Is there still money in booze and food?

[Yipper]

Wetherspoon made a +7% operating profit (OP) in 2016.

For comparison, Apple (iPhone) made +28% OP in 2016.

Wales has the highest concentration of Wetherspoon pubs in the UK, at 2 for every 10k inhabitants.

It currently costs Wetherspoon about ~£1.7m to open a brandnew pub.

The average operating profit per Wetherspoon pub was ~£110k in 2016. About ~£50k per pub after all taxes are paid. It is clearly a very tough business to be in if you can only make £50-100k profit per pub with such huge scale and big premises.

[Yipper]

markcoznottz said:

Frimley111R said:

Also, related to food and drink, my local McDonalds has a T/O of £6m. Not bad on food that is so low cost.

As you well know though, turnover ain't profit. Plus franchise fees etc. It's hard to gauge the roi on individual McDonald's, and they must spend money to make it hard to know.

Know someone (ex-dentist) who bought a couple of Mcd franchises in the Midlands in the late-1990s. It cost roughly £500k to buy them and he made about £100k net profit per resto per year until the early-2000s when he retired.

Suspect the fastfood market is much more crowded, nowadays, and profits are nowhere near as generous for current Mcd franchisees.

[MCLARENSLR]

Yipper said:

Wetherspoon made a +7% operating profit (OP) in 2016.

Wales has the highest concentration of Wetherspoon pubs in the UK, at 2 for every 10k inhabitants.

Must be 2 pubs per 100,000 inhabitants surely? e.g Cardiff 7 pubs 350,000 people. Barry 1 pub 50,000 people etc.

[markcoznottz]

Yipper said:

markcoznottz said:

Frimley111R said:

Also, related to food and drink, my local McDonalds has a T/O of £6m. Not bad on food that is so low cost.

As you well know though, turnover ain't profit. Plus franchise fees etc. It's hard to gauge the roi on individual McDonald's, and they must spend money to make it hard to know.

Know someone (ex-dentist) who bought a couple of Mcd franchises in the Midlands in the late-1990s. It cost roughly £500k to buy them and he made about £100k net profit per resto per year until the early-2000s when he retired.

Suspect the fastfood market is much more crowded, nowadays, and profits are nowhere near as generous for current Mcd franchisees.

Was a license to print back then, much simpler operation and menu, and less frequent refurbs.

[Sheepshanks]

Yipper said:

Wetherspoon made a +7% operating profit (OP) in 2016.

For comparison, Apple (iPhone) made +28% OP in 2016.

Wales has the highest concentration of Wetherspoon pubs in the UK, at 2 for every 10k inhabitants.

It currently costs Wetherspoon about ~£1.7m to open a brandnew pub.

The average operating profit per Wetherspoon pub was ~£110k in 2016. About ~£50k per pub after all taxes are paid. It is clearly a very tough business to be in if you can only make £50-100k profit per pub with such huge scale and big premises.

I've no idea how business finance works at this level, but if they borrowed that £1.7M at commercial rates then the interest payment alone would surely pretty well wipe out the operating profit?

[insurance_jon]

I've got one friend/client who is turning over a significant sum in food and beverage.

He has about 30 pubs that he leases out on a tied tenancy to his wholesalers.

But then he has 10-12 large venues (German themed and gin themed) that each turnover £2m plus each a year.

This is where the clever bit is, because on these he is getting the wholesale and retail margin

One would think spoons are doing this too. I spoons wholesale supply the pubs, and get 2 bites of the cherry.

[AnimalMother]

Sheepshanks said:

I've no idea how business finance works at this level, but if they borrowed that £1.7M at commercial rates then the interest payment alone would surely pretty well wipe out the operating profit?

Exactly what I was inferring in my first post on this thread.

The ROI per site is awful, can you imagine asking someone to invest £1.7m for £40k-£60k return!

Its seams to me like most huge enterprises, perceived growth is more important than profit........

[The Mad Monk]

AnimalMother said:

Exactly what I was inferring in my first post on this thread.

The ROI per site is awful, can you imagine asking someone to invest £1.7m for £40k-£60k return!

Its seams to me like most huge enterprises, perceived growth is more important than profit........

If you will forgive me, I suggest that you implied it and we (may have) inferred it.

[Bradgate]

RTB said:

N.B. With those margins I imagine that managing a Whetherspoons is a pretty stressful job.

Back in the 90s I managed branded pub restaurants ( eg Beefeater). It was horrendously exhausting and stressful, and we 'only' traded for around 70 hours per week. Most JDWs trade for 112 hours per week...

[anonymous-user]

Yipper said:

Know someone (ex-dentist) who bought a couple of Mcd franchises in the Midlands in the late-1990s. It cost roughly £500k to buy them and he made about £100k net profit per resto per year until the early-2000s when he retired.

Suspect the fastfood market is much more crowded, nowadays, and profits are nowhere near as generous for current Mcd franchisees.

It's not far off that now. Margin is 10% on an "in-line" store, 12% for a drive thru. Turnover is between £700k and £1m for a typical hamburger franchise. It's a good business, and earnings go up in a recession. £500k - £850k to open a new outlet is about right too, they are modular and can be built out very quickly. You lease all the equipment, obviously.

[Frimley111R]

dme123 said:

Yipper said:

Know someone (ex-dentist) who bought a couple of Mcd franchises in the Midlands in the late-1990s. It cost roughly £500k to buy them and he made about £100k net profit per resto per year until the early-2000s when he retired.

Suspect the fastfood market is much more crowded, nowadays, and profits are nowhere near as generous for current Mcd franchisees.

It's not far off that now. Margin is 10% on an "in-line" store, 12% for a drive thru. Turnover is between £700k and £1m for a typical hamburger franchise. It's a good business, and earnings go up in a recession. £500k - £850k to open a new outlet is about right too, they are modular and can be built out very quickly. You lease all the equipment, obviously.

The one that opened near us was built/[paid for by McD so the franshee didn't have to fork out for the cost of the building plus everything else

[anonymous-user]

Frimley111R said:

dme123 said:

Yipper said:

Know someone (ex-dentist) who bought a couple of Mcd franchises in the Midlands in the late-1990s. It cost roughly £500k to buy them and he made about £100k net profit per resto per year until the early-2000s when he retired.

Suspect the fastfood market is much more crowded, nowadays, and profits are nowhere near as generous for current Mcd franchisees.

It's not far off that now. Margin is 10% on an "in-line" store, 12% for a drive thru. Turnover is between £700k and £1m for a typical hamburger franchise. It's a good business, and earnings go up in a recession. £500k - £850k to open a new outlet is about right too, they are modular and can be built out very quickly. You lease all the equipment, obviously.

The one that opened near us was built/[paid for by McD so the franshee didn't have to fork out for the cost of the building plus everything else

If you're opening in a stty area you can often get the landlord to stump up most or all of the construction costs. McDogbits also operate their own stores in particularly lucrative areas.

[CaptainMorgan]

Ah I'm guessing you're in the ex cake corner premises?

Spoons have been trying to get a location in the area for ages, I would guess due to the football crowds, they were trying for somewhere nearer the station end of town but for whatever reason couldn't get anywhere. I can help but feel it's a bit out the way if the footie lot are their intended punters but I'm no expert. It's going to be a 'spoons hotel too, massive extension on the rear (the garden is/was huge) and the front car park will become seating outdoors.

Will be interesting to see how it goes, I went to Manchester a while back for a business expo, stayed at hotel football next to Old Trafford, went out to find a pub in the evening and found a random spoons. For a weekday evening it was busier than I expected, we weren't the only ones being kicked out at closing.

[The Mad Monk]

CaptainMorgan said:

Ah I'm guessing you're in the ex cake corner premises?

Spoons have been trying to get a location in the area for ages, I would guess due to the football crowds, they were trying for somewhere nearer the station end of town but for whatever reason couldn't get anywhere. I can help but feel it's a bit out the way if the footie lot are their intended punters but I'm no expert. It's going to be a 'spoons hotel too, massive extension on the rear (the garden is/was huge) and the front car park will become seating outdoors.

Will be interesting to see how it goes, I went to Manchester a while back for a business expo, stayed at hotel football next to Old Trafford, went out to find a pub in the evening and found a random spoons. For a weekday evening it was busier than I expected, we weren't the only ones being kicked out at closing.

Which post are you responding to?

[singlecoil]

The Mad Monk said:

CaptainMorgan said:

Ah I'm guessing you're in the ex cake corner premises?

Spoons have been trying to get a location in the area for ages, I would guess due to the football crowds, they were trying for somewhere nearer the station end of town but for whatever reason couldn't get anywhere. I can help but feel it's a bit out the way if the footie lot are their intended punters but I'm no expert. It's going to be a 'spoons hotel too, massive extension on the rear (the garden is/was huge) and the front car park will become seating outdoors.

Will be interesting to see how it goes, I went to Manchester a while back for a business expo, stayed at hotel football next to Old Trafford, went out to find a pub in the evening and found a random spoons. For a weekday evening it was busier than I expected, we weren't the only ones being kicked out at closing.

Which post are you responding to?

It will be the first one I should think. He obviously knows Bletchley/Milton Keynes and he is correct about my having set up in the premises previously known as the Cake Corner.

[Evanivitch]

Is this low profit simply a result of their large growth and heavy investment in New pubs? We must be reaching saturation by which point it then just becomes a refurbishment issue.

MCLARENSLR said:

Yipper said:

Wetherspoon made a +7% operating profit (OP) in 2016.

Wales has the highest concentration of Wetherspoon pubs in the UK, at 2 for every 10k inhabitants.

Must be 2 pubs per 100,000 inhabitants surely? e.g Cardiff 7 pubs 350,000 people. Barry 1 pub 50,000 people etc.

Of you saw the Prince of Wales on any event day at the Millennium Stadium you'd struggle to believe they only make 60k profit on that site.

[blindswelledrat]

AnimalMother said:

I once read that Wetherspoons make an average profit per establishment of between £30k and £40k......

Truly an economy of scale...

Seems to be around £80k (79m profit last year across just under 1000 pubs) which doesn't negate your point.
However, as a chain that well and truly sets themselves out as bottom of the market, like all other cheap shops scale is obviously vital.

[CaptainMorgan]

The Mad Monk said:

Which post are you responding to?

OP

[untakenname]

It seems quite a few pubs are purposely kept empty and derelict as it's cheaper than having them open due to business rates.
This one for instance was closed back in 2009 yet despite being refurbed back in 2015 (knew a friend who spent a few months working on it) didn't open and is once again derelict and apparently has problems with water damage and pigeons.
https://www.bobneill.org.uk/sites/www.bobneill.org...

[singlecoil]

untakenname said:

It seems quite a few pubs are purposely kept empty and derelict as it's cheaper than having them open due to business rates.
This one for instance was closed back in 2009 yet despite being refurbed back in 2015 (knew a friend who spent a few months working on it) didn't open and is once again derelict and apparently has problems with water damage and pigeons.
https://www.bobneill.org.uk/sites/www.bobneill.org...

I've heard people say that, but business rates are so small a proportion of the overall costs of running a business that that claim doesn't usually stand up to close examination.