Pubs have enjoyed a place in the British consciousness for hundreds of years, and the market continues to grow. There’s significant enjoyment to be had from running a friendly and welcoming pub, with plenty of opportunity for creative freedom.
Why run a public house?
With over 15m UK residents drinking in pubs at least once a week, there’s a massive market to tap into and the potential for fantastic customer loyalty. The pub market is diversifying, increasing potential revenue streams through new avenues such as gastro-food, quizzes and karaoke. Pubs are very British, and it can be very rewarding to run and nurture such a traditional institution.
What skills will I need?
Being personable is essential in order to create loyal patrons; many pub goers want to feel at home in the pub, and creating an atmosphere that allows this is the mark of a good landlord. You’ll need to be welcoming and friendly with the ability to engage all manner of travellers from worlds apart. You’ll also need to able to effectively manage stock, financials, a catering team, and create effective marketing campaigns to encourage customers to visit your pub.
Senior-level experience in a pub is essential otherwise you will be throwing yourself in at the deep end. If possible gain experience in all tenets of pub life, from serving drinks and changing barrels to organising staff and managing suppliers. In terms of professional qualifications, The British Institute of Innkeepers offers a range of diverse courses that result in nationally-recognised diplomas. The BIIAB Level 3 Award in Managing the Night-Time Economy and the BIIAB Level 2 Award in Conflict Management for Licensed Premises staff are just two.
Pubs are run in three main ways: independently, or on a lease or tenancy from the owner. Over half of all pubs in the UK are run by a pub company with a further 16% owned by breweries, making leasing and tenancy the most popular routes to market, particularly for first-time pub owners.
• Independent owners buy ‘freehouses.’ They own all assets outright and accrue all profits. They are free to buy stock from any supplier and can employ staff of their choosing
• Tenants buy fixtures and fittings outright, have contracts of around 3-5 years and rent the building from the owner. They are normally responsible for interior repairs and decorating only
• Lessees pay a premium for the fixtures, fittings and goodwill, and have longer leases of between 10 and 30 years. Lessees are generally responsible for both exterior and interior decorating and repairs
Leasing and tenancy takes two forms: tied or free of tied. Tied contracts reduce the price of the premium (the sum payable to the owner) but you will be required to sell stock bought directly from the owner. Free of tied contracts means you can shop around to find the cheapest supplier.
Costs vary depending on what route you take. Tenancy costs start around £20,000, average around £30,000 but may rise as high as £60,000. The price depends on the pub’s success and location, and whether it needs any repairs. Rent is charged at 10-15% of turnover. For leased options, the total costs will be around £150,000 but this could go higher if the pub has an extraordinary level of goodwill. Freehouses will be far more expensive, starting at £120,000 for less successful pubs and going up to several millions of pounds in busy City areas. Budget a further £15,000 for insurance, stock, minor fixtures and fittings and insurance should business dry up for a while.
Insurance and compliance
Selling alcohol for immediate consumption on the premises requires licenses, which can be obtained from your local licensing authority (typically the council). You'll need both a premises license and a personal license, the latter of which will typically included a CRB check.
If you wish to supply food you’ll also need the necessary food safety qualifications – please contact the Health and Safety Executive (HSE) for more information.
You’ll need public liability insurance and professional indemnity insurance as pubs can be high-risk areas, and employer’s liability insurance if you take on staff. If leasing a pub, check to see what is covered in the premium and see if the pub company or owner can offer corporate insurance policies.
Your first step
If you have relevant experience running and working in a pub, your first step is to consider what establishments are available and which fit within your budget. Consider what training you’ll take and begin drawing up a very detailed business plan; running a pub is a very competitive market and you’ll need to work hard to convince a lender to provide you with finance (typically up to 70% of the cost). Join the British Institute of Innkeepers and analyse what training courses will be most applicable for your needs. If you do not have relevant experience, work in several pubs – at different levels – and take professional training.