Leasing a very small village pub

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

"Put that on the slate Doc"

·    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?

€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.

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!

Rates could be a big cost.

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.

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.

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?

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!!💸😁

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.

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.

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

I work in the insurance industry and have done for more than 10 years. In that time I have underwritten and broked many pubs. My experience is not some anecdotal press related guff. Pubs in general are a massive risk from a liability perspective. There is a reason why virtually none of the big players in the Irish insurance market would touch them pre-covid.

Its surprising that you work in the insurance industry and did not know that covid risks are now excluded and business interruption insurance can be excluded. It is also limited to a specific figure.

Also surprised that you do not know that FBD are one of the main players in the pub insurance market - you can't get more Irish than that, but most business insurance is done by specialist insurers who don't spend millions advertising their name on TV and Radio or have retail sales operations here. If you are in the insurance industry, you'd know that too.

for the op, here's a good vfi guide

https://vfipubs.ie/wp-content/uploads/2019/10/VFI-Pub-Guide-2.pdf

Id suggest before you comment on my posts that you read them all, instead of trying to be a know it all that clearly does not, know it all.

😉

Good luck with it anyway mate. Its unfortunate that the market is so fecked at the moment. Small pubs are the lifeblood of many communities so to see so many closed is quite sad.

I'm certainly not overly knowledgeable on insurance, though I have been purchasing multi unit retail and cafe business insurance for over 30 years and just 2 small burglary claims, so I'd have good knowledge from a business perspective.

I simply pointed out the very glaring deficiencies in your post that gave incorrect information.

The OP can call a specialist broker and get a good idea in minutes of the cost, or ask the current operator how much insurance is. I'll guess it will be well under €2,000 for a small quiet rural pub that will not have a late license.

your prospective landlord is getting on.

i am sure he is the most honorable person in the world but his word it his promise to give you first refusal is basically worthless.

if he dies or has a serious accident (which will happen sooner or later, assuming you are successful) someone else will be in charge and your gentleman’s agreement will be forgotten.

if you are successful he will no longer have any compelling reason to give you a first refusal

you need this first refusal on writing from Day One. There is a strong case to be made that you should have an option to buy the pub for some agreed fixed price too. You need a solicitor for this and there will be legal costs, for the lease and for transferring and maintaining the licence. You will probably have to pay your landlord’s legal costs too

if you can’t get the right legal advice and drafting at day one I would advise you to just forget about it. You would be taking all the risk and doing all the hard work and someone else would be getting the benefit of all the upside.

You are not a barman or a bar manager anymore. You are not this guy’s friend nor is he your friend. You are now a business person, wholly responsible for yourself and your business. You have to make hard decisions as you plan for your and your family’s future.

Turnover is vanity, profit is sanity. For a business to survive and grow, it needs profit.

Just back from the holidays in East Clare. Remote is a word that came to mind many times. Village after village with pubs (and shops) for sale/boarded up. The local village to us had one pub still open and they did food. A great variety of food - to eat in or take away. The phone didn't stop ringing whenever we were there.

OP, you'll have no trouble finding a reasonable insurance premium on your standard rural pub. The problems only start coming with live music (excluding a lad in the corner playing guitar etc), dancing, functions and late licence. Your landlord will insure the structure and his contents, you only need to cover your property, stock and liabilities related to your activities.

The Covid related claims for business interruption are not an issue, cover is now excluded. The insurers who paid out might not be as competitive as they were as they need to recoup losses, but they're still quoting