Anyone here in the bar/pub trade?
Discussion
Someone I know has been offered to take over a bar. He doesn't have all the money needed to buy it so has asked me if I want to put a few quid in as an investor. I know zero about this market so was wondering how to determine if it's a good idea.
It's somewhere I have had a few drinks in the past and always seems busy. On the weekends you can't move in there. It's in an affluent part of a busy city and charges decent prices for the drinks and food, which is fairly good quality. From the limited info I have so far, it looks like it's quite profitable and has been growing quite steadily since launch 2-3 years ago. The existing owner is selling for person reasons (or so he says) and is letting it go at a price that looks very attractive.
As with most things being sold, especially in business, it all sounds great so what are the typical pitfalls that I should look in to? What kind of things normally cause these trendy bars to fold and swallow up an investors hard earned savings?
I should mention that my contact has 10+ years experienced in this trade and already owns a successful, profitable bar that is similar. I don't doubt that he can make a good go of it but I want to make sure he/we aren't buying a pup.
Cheers my dears.
It's somewhere I have had a few drinks in the past and always seems busy. On the weekends you can't move in there. It's in an affluent part of a busy city and charges decent prices for the drinks and food, which is fairly good quality. From the limited info I have so far, it looks like it's quite profitable and has been growing quite steadily since launch 2-3 years ago. The existing owner is selling for person reasons (or so he says) and is letting it go at a price that looks very attractive.
As with most things being sold, especially in business, it all sounds great so what are the typical pitfalls that I should look in to? What kind of things normally cause these trendy bars to fold and swallow up an investors hard earned savings?
I should mention that my contact has 10+ years experienced in this trade and already owns a successful, profitable bar that is similar. I don't doubt that he can make a good go of it but I want to make sure he/we aren't buying a pup.
Cheers my dears.
Firstly, ask to see the latest set of accounts that the business has - both filed and managed.
From that you will see how profitable it really is (being busy doesnt always mean profitable) and see what the Wet/Dry split is (if it sells food). Are they tied to any supplier of drink or are you able to shop around to get it. Staff, how many/how good?
I guess from that you need to decide if your going to be an investor who sits back and waits for his money to come back after a certain time, or an investor who wants to be a partner in the business and help run it and take it forward.
Good luck, running a bar is not a 9-5 job, its more of a lifestyle but if you have time and energy the leisure and entertainment business is a good one.
From that you will see how profitable it really is (being busy doesnt always mean profitable) and see what the Wet/Dry split is (if it sells food). Are they tied to any supplier of drink or are you able to shop around to get it. Staff, how many/how good?
I guess from that you need to decide if your going to be an investor who sits back and waits for his money to come back after a certain time, or an investor who wants to be a partner in the business and help run it and take it forward.
Good luck, running a bar is not a 9-5 job, its more of a lifestyle but if you have time and energy the leisure and entertainment business is a good one.
The pub/restaurant business is notorius for it's ability to leave you broke.
It can make some serious money but it relies on a lot of things which if you aren't hands on or have incredibly tight controls can bite you in the bum and you won't even see it coming.
here is what may well happen.
You will ask to see the most recent accounts, they either won't be able to produce them or the ones they do will be back of the envelope and they will say it does far better (nudge nudge) So on that basis any investment is a massive leap of faith.
The reason for the owner selling will be because they are broke i would imagine, I've seen it soooooo many times.
I hope this isn't too negative as i say it COULD be good. How about working their for a week and asking some questions about the operation? It will give you a feel for what is happening.
It can make some serious money but it relies on a lot of things which if you aren't hands on or have incredibly tight controls can bite you in the bum and you won't even see it coming.
here is what may well happen.
You will ask to see the most recent accounts, they either won't be able to produce them or the ones they do will be back of the envelope and they will say it does far better (nudge nudge) So on that basis any investment is a massive leap of faith.
The reason for the owner selling will be because they are broke i would imagine, I've seen it soooooo many times.
I hope this isn't too negative as i say it COULD be good. How about working their for a week and asking some questions about the operation? It will give you a feel for what is happening.
POORCARDEALER said:
Savvy friend of mine just come out of a tied house (his wife ran it)...despite it blowing a grand a week the brewery are still making money.
Go in with your eyes very wide open
With the greatest respect to your friend, he can't be that savvy to go into a tied house. The only way to make decent money in the pub trade is to be able to choose where you buy your stock, most likely as a freeholder. Go in with your eyes very wide open
These days most breweries / pubcos are just landlords, they don't give a damn about the quality of the pub or leaseholder for that matter as long as they are getting their rent. One leaseholder goes pop, here comes another with the romantic idea of running a pub. Rinse and repeat.
foliedouce said:
POORCARDEALER said:
Savvy friend of mine just come out of a tied house (his wife ran it)...despite it blowing a grand a week the brewery are still making money.
Go in with your eyes very wide open
With the greatest respect to your friend, he can't be that savvy to go into a tied house. The only way to make decent money in the pub trade is to be able to choose where you buy your stock, most likely as a freeholder. Go in with your eyes very wide open
These days most breweries / pubcos are just landlords, they don't give a damn about the quality of the pub or leaseholder for that matter as long as they are getting their rent. One leaseholder goes pop, here comes another with the romantic idea of running a pub. Rinse and repeat.
Brewery will always win - even when the pub shuts down they are sitting usually on prime real estate.....
Sadly too many pubs are shutting down, mostly because they are not being used - and some of that (not all of it) reasoning is that they are not run very well by those doing it.
Ive lost count on how many pubs Ive been to, being staffed by rude people and serving food that is over priced and not very nice. Its really not hard. Seriously.
But the brewery will always win and more so when they own the freehold.
Being a freehold landlord gives you more options to make more money.
Sadly too many pubs are shutting down, mostly because they are not being used - and some of that (not all of it) reasoning is that they are not run very well by those doing it.
Ive lost count on how many pubs Ive been to, being staffed by rude people and serving food that is over priced and not very nice. Its really not hard. Seriously.
But the brewery will always win and more so when they own the freehold.
Being a freehold landlord gives you more options to make more money.
POORCARDEALER said:
He is very successful in his own field ...his wife wanted a pub, he didn't want to buy a free house and used this as a trial , his wife hates the trade , so it worked out well....my point was the breweries make money even when your losing
We can definitely both agree on that! Sounds like they made the right call, a lot of people have a very different idea to what running a pub is all about, until they start running one.
CoolCurly said:
Brewery will always win - even when the pub shuts down they are sitting usually on prime real estate.....
Sadly too many pubs are shutting down, mostly because they are not being used - and some of that (not all of it) reasoning is that they are not run very well by those doing it.
Ive lost count on how many pubs Ive been to, being staffed by rude people and serving food that is over priced and not very nice. Its really not hard. Seriously.
But the brewery will always win and more so when they own the freehold.
Being a freehold landlord gives you more options to make more money.
Cheapest of the cheap trade food as well.....enough to turn your stomach. Sadly too many pubs are shutting down, mostly because they are not being used - and some of that (not all of it) reasoning is that they are not run very well by those doing it.
Ive lost count on how many pubs Ive been to, being staffed by rude people and serving food that is over priced and not very nice. Its really not hard. Seriously.
But the brewery will always win and more so when they own the freehold.
Being a freehold landlord gives you more options to make more money.
About 20 years ago I used to work for youngs and co in London it was a dying business then.
If its a drinking bar you need a good regular catchment (students ect) and drinkers can be very very fickle, the margins on drinks only establishments is quite small.
Food is where you make your money but again you need to stand out as everyone and their cat is doing it.
That said if you can position yourself in the right part of the market you can do well so you need to be very good and lucky.
I think it is a business that take a lot of work and is very hands on .It is also very easy to get ripped off how well do you trust your mate?
If its a drinking bar you need a good regular catchment (students ect) and drinkers can be very very fickle, the margins on drinks only establishments is quite small.
Food is where you make your money but again you need to stand out as everyone and their cat is doing it.
That said if you can position yourself in the right part of the market you can do well so you need to be very good and lucky.
I think it is a business that take a lot of work and is very hands on .It is also very easy to get ripped off how well do you trust your mate?
Unless you can afford to pay a GOOD manager to run it, then think very hard.
Do you really want to be stuck there on a Saturday night serving pints and dealing with drunks? Do you want to be there at 8am when the deliveries turn up, or to let in the cleaners, or to deal with tradesmen fixing the toilets etc.
Do you want to be dealing with unreliable bar staff? Having to go in on your weekend off because staff have failed to show. Even a manger needs a holiday, are you willing to step in and cover?
It's a complete lifestyle, so unless you willing to embrace it, I'd steer clear. If you are going to be a silent partner, then be ready to be fleeced!
Do you really want to be stuck there on a Saturday night serving pints and dealing with drunks? Do you want to be there at 8am when the deliveries turn up, or to let in the cleaners, or to deal with tradesmen fixing the toilets etc.
Do you want to be dealing with unreliable bar staff? Having to go in on your weekend off because staff have failed to show. Even a manger needs a holiday, are you willing to step in and cover?
It's a complete lifestyle, so unless you willing to embrace it, I'd steer clear. If you are going to be a silent partner, then be ready to be fleeced!
megaphone said:
Unless you can afford to pay a GOOD manager to run it, then think very hard.
Do you really want to be stuck there on a Saturday night serving pints and dealing with drunks? Do you want to be there at 8am when the deliveries turn up, or to let in the cleaners, or to deal with tradesmen fixing the toilets etc.
Do you want to be dealing with unreliable bar staff? Having to go in on your weekend off because staff have failed to show. Even a manger needs a holiday, are you willing to step in and cover?
It's a complete lifestyle, so unless you willing to embrace it, I'd steer clear. If you are going to be a silent partner, then be ready to be fleeced!
What he said.....and add in it'll probably be losings a grand a week and you'll be working another full time job just to keep it afloat until you can get out of the lease. Do you really want to be stuck there on a Saturday night serving pints and dealing with drunks? Do you want to be there at 8am when the deliveries turn up, or to let in the cleaners, or to deal with tradesmen fixing the toilets etc.
Do you want to be dealing with unreliable bar staff? Having to go in on your weekend off because staff have failed to show. Even a manger needs a holiday, are you willing to step in and cover?
It's a complete lifestyle, so unless you willing to embrace it, I'd steer clear. If you are going to be a silent partner, then be ready to be fleeced!
Just burn your money, it easier and the pain will be over much quicker.
(I have "invested" in a bar)
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