey of floorboards etc. which was going to take weeks.
I know of another food business in a similarly aged building (500ish years) where it is simply impossible for them to ever get a 5* food safety rating as that would require structural changes that will never be allowed. They do still get a good trade because their products are good, but "only" getting 3 or 4 stars will put people off.
From my own experience in the trade, which I'm thankfully out of now, whatever you think your maintenance/repairs budget is... at least double it. A lot of old pubs have been shoehorned into buildings that weren't originally designed to be pubs. These have usually subsequently had god knows how many refurbishments, upgrades, structural changes, repair works etc. that they are a myriad of rouge electrics and pipes. The only way to turn on the TV in my first pub was by switching on 3 different plug sockets, of which only one actually had a plug plugged in (for the TV strangely enough). All three sockets were on different walls!

 

[Glue_Sniffer]

I have worked overseas for some time but tend to spend each summer in the UK, which I admit, gives me a somewhat biased view of life.

Working overseas is not bad for all sorts of reasons, but it cannot last forever. I can quite easily do the same type of work in the UK if I wanted as I have kept up to date but wanted to test the water in terms of finding the next thing to do.

I have always truly admired those people who have the self belief and courage to strike out on their own to do something that they really want rather than just talking about it. I am still in the talking phase and this might not be for me for many of the excellent reasons that have been highlighted in this thread. Still looking though.

I'm sure there are nice country pubs that have been doing well (pre Covid).
I've certainly visited some and eaten there. I think there will be an on going demand for them.
But they're really food places (and perhaps B&B) first and foremost.

But it's the local drinkers type pub that's been hit by the social changes. I can't see those drinkers pubs coming back. Just take a look in a few once the lock down has ended, the demand is literally dying out.

 

[Glue_Sniffer]

Someone mentioned on here earlier about a "micro pub".
What are the actual rules about selling alcohol?

Because I remember in the army whole loads of cans of beer being taken up to the ranges.
We used to sleep in these disused buildings / troop shelters and buy the cans for about £2 each.

So what was that classed as legally?
Was it a private function?
Or would it have been the Junior Ranks Club / Mess bar, but just trading in a different location?

 

[putteesinmyhands]

So what was that classed as legally?

Daylight robbery.

Ours were £1 per can.

 

[bobthebuilder]

I have worked overseas for some time but tend to spend each summer in the UK, which I admit, gives me a somewhat biased view of life.

Working overseas is not bad for all sorts of reasons, but it cannot last forever. I can quite easily do the same type of work in the UK if I wanted as I have kept up to date but wanted to test the water in terms of finding the next thing to do.

I have always truly admired those people who have the self belief and courage to strike out on their own to do something that they really want rather than just talking about it. I am still in the talking phase and this might not be for me for many of the excellent reasons that have been highlighted in this thread. Still looking though.

Remember that when you buy a pub, your are first and foremost buying a business. Well run businesses survive and thrive, badly run businesses fail. There’s no such thing as a hobby business or a lifestyle business; if it’s not run properly as a business your lifestyle dream will quickly become a lifestyle nightmare.

So you need to be all over the numbers. Contrary to popular belief, that doesn’t mean finding a good accountant. An accountant only looks backwards, produces records and does your tax. You need to understand the cash flows in and out of your business and be predicting them forward. And you need properly defined targets for building up capital. To do this, you have to manage the businesses against proper plans, not against what’s in the bank. You also have to know what product lines sell and make a profit and what product lines leave you with slow turning stock or worse, throwing stock away. And how many of those profitable product lines you need to sell to hit your capital growth target.

Next, you only really have one function as a pub owner and it’s not pouring pints. It’s marketing. You need to have a clear plan that defines how you are going to attract new customers and retain them. Plus you need to be clear how you are going to retain your existing customers and regain those who have stopped coming in. Far too many pubs sit waiting for customers to walk through the door.

The rest is management. The beer has to be right, the food good quality, pub clean, toilets immaculate etc etc. But those should be taken as read; don’t try to sell people shit beer or food in shit surroundings. You can’t allow yourself to be sucked into the daily grind of execution to the point where you can’t focus on marketing and cash flow.

Those who strike out on their own and succeed invariably focus on working on their business, not working in the business. So make sure you do your due diligence on any pub that you intend to buy.

Personally, I’d be starting building a business plan now, long before you start looking at pubs. Then buy a pub that fits into your business plan.

 

[Falling Plate]

An example ( completely f*cked up by Greene King , who as described above , simply set out to screw tenants into the ground )

Check out this commercial property on Rightmove!

Pub for sale in Bell Inn, Market Hill, Clare, Suffolk, CO10 8NN £650,000. Marketed by Christie & Co , Ipswich

www.rightmove.co.uk

Just down the road from me. In your patch ?
I hate Greedy King.

 

[Falling Plate]

if buying one out in the sticks consider letting motorhomes stopping over for a small fee or free if they spend money in the place, I know a few that have gone down that route and keeps them busy.

Its getting very popular now.

 

[Escape-from-PPRuNe]

It was Margaret Thatcher who created the background for it all. She was unsympathetic to the brewery tied house system that predominated at the that time. It may have had some shortcomings as far as competitive access was concerned, but the brewers primary interest was, at least, hospitality and shifting beer. Property/Asset management did not come into it, apart from on the property acquisitions side.

The general "you take the commercial risk and we keep the assets" structure is common to franchise business models and is a very good reason not to become a franchisee, as there are all sorts of dodgy practices that will be very familiar from the pub trade. You've got to buy all your supplies from us at our comedy prices, follow this book of rules a mile long, pay our usurious interest rates, put up with us opening two competitors in sight of your front door etc. This links up with some of the international transfer pricing tax avoidance tricks.

Thatcher's Beer Orders blew up the old big six cartel and did the independent brewers a power of good - probably a lasting improvement in the beer - but the problem has moved on to the pubcos, and none of the subsequent governments have gripped it. In some sense one group of politically connected monopolists - the big six brewers - have been replaced by another - the private equity and structured finance businesses. Guy Hands is exhibit A, as he did the first two really big pubcos while he was at Nomura Securities.

 

[velcrostripes]

Just down the road from me. In your patch ?
I hate Greedy King.

We ALL hate Greedy King !
I'm about four miles from there . Globe is the only decent pub in the village .

 

[bobthebuilder]

The general "you take the commercial risk and we keep the assets" structure is common to franchise business models and is a very good reason not to become a franchisee, as there are all sorts of dodgy practices that will be very familiar from the pub trade. You've got to buy all your supplies from us at our comedy prices, follow this book of rules a mile long, pay our usurious interest rates, put up with us opening two competitors in sight of your front door etc. This links up with some of the international transfer pricing tax avoidance tricks.

Thatcher's Beer Orders blew up the old big six cartel and did the independent brewers a power of good - probably a lasting improvement in the beer - but the problem has moved on to the pubcos, and none of the subsequent governments have gripped it. In some sense one group of politically connected monopolists - the big six brewers - have been replaced by another - the private equity and structured finance businesses. Guy Hands is exhibit A, as he did the first two really big pubcos while he was at Nomura Securities.

And yet there are people who make very good money operating franchises. IMHO it’s all about business planning and properly understanding the numbers.

The reality is that there isn’t enough demand to support lots of pubs. The village I grew up in had four for a population of less than 2000. Two are left; one owned by Stuart Broad’s fledgling pubco.

Our nearest town had 100+ pubs for a population of 50,000. Allegedly, it had the highest pub density in England. There’s probably less than 29 now.

I don’t believe it’s got much to do with the ownership model. It’s all about competition; cheap supermarket beer, a huge expansion in restaurants, Netflix, budget airlines etc etc all compete for disposable income.

 

[Glue_Sniffer]

There is a pub / restaurant / hotel in Newport, near the transporter bridge for sale.
It's called the Waterloo Hotel.
It's a really nice place inside. But it's a typical example of how the UK has changed, while that building has remained.

Even post Covid, the question will be whether the demand is there to support the prices needed to make a return on your investment.

 

[Glue_Sniffer]

The general "you take the commercial risk and we keep the assets" structure is common to franchise business models and is a very good reason not to become a franchisee, as there are all sorts of dodgy practices that will be very familiar from the pub trade. You've got to buy all your supplies from us at our comedy prices, follow this book of rules a mile long, pay our usurious interest rates, put up with us opening two competitors in sight of your front door etc. This links up with some of the international transfer pricing tax avoidance tricks.

Thatcher's Beer Orders blew up the old big six cartel and did the independent brewers a power of good - probably a lasting improvement in the beer - but the problem has moved on to the pubcos, and none of the subsequent governments have gripped it. In some sense one group of politically connected monopolists - the big six brewers - have been replaced by another - the private equity and structured finance businesses. Guy Hands is exhibit A, as he did the first two really big pubcos while he was at Nomura Securities.

The problem with the pub industry is that there are actually (at least) two issues playing out at the same time.

There's the general decline in demand for traditional "wet" pubs, mostly due to social changes.
On top of that there's the franchise type business models described.

Food places, like McDonald's and Subway use the franchise model, but the underlying demand for their services are steady and probably pretty sound.

 

[Glue_Sniffer]

Daylight robbery.

Ours were £1 per can.

I think the extra £1 we paid, went into some kind of "welfare fund". It was used to bring us bacon sandwiches wrapped in tin foil on exercise etc. We didn't pay for those.
I didn't drink much, but I liked the bacon sandwiches, so I was pleased with the arrangement.

I seem to remember something about them not being allowed to make more than 13% profit?
But maybe I'm imagining that.

 

[ex_colonial]

The bookies took a big hit when the Roulette machines (FOBTs) stakes were cut back drastically. Many betting shops closed pre COVID. I suspect that post COVID there will be many more bookie closures, simply because many people won't have the money to have a punt and many habitual gamblers will have broken the habit with two months of no betting.

Not sure about that, flicking through the numerous TV channels & trying to avoid the adverting breaks, there seems to be a large & ever growing numbers of on line gambling sites adverting for both "tombola/bingo" firms to strait bookies, often offering what appear to be tempting offers of £x free bets/credit for £y spent!