Buying a pub/restaurant
Discussion
Hi. Looking for a bit advice from the experts out there. It looks like my services at work will no longer be required at work, will find out this week. Was thinking I may use this to do something I really want to do. Been looking at existing pubs/restaurants that are for sale but I would need finance to buy. I know there are many pitfalls with this but I was brought up in this enviroment and have a real passion for it. Is there a better route than the standard 'go to your bank'?
Private investors, friends / family / business partner.
As you mentioned this is a tough sector. Pubs have been totally twa**d by the smoking ban, and the pub / restaurant game is very very hard to make work. I use to be a chef years ago and would not go back to the totally crap hours and s
t pay for anything, hiring decent staff therefore may prove to be an additional problem.
Good luck. Maybe consider a real niche like seafood I am sure most people could do a lot better than the loch Fyne's of this world. I have been to a few and they never fail to disappoint.
As you mentioned this is a tough sector. Pubs have been totally twa**d by the smoking ban, and the pub / restaurant game is very very hard to make work. I use to be a chef years ago and would not go back to the totally crap hours and s
t pay for anything, hiring decent staff therefore may prove to be an additional problem. Good luck. Maybe consider a real niche like seafood I am sure most people could do a lot better than the loch Fyne's of this world. I have been to a few and they never fail to disappoint.
Leasehold or freehold?
Freehold is easier as you sell your house and move in upstairs. I would go to a IFA to sort out the finance on that deal as you might need a commercial mortgage, but I am no expert.
Leasehold, the bank will only lend you if you have all the capital in your existing house and they will want that as security.
Couple of extra things to bare in mind: pubs value is calculated mostly on profits, so unless you have some good equity you will probably need to take on a pub that is fiscally challenged. If this is the case people might not lend you the money! Catch 22.
Good luck and make sure you don't skimp on the due diligence.
Freehold is easier as you sell your house and move in upstairs. I would go to a IFA to sort out the finance on that deal as you might need a commercial mortgage, but I am no expert.
Leasehold, the bank will only lend you if you have all the capital in your existing house and they will want that as security.
Couple of extra things to bare in mind: pubs value is calculated mostly on profits, so unless you have some good equity you will probably need to take on a pub that is fiscally challenged. If this is the case people might not lend you the money! Catch 22.
Good luck and make sure you don't skimp on the due diligence.
May I suggest you PM The Landlord on here. It's something he did at the back end of last year.
Finance is a bugger unless you have a shedload of recent experience and a decent deposit. Think 65-75% LTV, and thats not based on the turnover of the pub, the lenders go against the bricks and mortar value ofthe buildings........
So if you are paying £750k for the pub lock stock and barrel, and yet the pub building is worth £500k when valued as a shell. you are going to need a really helthy sum of cash to put in (thats for freehold)
Finance is a bugger unless you have a shedload of recent experience and a decent deposit. Think 65-75% LTV, and thats not based on the turnover of the pub, the lenders go against the bricks and mortar value ofthe buildings........
So if you are paying £750k for the pub lock stock and barrel, and yet the pub building is worth £500k when valued as a shell. you are going to need a really helthy sum of cash to put in (thats for freehold)
Don't go to your bank. You would be extremely lucky for them to finance this, let alone at a great rate. Find a whole of market IFA with commercial experience and ask them about your options. At the moment, with the credit crunch, the commercial finance game is quite turbulent, and brokers and lenders are regularly being forced out of the market one way or another. Unless you have a decent deposit then 99% of lenders will not even speak to you. Not wanting to sound negative, just giving you the realistic opinion of someone involved in the commercial finance market.
Thank you guys for all your input, it's nice to have people who know give a bit of realism to an idea. I have been doing a lot of research this morning and reading your advice and have come to the conclusion that the time isn't right. Now I have to try and think of something that would work in the current climate! Anyway thanks again for taking the time to reply.
Just had a n email through that may or may not (after your last post) be of use to you. Some pub show thingy in London. http://publican.cmp-info.com/c/14suLoA7wlg7YMJKDO
Paul R said:
Thank you guys for all your input, it's nice to have people who know give a bit of realism to an idea. I have been doing a lot of research this morning and reading your advice and have come to the conclusion that the time isn't right. Now I have to try and think of something that would work in the current climate! Anyway thanks again for taking the time to reply.
There is higher margins and lesser outlay in fish n chips or sandwich shops I expect.Gassing Station | Business | Top of Page | What's New | My Stuff