Pub numbers have fallen in recent years but there's still demand for pubs that offer great food and well kept beer. You'll find all you need to start up and run your own pub in our practical guide.
- Research your target market
- Establish your customer profile
- Tenant/free trader
- Decide what services to offer
- Decide what to sell
- Buy an existing business
Research your target market
When you plan your new pub business it's essential to think carefully about what exactly it involves and make a realistic estimate of the amount of customer demand there is likely to be. Doing some market research will help you with this.
Checking out the reality
Unless you have some previous experience of the pub trade it's a very good idea to try to get practical experience of what working in a pub is like before you take the plunge.
You will be working very long hours, seven days a week, with little opportunity for a holiday. You will have to have good personal and social skills as well as physical strength and stamina. If you are planning to take on the pub with your partner or spouse it's important to make sure that you are both prepared for what life will be like.
Estimating demand
Having decided to make a go of it you will need to find out how much demand there is likely to be for your business. First of all, check out the competition. Count how many pubs there are already in your area and visit each of them to see what they offer. Do they appear to be thriving? Make a note of any other business, whether licensed or not, which might attract your potential customers. For example, local workers might buy a sandwich from a variety of outlets at lunchtime instead of going to your pub.
If you are entering into a tenancy agreement or buying a free house you may be able to obtain details of the income from drink and other product lines for the last 12 months from the previous tenant or proprietor. This will give you an indication of potential demand.
Catchment area
Note down the different types of potential customer living and working in the area where the pub will be. This will help you to come up with the range of products and services that you will offer. For example, professional people may be attracted by a good range of wines and by a restaurant facility, while young, male customers may be looking primarily for a range of alcoholic drinks and amusements, such as pool tables.
Why will customers choose your pub
It's very important to do all you can to make sure that enough customers will choose your pub rather than other leisure outlets. Check out the competition to see:
- what range of products they offer
- what services they offer - for example bed and breakfast accommodation
- what prices they charge
- what are their opening hours
- what type of customer they are attracting
- if the premises have been newly refurbished
This might immediately show you that there is a gap in the market for a certain type of pub, for example, offering unusual restaurant meals at both lunchtime and in the evening. Maybe there's an opportunity to offer a range of craft beers and local food specialities.
Find out what people want
It can be a good idea to talk to people in the pub's locality about your proposals. Ask them what they would like their local to offer, and what they don't like about other pubs.
Research current trends, plus legal and tax issues
- Sector trends for pubs
- Legal issues for pubs
- VAT rules for pubs
Establish your customer profile
Your customer base will depend to a certain extent on:
- the sector of the market you are targeting
- your location
Some pubs build up a core of regular customers, which may change depending on the time of day and the day of the week. For example, regular lunchtime office workers may not use the pub in the evenings, when it becomes the local for residents in the area. Others may act almost like community hubs and have a core of regular customers that is made up almost exclusively of residents from the local area. In some pubs, for example those in busy city centres or in holiday areas, the landlord may rarely see the same customer twice.
Think about whether your customers will be local residents, people who work locally, tourists and other visitors to the area, shoppers and/or people specifically visiting the area for a night out.
Special offers, discounts and promotions
Traditionally, many pubs have had a 'happy hour' during the early part of the evening when drinks have been reduced to attract customers. Concerns over binge drinking, alcohol abuse and late-night violence prompted the licensed trade to put in place a voluntary ban on any irresponsible promotions leading to 'speed drinking'. The government then introduced new mandatory licensing conditions for pubs in England and Wales, and similar conditions were introduced in Scotland. These ban all irresponsible drinks promotions and require pubs to make fresh water freely available to customers. Its very important to make sure that any discounts you offer don't encourage people to drink too much, too quickly. (It should be noted that the mandatory licensing conditions don't actually ban happy hours but any promotion you run must pass a 'significant risk' test.)
Some pubs have regular promotions on different types of beers. Discounting on meals (for example Sunday lunch or early in the evening) is commonplace, but take care that you do not offer such low prices that you do not make any profit.
Don't forget to brief your staff thoroughly on the discounts that can be offered. Guard against staff offering unauthorised discounts to their friends and family.
Tenant/free trader
Tenant/lessee
A tenant is a self-employed person who rents a pub from a property owner such as a non-brewing pub company (often referred to as a 'pubco') or a brewer.
The term of the tenancy agreement may be from one year upwards (for example, a three year period) and the tenancy can not be assigned. The tenant is usually responsible for the cost of repairs and decoration, while the property owner is responsible for the structure of the building.
A new tenant buys the pub fixtures and fittings, stock and glassware from the outgoing tenant, at an agreed price.
The terms of the tenancy agreement are likely to include a requirement to buy certain products from the property owner - this is known as 'the tie'. For example, you may be obliged to buy beer, cider and soft drinks from the property owner, but can obtain wine and spirits from alternative sources. Often a tenancy agreement requires you to buy all drinks products from your landlord. The stock that you have to buy under the tie is referred to as 'wet rent'. As well as this you also pay a profit-related rental and usually also part of any income from amusement and vending machines. At the end of the tenancy period you will have an automatic right to renew your contract, although your rent will probably be increased. Measures included in the new Statutory Pubs Code (that came into force from July 2016 and applies to all businesses owning 500-plus tied pubs in England and Wales) allows tenants to go free of the tie in some circumstances by opting for a market rent only arrangement.
A lessee operates on a similar basis to a tenant, except that the term of the agreement is normally longer (for example ten years), the lease can be assigned and the lessee may be responsible for the structure of the building. You may also have to buy beer - and possibly other drinks - from your landlord.
Free trader
A free trader owns the property from which the business trades and is able to obtain stocks from any source. In practice some free traders enter into agreements with brewers so that in return for low interest loans, discounts and so on they agree to stock certain products.
How to find a pub
Details of available pubs can be obtained from a number of sources, such as
- brewers and 'pubcos'
- specialist brokers, also known as licensed property valuers or licensed property agents
- online resources
- the trade press
Decide what services to offer
Think about the range of facilities and services your pub will offer to customers. For example, will yours mainly be a drinking pub, or will food service be an important part of the business? Some of your services and facilities may be revenue-earning, while others might serve to make your pub more attractive to customers.
You could offer some or all of the following in addition to the ranges of ales, wines, spirits and soft drinks that you serve:
- tastings, beer festivals and other special events for real ale enthusiasts
- bar snacks and bar meals
- full-service restaurant meals
- al fresco drinking and dining
- catering service and/or mobile bar service for events
- regular events such as quiz nights and open-mic sessions
- live music and/or juke box
- bar games such as darts, pool and even traditional games like bar skittles
- amusement machines
- payphone
- public wifi internet access
- television showing live sporting events
- bed and breakfast
Some pubs, particularly those located in rural areas, incorporate a village shop and even a post office.
Organising the day
Although it is quite likely that you will not be opening your doors to the public first thing, you will have plenty to do during the early part of the day, such as:
- ordering stocks of food and drink
- food preparation
- looking after the beer and other dispensed drinks
- making sure the bars and public areas are clean and tidy
- booking bands and other entertainers
- paperwork
A growing number of pubs do open early and serve breakfasts, particularly at weekends.
Once your doors are open you will be busy serving customers, monitoring staff, receiving deliveries and dealing with a hundred and one other things. You will also have to regularly clean your beer lines, re-stock your optics, bring up bottled beer and other products from your cellar or store room and so on. It is important that you have an orderly approach to getting everything done - you could draw up a list of jobs and then allocate them to yourself, your partner and members of staff so that you work together as an efficient team.
Advertising your services
Whichever services you decide to offer to your customers, from skittles to Sunday lunch, you'll need to make sure that people know about them.
There are a number of things you can do to promote your business:
- advertise in your local newspaper and any other local publications, such as a leisure guide
- put up banners so that potential customers can easily see what type of services you offer, for example "Good food served all day" or "Real ales served here"
- if you have the space, contact local clubs and societies that might be interested in holding regular meetings in the pub
- pay for an entry in a specialist directory - this could be a printed publication or an online resource
- launch your own website, showing all the things that will attract customers to your pub - particularly if you offer accommodation, or pride yourself on your range of craft beers or the skills of your chef
- use social media like Twitter, Facebook and Instagram to advertise special features about your business
- have promotional leaflets printed to leave with local Tourist Information offices and any other local leisure venues, including caravan and camp sites
Decide what to sell
Give some thought to what your main sources of income will be, and think about how important you expect each source to be to your business.
Wet sales
The range of drinks you stock will be affected to some extent by the nature of your customer base. For example, you might decide to specialise in 'real ale' or craft beer, or to take advantage of the growing popularity of gin with younger people.
Wine has become popular as a pub drink and it may be worth stocking a good selection. Sophisticated wine preservation systems are available that allow you to offer wine by the glass from many different still and sparkling wines.
Many of your customers may also be driving home, so make sure you have a good range of non-alcoholic drinks at reasonable prices. You could think about offering a range of alcohol-free cocktails.
Depending on the customers you're hoping to attract, you may decide to offer a range of hot drinks such as coffee, tea and fruit and herbal teas.
Food sales
Because eating out has become so popular it is likely that you will want to offer snacks and meals. Again, your customer base will influence what type of catering you offer. Some pubs have a simple menu for lunchtime bar snacks together with a full restaurant service which operates in the evenings only. A take-away service might prove successful. Some pubs now offer breakfast, and you might consider offering afternoon teas, particularly if you are located in a holiday area. Offering regional specialities can be a good way of attracting customers. Maybe even think about offering healthy options featuring organic products, lots of fresh vegetables and containing less fat, salt and sugar - this approach is becoming increasingly popular with customers.
If your pub is located in good walking country, you could consider offering overnight guests a packed lunch for the following day.
Accommodation
If your pub is located in a holiday area and is big enough, you might be able to offer bed and breakfast facilities to guests. Check with your local Tourist Board to see when the busiest periods will be and what occupancy levels you could expect.
Other goods and services
There are any number of other things that you could offer your customers, some of which you can charge for and some of which you will use to increase attendances. These might include:
- function room hire and function catering
- pool tables, amusement machines
- juke box
- live music, karaoke and other entertainment
- discos
- cash machine or 'cashback' from card payments. Providing customers with this service might mean that they spend more on the products and services you offer
- free WiFi
Your market research will have helped you to identify the range of products and services to offer. Be prepared to be flexible - your aim is to provide your customers with what they want and after you have been trading for a while it may be clear that different ranges would go down well.
Buy an existing business
You might decide to buy an existing pub rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, regular sales, staff, premises and equipment are already in place.
Don't forget that anyone running a pub must hold a personal licence. You apply for this to your local licensing authority (or licensing board in Scotland). To get the licence you must hold a relevant licensing qualification. You can find out more on the British Institute of Innkeeping (BII) website.
The Fleurets website has details of pubs for sale and to let around the UK.
Unlike many other types of business, buying or taking on a pub often involves a move into new accommodation for you and your family. So you could be combining a business purchase with moving home - giving you plenty more to think about!
Have a look at the British Beer & Pub Association (BBPA) survey of the costs involved in running a pub. You can download Cost guide for tenants and lessees from the BBPA website. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.
But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish the genuine trading and financial position, so that the price you pay for the business is not too high.