PAS has developed an interactive COVID-19 sales and rent impact tool.
The interactive tool we have created will demonstrate the impact of COVID-19 has had on pub trade sales and the expected sales recovery over a five year period, highlighting its ultimate effect on rent. It will allow publicans to adjust the trade levels year by year to view the many different recovery scenarios. It will demonstrate the importance of having your rent review re-triggered under the Pubs Code if you are in the fortunate position of doing so. (instructions on using the tool further down).
We think triggering rent assessments now will be of immense value as even if you have a sympathetic landlord it remains very uncertain if the sales will return to previous levels of activity when restrictions are finally lifted. We are confident we can help a large number of pubs right now.
If you would like to explore the opportunity with us then please submit an inquiry via the form on this page – we will be in touch.
Take care and stay safe – PAS #ukpubs
- Input your annual trade/revenue ex VAT
- Input your total Gross Profit margin as a percentage – i.e 55
- Input your annual expenditure (less any rent)
- Adjust the sales recovery sliders years 1-5 as you see fit
The result will show what the hypothetical expected rent may have been pre-virus conditions, versus the rent accounting for the recovery period over 5 years.
A number of assumptions were made in the data input and calculations, such as;
- Assuming the level of trade you input is considered to be the FMT of the REO (could be either above or below) jargon buster here if you are not sure.
- Assuming a gross profit margin covering all income streams – food, drink, accommodation etc.
- Assuming the expenditure is considered correct, some premises are operating on expenditure that is either above or below considered what the REO would budget for.
- Assuming the sales recovery on a year by year basis, this is subjective, no one truly knows the state of the market and its projected recovery time frames.
Note, this is not a substitute for a professional rental valuation, it is simply for demonstrative purposes and a visual tool. For an accurate and professional rental valuation, it should be undertaken by a qualified and competent surveyor / trade valuer.
Morgan & Clarke Chartered Surveyors have been posting regular content and are up to date with the latest happenings in the pubs trade, assessing the effect COVID has had on sales and how this should be factored into any near future rent review. For market insight from a licensed trade surveying and valuing team perspective – see here.