45 Questions to ask a Pub Company
The market is awash with pubs to let. Either under a tenancy or a lease agreement. There is also a growing market for self-employed managers, but if you don’t know, they take a % of the sales to pay for staffing the pub (however this may be in breach of off payroll or IR35 legislation read our blog HERE).
The issue remains in how to sort a good deal from a bad one. If you have never been in the trade, our list is designed to help you by asking key questions. If you get answers to all of them that is excellent. You are going to be in a fantastic position to make an informed choice before you sign up.
However, the more questions unanswered or avoided ( a typical non-answer = “every pub is different” etc) is bad news. You risk making a leap of faith. If you get lots of missed or non answers, the alarm bells should be ringing loudly as the biggest pub companies in Britain have been running rent models for decades. They have extensive data on the costs, the sales and the numbers that work. So there should be no reason not to have any answers.
45 Questions to ask a Pub Company
- How long has your business been going?
- How long has the rent model you are offering been in operation for?
- How experienced is the team running it?
- What is your financial investment in the business?
- Who owns the intellectual property?
- What’s your vision for the business, if our vision differs does it matter?
- What is the average level of trade a pub achieves?
- Will you confirm when the pub was last refreshed or refurbed, when will it need re-doing?
- What peaks and troughs are there in the business?
- Are there any financing arrangements on offer, can we see sample copies of any agreements?
- What “day one” working capital is required?
- Are there any company owned or managed units, what are your future plans with these?
- What’s the turnover rate for tenants operating your model?
- How many tenants fail and in what period?
- How many tenants renew their agreements and what does it cost them to renew?
- Is the pub currently at a “minimum operating standard” and if not, who is responsible and expected to pay to get it to that standard?
- What is the typical amount of dilapidations charged at the end of the agreement?
- Is training included and charged for?
- What support is provided and what does it cost, how is it covered?
- Who will be the main point of contact?
- How do other publicans you rent to connect or network with each other?
- How do you communicate with us, and how often?
- How do you help under-performing sites?
- How long is the term for?
- What “ties” exist in the agreement or model you are running, also if the price I pay for stock from you rises and I can’t increase the prices to my customers, what happens?
- Can I decide whether to open or close?
- How often will I be expected to refurbish the pub or update equipment should I budget for it and what is a reasonable amount to cover this?
- What level of stock am I to hold and can the site accommodate such a level?
- What happens if my business is not a success?
- What is the process for selling on my business?
- Is there a call centre, do you offer cover 7 days a week up till my closing time?
- How much control will I have over any ordering and choice of supplier?
- Will I get any help with staff recruitment and training?
- What minimum trade or benchmarks do I have to meet?
- Is there an optimum time to open a pub business, i.e. Jan or July?
- What are the criteria you use to select tenants?
- What do you think are my strengths and weaknesses?
- Why do tenants succeed/fail?
- What are the strengths and weaknesses of the management and support you offer?
- How does your firm handle conflict or disputes?
- Typically, how long does it take a tenant to make a profit and or cover any investment?
- How many hours do tenants work?
- (say) I want a reward of £36,000pa can you tell me how much trade I need to do at the pub to get that level of reward under any deal you offer me?
- Has the pub I’m looking at ever done the level of trade required in answer to question 43?
- How much should I budget for when using third-party arbitration at rent reviews?
- NEW ADDITION Pandemic Break clause, given that this is now forseeable and not insurable, ask if there is any cover to cancel rent in the event you are closed by Govt restrictions and have no sales from which to pay rent. Note if there is no cover you are self insuring and running all the risk, so does the reward when open, reflect this or is the rent sufficiently low enough for it not to be a problem if closed. Many publicans have gone insolvent because they had no clause in the lease they could rely upon.