Pub leasehold


K

K Andrews

After many years in the construction industry, I am considering taking on a
pub leasehold. (with my wife)
Am only in the early stages ATM, trying to look at the financial side of
such a venture. Any help with the following much appreciated;

All estimates;
Sales - £4000/week (including food)
Profit at say 55%
Machines income £150/week @ 50%
Possibly additional income from letting rooms.

Rent - £600/week
Business rates - £150 / week
Part time staff - say 3 x £140 = £420
Unsure about employers tax and NI contribution ?
Holiday pay ?
AIUI, you are obliged to keep existing staff.
Public liability ? £1 Million cover ?
Heating / electric ?
Water rates ? possibly metered
Telephone - £10 / week
Cleaner - say £10 / day x 7 = £70 / week
Breakages ?
Internal repairs and decorations ?
Any others ?

We have enough equity in our property to buy the leasehold, ( up to £130k)
so no repayments for that.
I would of course employ an accountant to inspect any accounts before
entering into an agreement.
Most leaseholds seem to be partially tied to a brewery in respect of beers
and alchopops. I assume then I could buy my own wine, soft drinks etc.
Finaly, what length of lease would be best ?
Any sound advice appreciated

PS What is the 'best time of year' for selling a house ?
 
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D

DaveJ

K Andrews said:
After many years in the construction industry, I am considering taking on a
pub leasehold. (with my wife)
Am only in the early stages ATM, trying to look at the financial side of
such a venture. Any help with the following much appreciated;

All estimates;
Sales - £4000/week (including food)
Profit at say 55%
Machines income £150/week @ 50%
Possibly additional income from letting rooms.

Rent - £600/week
Business rates - £150 / week
Part time staff - say 3 x £140 = £420
Unsure about employers tax and NI contribution ?
Holiday pay ?
AIUI, you are obliged to keep existing staff.
Public liability ? £1 Million cover ?
Heating / electric ?
Water rates ? possibly metered
Telephone - £10 / week
Cleaner - say £10 / day x 7 = £70 / week
Breakages ?
Internal repairs and decorations ?
Any others ?

We have enough equity in our property to buy the leasehold, ( up to £130k)
so no repayments for that.
I would of course employ an accountant to inspect any accounts before
entering into an agreement.
Most leaseholds seem to be partially tied to a brewery in respect of beers
and alchopops. I assume then I could buy my own wine, soft drinks etc.
Finaly, what length of lease would be best ?
Any sound advice appreciated

PS What is the 'best time of year' for selling a house ?
Accountancy serices (including payroll), till(s) and computer, cleaning
materials, consumables (soap, bog rolls, glass/dish-washer detergent),
Personal license (over a grand including training I believe), relief manager
(assuming you might want a holiday now and again), entertainment (music
license, sky, (DJs, Karaoke - bleurgh, but I thought I'd put them in)),
maintenance contracts for all the kit (kitchen appliances, bottle fridges,
beer lines and dispensers), CO2 and other gas for fizzies, lager and keg
beer, line-cleaning detergent (and beer wastage when you clean), bank
charges, gardening, refuse collection (councils charge for business
rubbish), window cleaning, Switch/Credit card machine rental and charges
(phew, enough!).

You should be able to get numbers for Gas, Leccie, and Water (all metered),
although you'll need to budget for buying fixtures and fittings (normally
down to the lightbulbs!), glasses, existing stock (which may include stuff
you'll never sell, eg all the millennium champagne... unless we win the
World Cup). Unless it's a lock-up, you'll also have council tax, gas,
leccie, water for the living accomodation. By the way, machine income seems
high relative to the drink and food turnover - there's usually close to £100
rental, then (with a certain propertyco I know of..) it's a 50/50 split of
the rest, that would suggest a gross 'profit' (customer cash-loss) of £400 a
week. Rent also high - I know of pubs with double the turnover going for
less than £800 a week (is this a company beginning with P, formerly S by any
chance?).

Accountant's advice is a good move - you'd be advised to factor in solicitor
and building surveyor to check for nasties in the contract (rent increases
etc) and any repairs which need sorting before you sign up. Pretty sure you
have to stand staff holidays (4 weeks a year) and employers NI (around 13%,
Employees pay their own NI).

One important point - it's often suggested that you can sell the lease on
after 3 years (of a 10 year lease)... However, if it's a Head Lease YOU are
still responsible if whoever you sell it to does a runner (that's why you
need a solicitor to check things out).

Best of luck - you're doing a lot more research than most, and hopefully a
lot less likely to get it wrong.
 
K

K Andrews

Accountancy serices (including payroll), till(s) and computer, cleaning
materials, consumables (soap, bog rolls, glass/dish-washer detergent),
Personal license (over a grand including training I believe), relief
manager
(assuming you might want a holiday now and again), entertainment (music
license, sky, (DJs, Karaoke - bleurgh, but I thought I'd put them in)),
maintenance contracts for all the kit (kitchen appliances, bottle fridges,
beer lines and dispensers), CO2 and other gas for fizzies, lager and keg
beer, line-cleaning detergent (and beer wastage when you clean), bank
charges, gardening, refuse collection (councils charge for business
rubbish), window cleaning, Switch/Credit card machine rental and charges
(phew, enough!).
Yeah, quite a bit there !
By the way, machine income seems
high relative to the drink and food turnover - there's usually close to
£100
rental, then (with a certain propertyco I know of..) it's a 50/50 split of
the rest, that would suggest a gross 'profit' (customer cash-loss) of £400
a
week.
I don't quite follow that, please explain.

Rent also high - I know of pubs with double the turnover going for
less than £800 a week
The (estimated) rent is £600 / week.

(is this a company beginning with P, formerly S by any
chance?).
No.
Best of luck - you're doing a lot more research than most, and hopefully a
lot less likely to get it wrong.
Cheers, and thanks for helpful information.
 
D

DaveJ

K Andrews said:
I don't quite follow that, please explain.
Pub machines are normally leased from a machine company, so they charge say
£100 a week (depends on machine type, how often they change them), then you
split the rest of the take 50/50 with the pub company. So if the machine
makes £400 profit in a week (say customers stick in £800 and 'win' half of
it back), the machine co extracts their £100 and gives you the remaining
£300 then you give half to the pubco leaving you with £150.

This just seemed high - my local has around double the turnover, but machine
takings around 60% of the above numbers (may be just be a 'low gambling
area').
 
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K

K Andrews

DaveJ said:
Pub machines are normally leased from a machine company, so they charge
say
£100 a week (depends on machine type, how often they change them), then
you
split the rest of the take 50/50 with the pub company. So if the machine
makes £400 profit in a week (say customers stick in £800 and 'win' half of
it back), the machine co extracts their £100 and gives you the remaining
£300 then you give half to the pubco leaving you with £150.

This just seemed high - my local has around double the turnover, but
machine
takings around 60% of the above numbers (may be just be a 'low gambling
area').
Thanks Dave.
 

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