With over 1,700 breweries in the UK, British beer is big business – one that contributes £22 billion to the UK’s GDP and generates some £13 billion in tax revenue.

At the heart of the industry is the good old British pub, centre of communities, and often a much-needed boost to local economies. (1)

So it’s little surprise that owning a pub is a popular career choice. If you’re interested in pub ownership, here’s a taster of what you need to know.

Business Model

There are three types of business models for pub ownership.

A tenancy is a great option if you want to try the pub lifestyle before making a major commitment. A typical tenancy lasts three years, and costs between £15,000 and £50,000 to get started.

A leasehold pub is also owned by a brewery or pub company, and is a longer commitment, generally between 10 and 25 years. Leaseholds usually start at around £50,000, and can rise to £250,000 depending on the success of the pub.

A freehold means you are your own boss – you own the pub, and are responsible for all decisions, including your suppliers, and all fixtures and fittings within the pub. Your initial investment may start at £60,000, but can rise to £1.5 million for a prime London location. (2)

Food or no Food: That’s the Question

While locals are the heartbeat of most pubs, you’ll probably want to offer something extra to pull in the crowds and ensure you have a good profit margin. Serving food is the ideal way to achieve this.

Decide what sort of menu you want to offer – good old pub classics, a gastro-pub menu based on locally sourced, seasonal dishes, Sunday lunch, or maybe a smaller snack menu with sandwiches or pizzas.  

If you don’t have background knowledge of food, ensure you employ an experienced chef, and that everybody involved with your kitchen is well trained in food safety guidelines. 

Running Costs

Pub owners don’t just need to think about their initial costs; there are many other overheads involved in running a pub, including wages, rates and utilities, insurance, repairs, marketing, equipment hire, and cleaning, to name a few.

These costs vary widely depending on the type and location of pub, your turnover, and whether or not you offer food.

The British Beer and Pub Association produces a regular report on typical running costs based on a number of different scenarios. (3)

 

Insurance

Having adequate public house insurance is a legal requirement for all pub owners. Your cover requirements will vary depending on the type of business model you have – if you have a freehold pub, you’re responsible for all aspects of insurance, but for tenancies and leaseholds it will depend on the contract between you and the landlord.

As this is a specialised field, it’s a good idea to seek advice from a pub insurance specialist who can advise you on the cover you need, and negotiate a competitive rate.

Licences

You need two types of licence to run a pub. A premises licence is necessary to sell alcohol and provide entertainment (4) and the premises supervisor also requires a personal licence (5), which involves passing an accredited qualification and having a DBS criminal records check.

Both types of licence are available from your local authority.

 

Sources:

1. http://www.beerandpub.com/thebeerstory

2. http://howtorunapub.co.uk/guide-to-buying-a-pub/

3. http://www.beerandpub.com/industry-briefings/running-a-pub-information-for-prospective-tenants-lessees

4. https://www.gov.uk/premises-licence

5. https://www.gov.uk/personal-licence-to-sell-alcohol

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