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Leasing a very small village pub

  • #2
    Registered Users Posts: 67 ✭✭ DOC2015


    Hello,

    I'm looking at renting a very small rural pub in a village. The pub is well-known and has its regulars - nothing fancy but the place to go if you want a quiet drink and a chat. The other local bars are larger with a wider age group of clientele. The rent will be roughly €100 per week but still in the early stages of negotiations. I have a good bit of experience working in rural bars over the years and have some experience working in large rural bar that did food so I'm obviously very wary of the potential costs and pitfalls. I know this small pub would make money, but let's just say I wouldn't ever become wealthy from it. However, I'd like to go into it with my eyes fully open and maximise profit where possible. (I'll also be getting advice from an accountant who has experience in the rural pub trade)

    I'm looking for any tips (aside from Covid) for starting out. At the moment, I would be looking at opening at weekends only with a view to extending to Fridays and Mondays if things go well. This is how the bar has been run for the past while and I also work full time so it would suit me starting out. I think it would make more financial sense for the moment and it's what the regulars are used to. Maybe someone who runs a small rural pub could advise me on some of the following:

    • Is there any point in registering for VAT considering turnover would be quite low?
    • How much cash would I need starting out (no food)?
    • I don't plan on hiring any staff. If I need an extra pair of hands, I am lucky to have two family members that will help out when needed.
    • Should I provide cashless payment for customers, considering people are less inclined to have cash on them since Covid and that banks seem to be less interested in cash nowadays?
    • Is it a case of ringing around local suppliers and asking for credit (kegs, gas etc....the pub would be well-known to suppliers so I'm assuming setting up a line of credit shouldn't be a problem as I am a local myself)
    • What is the best way to order spirits and splits? Buy more and get a discount or just buy as I need?
    • Do I have to register for PAYE if I don't intend taking a wage for the first year?
    • Should I register with the VFI - will this give me discounts when buying stock/kegs?
    • Any advice on light/heat arrangements?
    • I'm hoping insurance for such a small 'established' business, insurance would be low - best place to get this insurance?
    • What rates should I be expecting to pay?
    • Any other "small pub" related things I need to look out for?

    Many may be asking why I could be bothered with a business that won't make me much money but I genuinely think there is potential for development in the future - the landlord is close to retirement age and I wouldn't mind being in the position where they may offer me first refusal if they decide to sell. This pub has a uniqueness about it that the other local pubs don't seem to have (if that makes sense). I have always wanted to own a small bar myself but haven't yet had the right opportunity. I feel this could be it, I may just have to play the long game.


    Many thanks in advance for the advice!



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Comments

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    • Any other "small pub" related things I need to look out for?

    "Put that on the slate Doc"



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    :) Haha I remember that one well! The only slates around here are above on the roof, lads!



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    ·    Is there any point in registering for VAT considering turnover would be quite low? – Yes and no considering you will be paying VAT on all your purchases it might be worth registering for VAT.

    ·    How much cash would I need starting out (no food)? – Float c. €200. To stock bar probably a few thousand depends on range of drinks you plan on having I would think about 2 or 3k.

    ·    I don't plan on hiring any staff. If I need an extra pair of hands, I am lucky to have two family members                that will help out when needed. – Very handy but be careful as this can lead to family disputes.

    ·    Should I provide cashless payment for customers, considering people are less inclined to have cash on           them since Covid and that banks seem to be less interested in cash nowadays? – Taking payment by card is extremely handy but it can be quite expensive as the provider charge you for the machine and any transactions on it. It is usually a percentage. Shop around as there are a few suppliers. Lodging cash is very expensive so taking card could be cheaper also talk to your bank you never know you might be able to negotiate bank charges.

    ·    Is it a case of ringing around local suppliers and asking for credit (kegs, gas etc....the pub would be      well-known to suppliers so I'm assuming setting up a line of credit shouldn't be a problem as I am a          local myself) – Credit will be based on you suppliers will ask for references from you. You may need to give a deposit to get credit. You may not get credit straight away.

    ·    What is the best way to order spirits and splits? Buy more and get a discount or just buy as I need? – You could but these in the large supermarkets as they tend to have discounts. My advice would be buy as you need it really depends on your cashflow.

    ·    Do I have to register for PAYE if I don't intend taking a wage for the first year? – if you are operating the pub as a sole trader you would need to register for income tax and pay tax on the profit of the pub. You can take as much money out as you like this is drawings. If the pub is set up and registered as a company, you would be an employee of the company. If you are not taking on any staff or taking anything yourself trading as a company, you don’t need to register for PAYE.

    ·    Should I register with the VFI - will this give me discounts when buying stock/kegs? – We would think this really is a personal decision look at there website ask other pubs in the area are they members and if they have helped them. At the end of day only do it if you can afford too.

    ·    Any advice on light/heat arrangements? – Shop around.

    ·    I'm hoping insurance for such a small 'established' business, insurance would be low - best place to get    this insurance? – Insurance is tricky you would need public liability insurance shop around you will need to give turnover etc.

    ·    What rates should I be expecting to pay? – This is based on the size of the pub and rateable valuation by the local authority.

    ·    Any other "small pub" related things I need to look out for? – If you can negotiate a rent-free period with the landlord maybe 3-6 months although a €100 a week isn’t bad haven’t said that if you are only open on a Saturday and Sunday it could be expensive. Ask the current landlord for his most recent set of accounts. How many customers does the pub get and what is the age range of the people in the pub? You might need to think outside the box if you really want to make a go of it. Is there a lack of something in the area that the pub could provide? Could you provide or get someone to provide a taxi service to bring customers to and from the pub?



  • #2


    @spoiler Thanks very much for your sound advice! Very useful info here. Yes, I'm looking into possibly working with the local taxi man to try and sort out a plan that will benefit us both. I'm gauging about 3k to get me started and will only have a limited range of stock as the regulars are very traditional in that sense. Definitely not a place for young ones, average age would be 50+ then a few couples on Saturday nights. If it pays for itself in the first year without too many surprises, I would be happy. You make a good point about the cash vs card argument, possibly swings and roundabouts but would need to check with other pubs in the next parish and see what works for them. I have lots of ideas for the future for how to make it offer things other local pubs wouldn't, but would be taking the cautious approach for the first while until I am more sure of the sustainability. I'm thinking about asking for the accounts, but having a little experience in accountancy, I'm wary of the books been 'polished', not cooked in fairness, but made to look better than the reality so I'm not sure would it help in real terms. I know the landlord quite well and I've been keeping an eye on the place for the past few years, waiting for it to come up. Let's hope things improve Covid-wise as a very small rural pub is not very Covid-friendly. For now, I think the biggest expenses are stock, insurance and rates. Thanks again for your advice, much appreciated!



  • #2


    €100 a week would be on the very low side for rent of a premises with an active licence which would make me think its really not done well at all recently.

    Are you budgeting for the costs to keep the licence going?

    At your likely turnover (if you're thinking it'll be under the VAT limit), it'll only be the €250 a year but there'll be solicitors costs also. The fees are currently waived due to COVID but they'll be back.

    The other thing to note is that 100 quid a week = 5200 a year to the owner. The licence is worth 10x that, if they get a predatory offer they may want you out to flog it.



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    Check out Square or Sumup for card transactions. Not bad charges for low turnover on cards.



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    Thanks for the tip @L1011. It's not that it hasn't done well, I think the owner is just pushing on now and has some health problems so doesn't have the same energy to put into it they once had. Yeah I've made a list of every possible cost and plan to sit down with an accountant to hash it out.



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    Cheers @Frynge I'll check those out now! I notice a lot of places who didn't previously take card now using the same white portable terminals (assume they run on wifi and that they're decent value considering these are all relatively small businesses as well)...they're about the size of a flattened 1908s mobile phone.



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    My 'local' back near the family home would be on the smaller side of pubs, and is using Sumup (those are the smaller white readers, you use a mobile phone to control them), they appear to be charging 12c per transaction (over the price of the drink that is) on it which isn't legal but is quite likely to be tolerated... just don't let anyone in Consumer Issues know I hinted that!



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    Thanks! Good to know these things! I think keeping the customer happy these days will pay off after the initial "can't believe we're back in pubs" wears off....you know those long November nights!



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    Rates could be a big cost.



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    I don't want to dampen your enthusiasm and I hope things work out for you but I've a couple of points to make. It's cases like yours that make me hope that I'm wrong.

    [quote]If it pays for itself in the first year without too many surprises, I would be happy.[/quote]

    I'm guessing that when you say it pays for itself in the first year, you mean that you break even. Here's my first point. If you already work full-time, why give up your weekends for the possibility of feckall reward? Have you ever worked 7 days a week over an extended period. Hard to keep that going and maintain relationships etc.

    [quote]Many may be asking why I could be bothered with a business that won't make me much money but I genuinely think there is potential for development in the future - the landlord is close to retirement age and I wouldn't mind being in the position where they may offer me first refusal if they decide to sell.[/quote]

    Second point. I've seen a local person take on a struggling pub, build it up for five years into a great business only for the owner to then refuse to renew the lease and it was the owner who benefited from all the hard work someone else did. In your case, when the owner retires, it would make more sense for the landlord to sell it than to have an approximate €5k annual income from the premises. You'd want a lot of legal stuff sorted out re: first refusals etc. before you take on the business.

    I've worked in rural pubs and was the bar manager in a very large hotel and golf club twenty years ago and it was always a dream of mine to have my own pub. But the reality is that the pub game is very hard work and is a dying industry when it comes to rural pubs so it's not something I'd enter into nowadays.


    Edit: Sorry, the old way of quoting text doesn't work any more so I've indented and bolded the part I tried to quote.



  • #2


    What I would do if I was running a bar would have a live band every weekend ,you have to spend a pound to make a pound .Local bars used all have live foik music back in the day ,They used be heaving .What I would not give to hear spalpin or celtic clan again but even the one man bands drew crowds if you get the ole craic going .I suppose a card game would be another crowd puller but they would not be known mighty drinkers .Best of luck .Btw any one else interseted in starting up Bidx have a popular bar up for 55k in north kerry probably have to buy a licence seperate do



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    Sky subscription costs, but there may be a legal way round it. https://www.bbc.com/news/business-17150054

    As regards spirits, I always found the cognac I bought in Lidl and Aldi of a higher taste and quality than the Hennessy brandy served in most irish pubs, and it costs a lot less.

    Also, always give a free chocolate biscuit or two with every cup of coffee. The foil wrapped type won't go off in a hurry. Costs very little, but customer feels he's got something extra. You get to sell more coffee, which doesn't cost you a lot to make. Win Win.

    Maybe get one of those sticks for newspapers you see in hotels etc. That way every punter knows it the pub paper and won't mind asking someone for it if they've finished with it. Also, while he's reading the paper for free, he's knocking back a pint or two.



  • #2


    @BattleCorp Thanks for your insights, helps keep things in perspective. Absolutely, there is always a risk. And yes, a lot of work. I've 12 years bar experience myself between working ungodly hours with family for 6 of them (the rows were epic at times) to try and keep costs down and then going back to the day job - it is one of the most thankless jobs out there really isn't it!

    Totally get where you're coming from re the selling of the premises, if it was going well for me, I know the landlord well enough to say I expect first refusal on any notion of selling the place. I suppose in anything in the pub trade, nothing is without risk. And if I pour 3k into it this year and things don't work out, I can walk away at least knowing that I gave it a shot. If I didn't, then I could be always wondering what if.

    You're definitely right about how time consuming it is, when you run a pub, you're effectively married to it. I'm extremely lucky that I am a teacher and if I need to can take an evening off lesson plans and correcting stuff to keep tabs on things. I'm the type of person that always has to be doing something - not sure if that's a good or bad thing.

    And yes, you're right, pub trade has been hit hard in the past few years, not withstanding Covid. Yet, we all need a local to be able to have a few pints in and complain away to the barman. I suppose the trick is to keep it fresh and try new things when you're in the position to do it. I'm sorry to hear that you haven't had the chance to take on your own pub - it seems you know what you're talking about. I'm very wary about taking this on for sure, but I think I'll be going into it with my eyes open. Worst case scenario, I lose 3-4k of my savings :/ and have a few extra grey hairs. Best case, things go well and it turns a small profit and continues a great tradition in my community - and I wouldn't mind being part of that.



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    That's gas, almost all these things are on my list. Thanks @Murt10



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    Best of luck if you go ahead with it.



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    Ice machine; is there one? If not, Look at only getting a small one.

    When was the last time that the lines were cleaned? If the pub has been closed for a while, they may not have been done in the current ramp up.

    Check the other pubs; does one show all the matches on Sky? Perhaps don't get into competition with them, if you're only starting off.

    Google maps; look at the pub of the past few years on street view; does it look open of closed?



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    I wish you the best in setting up and running this business. Too many rural pubs will never reopen and that is a shame . Mandatory disqualification for being even marginally over the limit the next morning has meant the end of the road for the rural pub .



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    Regarding the potential of figures being massaged. Don't look for sales, look at purchases instead. This will give you a better idea of how the place has been doing.

    Card machines are a massive cost year 1. However, like car insurance, when it comes time to renew prices can fall handily enough. VFI membership could help with rates on these as well.

    Lease a good coffee machine. The cost of a cup of instant as against fresh stuff in ingredients is roughly on par but one can be sold for €1.50 more than the other. It also means you can offer (for example) Baileys Hot Chocolates/Lattes in the winter months.

    If you do go for it, let us know where you are. We'll drop in and leave a few quid behind!!💸😁



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    Years ago, I was told by one pub owner I knew, that his Number One rule was to never drink in his own pub.

    Turned me off the idea of ever owning a pub myself, but I could certainly appreciate the dangers.



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    I'd be concerned with the weekend only opening especially if you have regulars.

    I'd be inclined to at least offer Thursday to Sunday.


    Square & sum up charge about 1.70% which is on the vat inclusive price, so the net cost is 2.09%

    eg, a €12.30 sale = net €10, but the 1.7% is on the gross. and costing you 2.09, thus 2.09% of the net €10.

    But its probably the best option for you at the moment.


    If there's an extra room, offer it as a meeting place to local groups with a nominal €2/head tea/coffee & biscuits charge. The idea is the get them used to being in the place and hopefully they return for a drink. This can also be offered Mon/Tues/Wed when you are closed.



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    Thanks @Ian OB for that tip, cost of purchases is a good one to check! Sumup seem to offer the best deal for small businesses with small turnover. There's a reduced % until Dec 31st as well and there's no long contracts.


    Will definitely consider the coffee machine, great shout on the baileys hot chocolates! I'll def keep you posted on how things pan out. Thanks again!



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    Good to know about the "real" cost of using the machine, thank you Silver2020. Yeah, I think it's the best option for now seen as though there's no locking into a contract.


    Re the weekend only opening, this is what the regulars are used to with the owner Fri night to Sun night. Although, if things are going well post-covid (whenever that is), the plan would be to add Monday evenings as I've found from working in other local pubs through the years, a lot of workers like to go for one after work on Monday evening. I'll have to see if its feasible before committing to it.



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    I'd absolutely have a couple of sociable drinks with the customers (if I happen to be outside the counter that is) to build up a rapport without the counter between us...sometimes it's over a drink when the best deals are done they say. I think you get to 'watch' more too especially if you have a few staff taken on. Going out on the lash is a different story 😅 One thing I would adamant about though is paying for my own drinks outside the counter. It looks better and you are more accountable as well.



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    Just on the insurance piece, Id urge you to ring insurers and brokers to see if you are insurable before you go to the bother of doing anything else. Pre-covid, the market for rented pubs was very, very limited with the majority of insurance companies either not taking on pubs in any way, shape or form or those that would look at taking on a pub policy declining risks that had no trading history. The pub industry was massively hit with Covid with insurance companies losing / about to lose 10s of millions of Euro on business interruption claims. Being perfectly honest, I would expect the chances of getting insurance to be either virtually impossible or if you can, you will pay thousands for it. That imo should be your first port of call.



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    Thanks for the well wishes @GNWoodd. Yes, you're right, the rural pubs have suffered the most because of it. I get why the law is there but its a pity the government didn't subsidise a local bus for certain areas in the country. It would have provided driving jobs for some and given the rural pubs a bit of a lift. But here we are, I suppose it's up to the publicans to try and keep it going now.



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    They simply exclude business interruption from the policy and also exclude covid related issues

    Insurance for a small pub in a rural village will not be too expensive. - Don't believe everything in the press.

    Busy pubs with late licenses are a totally different matter and a totally different risk



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    Wow! Thanks for the heads up. This is very concerning! Although the pub itself is tiny...roughly 6 or 700 sq ft. And going by turnover, I'd be hopeful that would dramatically reduce the "risk". Here's hoping I'm not horribly wrong!



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