How to run your own pub: what you need to consider


Barman pulling a pint of stout

Taking over a pub is a dream for many. The independence that comes from running your own business, a place to live as well as an income, enjoying a drink with your customers on a Sunday afternoon - what's not to like?

Well, quite a lot, as it happens. Every year, thousands of would-be publicans quit the business, disillusioned by long hours, hard work and inadequate profits. Others, though, say they wouldn't do anything else. So if you dream of presiding over a cosy country pub or a buzzing city bar, what do you need to consider before taking the plunge?

The first decision is whether to buy a free house or take a lease or tenancy, either from a brewery or one of the 'pubcos' such as Punch Taverns or Enterprise Inns. These pubcos sprang into existence after the introduction of the 1987 Beer Orders Act, which stipulated that no brewery should own more than 2,000 pubs. There's no such restriction on pubcos, meaning that they now own more than half the pubs in the country.

Various different deals are on offer. Tenancies involve a contract of around three to five years, with the tenant taking responsibility for interior repairs and decorating. Leases tend to run for 10 or 20 years, with the lessee handling exterior repairs as well. Both are usually 'tied', with the publican required to buy beer from the brewery or pubco at a higher than market price. A survey carried out two years ago by the British Beer & Pub Association (BBPA) found that the average cost of running a tenanted or leased pub stands at almost 35 percent of turnover - and as much as 46 percent when you add in the cost of the manager's salary, games machines, Sky television and the like.

The advantage, of course, is the much lower start-up cost compared with buying a freehold, with tenancies generally costing between £20,000 and £50,000 and leaseholds starting at about £30,000. There's also help and support from the brewery or pubco - particularly useful for first-time publicans. However, as many tenants and lessees have found, the ongoing responsibilities can be onerous - so it's important to be clear about the details, and get early legal advice.

"Check whether there's any turnover element to the rent and/or any rent review – and is it open market or inflation-based?" warns Andrew Hardcastle, a partner with Hancocks Solicitors, which regularly handles pub leases and sales. "Look carefully at your repairing obligations, and be prepared for a potentially significant dilapidations bill at the end of the term."

It also pays, he says, to scrutinise the inventory of fixtures and fittings, furniture, equipment and machinery with care and make provision for the price of stock in trade.

Lately, the pubcos have started coming in for some official scrutiny, with a report last summer from the Business, Innovation and Skills Committee recommending reforms. Tied tenants should be no worse off than those that are free-of-tie, it says, and a tie should always be optional. Ministers are currently considering the report, and may make changes.

In the meantime, buying a freehold pub gives the landlord much more control - as well as more of the profits.

Andrew Hall, who runs the Rose and Crown in Oxford with his wife Debbie, has seen the pub go from being owned by a brewery through a takeover by Punch Taverns to, finally, becoming a free house. In 1983, as a tenant of Allied Breweries, "We had a peppercorn rent, but paid slightly over the odds for our beer," he says.

Following the takeover, though, the Halls' rent tripled - and the price they had to pay for beer also went up. Things were tight, says Hall, until the couple was finally able to buy the pub outright in 2009 and shop around for their drinks supplies.

Running a pub is hard work, says Hall. "You're working from ten in the morning until late at night when you close - and then you have to clear up, close down the cellar, do the tills and the book-work," he says. "It's a long day of continual hard work, and of course it's a seven-day week."

Delegating is easier said than done, thanks to legal requirements.

"We have to have one person in the pub at all times who holds a personal licence. If you're a husband and wife team, officially you can't take a night off," says Hall. "So then you have to pay someone else, pay their National Insurance and PAYE, plus £250 for their personal licence - and just hope they stay with you for some time."

But all those footballers and taxi drivers can't be wrong, and for many people running a pub is a dream come true.

"I love meeting all the people. The Rose and Crown is a very special pub, and you get some amazing people coming in," says Hall. "You've got to really have your heart in it or it won't work - but I can't imagine doing anything else."

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