So, you dream of becoming the boss of your own drinking establishment?
“Are you crazy!?” Friends and family might ask.
Actually, despite the gloomy statistics surrounding pub closures, owning a pub can still be a rewarding occupation.
It takes hard work, passion, business acumen and great people skills; but it CAN be done.
However, before you invest your money, you ought to know what’s involved – and what to consider.
When you witness the landlord happily interacting with regulars on a busy Friday night, it’s only the tip of the iceberg.
A lot of work goes into making the busy nights a success.
In this beginners guide, you’ll discover all the things you need to know about how to run a pub for the first time.
Simply click on the chapters to find out more…
How to run a pub:
everything you need to know in one place
- Owning a pub explained: tenancy, lease & freehold options
- Locating the ideal pub: finding the right place at the right time
- Inspecting property & stock: the role of surveyors & valuers
- Writing a business plan: how to make it successful
- Forming the business: the 4 options for establishing its legal structure
- Licensing requirements for selling alcohol: premises & personal licenses
- Soliciting legal advice: why it’s needed & where to get it
- Employing expert accountants: trade specialists & how to find them
- Opening a business bank account: practical tips & advice
- Insuring a pub: key considerations & legal requirements
- Bookkeeping requirements: simple day-to-day processes to action
- Managing a pub cellar: training courses for serving perfect pints
- Employing staff: legal requirements & management excellence
- Delivering the food service: how to run a pub kitchen
- Serving customers: how to provide what punters want
- Marketing essentials: a checklist for successful pub landlords
- Other pub regulations you should know about
You need to understand your options for running a pub and which one best suits your circumstances. The 3 options are:
- Leasehold agreement
- Freehold premises
Tenancy and leasehold agreements are offered by the pub companies and brewery firms who own them. They rent out or lease the pubs to whoever they consider best-placed to make it a success.
However, there are important differences between a lease and tenancy. A lease requires you to provide greater initial start-up costs, the contracts terms are usually longer, and you may get to sell the lease on for a profit.
If you buy a freehold property, then you’re in the realms of ‘proper’ pub ownership. There are no breweries or pubcos looking over your shoulder; you’re in it alone. As you’d expect, this makes initial investment far greater, but the potential financial rewards much bigger.
Whichever option you take, fully understanding contract terms (with the help of a solicitor) is essential.
Finding the right pub, in the right place, at the right time, is crucial. Get it right, and you’ve massively boosted your chance of running a successful pub. Get it wrong, and you’re already facing an uphill struggle.
Six key words: location, location, location; research, research, research. You need to find out everything you can about:
- The pub building itself: condition of the property, facilities, current customers, recent history, financial performance, benefits and weaknesses.
- The location and surrounding area: find out who the people are in your catchment area, the demographic make-up, the earnings of nearby residents, foot traffic, competitors and more.
Lessees and freeholders will require an independent property surveyor to assess the pub’s condition. Relying on reports from a pub company or brewery is best avoided. You might end up with a nasty surprise at a later date, such as a hefty maintenance or repair bill.
To ensure the job’s done properly (and objectively!), it’s best to enlist a chartered property surveyor. They will expertly inspect and valuate a premises and resolve disputes with the seller.
Costs will vary so it’s worth getting a range of quotes from different surveyors.
After you’ve got a full analysis of the condition of the property, and details of any repairs that need carrying out, the next step is to get a full valuation of the property itself.
Look for licensed trade valuers who are members of the Royal Institute of Chartered Surveyors (RICS) or the Association of Valuers of Licensed Property (AVLP).
Calculating the value of leftover stock
Where stock is left over from previous owners, you need to work out its value. That’s where licensed trade stocktakers come in. They will value the stock on the day you arrive at the pub and can also provide ongoing monthly stocktaking services.
When employing stocktakers, check they are registered with the Institute of Licensed Trade Auditors (ILTSA)
The level of detail involved in researching and writing a business plan should get you thinking like a working publican. You’ll come up with solutions to problems you’d never have considered and discover opportunities that were not previously apparent.
The objective of a pub business plan is twofold:
- To prepare you for every aspect of running a pub.
- To convince the pub company, brewery or property seller that you are the perfect person to take on the pub.
For that reason, it has to be incredibly detailed. Thankfully there are some really helpful resources on the subject…
You must decide on your pub’s legal structure. The legal structure (otherwise known as the business structure) affects the way you account for the money that goes into and out of your business, as well as the amount of tax you pay.
You have 4 options:
- Sole trader
- Limited liability partnership
- Limited liability company
The best option depends on your pub’s expected turnover, and the availability of – or desire for – a business partner.
In order to legally serve alcohol in your pub, you need 2 things: a premises licence and a personal licence.
Your pub needs a premises licence in order to sell alcohol and provide entertainment. To get one, you need to contact your local council.
Application fees range from £100 to £1,905, depending on the fee band of your venue. You must appoint a ‘designated premises supervisor’ (DPS) as point of contact.
The designated premises supervisor must have a ‘Personal Licence‘ in order to sell alcohol. You need to sit and pass an accredited personal licence qualification and clear a ‘DBS’ criminal records check (formerly CRB).
Whether you’re running a tenancy, leasehold or freehold pub; you’re going to encounter legal jargon, detail-heavy contract terms, and other head-scratching technical issues. Instead of tenderising your brain cells, employ a professional and objective legal advisor.
The kind of legal advice you require will depend on whether you’re a tenant, leaseholder or freeholder.
Solicitors may be required for a range of issues:
- Licensing issues: applications, alterations to the premises licence etc
- Tenancy advice: checking and explaining the terms of your tenancy agreement
- New lease: getting expert advice on the completion of a lease agreement
- Freehold: solicitors are essential if you’re buying a pub premises
- Finance: legal implications and loan agreements
- Other issues: such as employment legalities, partnership agreements, and landlord disputes.
For those concerned about solicitor costs, you should seek out free consultations first.
As a busy pub landlord, you can’t be an expert in all aspects of finance. There’s simply too much to oversee, including: paying your taxes on time, preparing profit and cashflow forecasts, setting up payroll, filing year-end accounts, stocktaking… and more.
That’s why you’re going to need an accountant. Not just any accountant: you need a specialist in the field. Check that they are a member of the ALTA (Association of Licensed Trade Accountants).
A good accountant will be worth the fee. They will help you run tax efficiently and ensure you avoid any legal problems.
Accountants can be of great help before and after you’ve opened a pub.
You will definitely need to open a business bank account for your pub.
Firstly, things will get mightily confusing if you stick to your personal current account. By setting up a business bank account, you keep all your business incomings and outgoings all in place. That makes working out your tax liability much easier.
Secondly, if you run a pub as a limited company or partnership, then it’s a requirement.
A few pieces of advice:
- Shop around for the best deal, most new start-ups can get free business banking for the first 18 months. Just make sure they don’t hammer you with high rates after the free period comes to an end.
- Ideally, the bank will be close to your pub. That will save on travel time, and make banking less of a chore.
- Establish a good relationship with your bank manager – it really can help.
Getting insurance cover for your pub protects both you and your business. It’s also a legal requirement. A specialist broker, registered with the Financial Conduct Authority (FCA), can ensure your business is properly covered.
Remember pub insurance is a specialist field. Your particular needs will depend on whether you acquired your pub on a tenancy, lease or freehold basis.
Key insurance considerations include:
- public liability
- employer’s liability
- fixtures, fittings and equipment
- loss of license
- business disruption
- building insurance cover
- life insurance
Even when you employ a good accountant, you still have to keep on top of your own personal bookkeeping responsibilities.
Before you start trading, it’s worth sitting down with your accountant and getting advice on the most effective way of setting up a book-keeping system for tracking your incomings and outgoings, and other accounting processes.
What is bookkeeping? Really, it’s about maintaining a record of your pub’s financial transactions and ensuring all your paperwork (receipts, bills, bank statements, invoices and other paperwork) is organised, present and correct.
Not only is good bookkeeping a benefit to your business, it’s also a legal necessity. Failing a bookkeeping inspection could set you back as much as £3,000.
Effective cellar management enables you to serve your draught beer and cask ales at their peak condition. Training from accredited course providers is essential and will give you the confidence to provide customers with perfect pints every time. Consumers expect nothing less.
Serving great beer not only impresses your immediate customers, but it could also get the attention of aficionados at CAMRA – the campaign for real ale. They might literally put your pub on the map.
Effective cellar management means:
1) Keeping drink wastage to a bare minimum.
2) Preserving your drinks range in its prime condition at all times.
3) Maintaining appropriate stock levels.
4) Organising products so that they are easy to find and access.
5) Ensuring safety and cleanliness.
Getting the right staff is an essential element of how to run a pub successfully. The members of your front of house team need to be:
- Willing to learn
You also need to know the rights of your employees and ensure you comply with your legal responsibilities. Areas of employment law which require your attention, include:
- Employment contracts
- National minimum wage
- Working hours
- Paid holiday/sick pay
- Maternity/paternity pay
- Discrimination laws
- Employee health & safety
The vast majority of successful pubs today offer a quality food offering which fulfils the needs of their customers. It’s rarely the case that a ‘boozer’ can be successful without serving food.
Delivering a menu that fulfils the needs of your patrons is hugely important. That means finding the right chef is crucial. If you know any reliable working chefs, it’s well worth asking if they have any recommendations.
Of course, food safety is also of paramount importance. You must register your food operation 28 days before the first day of trading, appoint an appropriate food safety manager, and take a meticulous approach to food safety in-line with legal guidelines.
Providing great customer service is a vital aspect of running a successful pub. But do you know what great customer service is?
Just having a vague idea is not enough as it’s something that can make or break your business.
In order to provide the service your customers want, you need to know what it is they want. And then provide it over and over again. Then, when their tastes change or they demand something different, you’ve got to be ready to adapt your service.
In other words, it requires constant learning.
Today’s publicans must transform into expert marketers. Once you’ve understood who your customers are, what they want and how you can provide it for them… it’s then a case of providing that service and promoting it.
Effective pub marketing starts with you. You must be positive, welcoming and friendly. If a publican has a reputation for being surly, will customers really want to spend their hard-earned money in their establishment?
Aspect of marketing to consider include:
- Your staff – talking to customers, promoting events, and just being friendly
- A-boards, chalkboards, posters & signs – highlighting food or drink offers, special features of your pub, or events
- Paid-for advertising and flyers – targeting your local area, welcoming people to your pub
- Your pub’s website – attractive and well designed
- Social media – communicate with your local community on Twitter and Facebook
Finally, here’s a summary of the other regulations you should be aware of…
Recorded music licensing
You’ll need 2 licenses which, between them, cover the royalties of all the people involved in creating and publishing the music:
Performing Right Society (PRS): Collects and distributes music royalties on behalf of composers, songwriters, publishers and authors.
Phonographic Performance Limited (PPL): Collects and distributes music royalties on behalf of performers and the record companies.
Fire Safety law
Publicans must comply with fire safety law and carry out a fire safety risk assessment.
Health and Safety Law
You have a legal responsibility to ensure that you pub is a safe place for customers, staff and contractors.
COSHH – Control of Substances Hazardous to Health
Pub landlord’s need to carry out a risk assessment of the substances which could be hazardous to employees, customers and contractors. This can include cleaning chemicals, gas, dust and micro-organisms such as bacteria. Again, HSE has a full guide on COSSH legislation and how to carry out a risk assessment.
RIDDOR – Reporting of Injuries, Diseases and Dangerous Occurrences Regulations
As an employer, you have a legal duty to report serious workplace accidents, occupational diseases and any dangerous incidents which almost lead to injury or illness. For this purpose, ensure you have an accident book to report such incidents.
Disability Discrimination Act 1995
The Disability Discrimination Act seeks to prevent discrimination against disabled people in all areas of life.
The legislation stipulates that a service provider must take reasonable steps to make their premises accessible to disabled people. What constitutes ‘reasonable’ depends on the nature of your business, the size of your business, the costs of any adjustments, and the impact of any disruption it might cause.
The British Beer & Pub Association has put together a useful guide on accessibility for pubs.
The Caterer has written an insightful piece on how to ensure your business is accessible.
VisitEngland provides a free Access Statement tool, so you can inform a potential customer about the accessibility standards at your pub.
While smoking is banned inside pubs (in case you hadn’t noticed), people may smoke outside, as long as it’s not in an enclosed space.
More guidance about how the law works, what it expects from you, and the potential cost of fines can be found at Smoke Free England’s website.
Door security legislation
All door supervisors in the UK must hold an SIA (Security Industry Authority) front-line licence. Any door supervisor (commonly known as a ‘bouncer’) must have this licence, otherwise it’s a criminal offence.
If you directly employ door supervisors, you will need to hold a non front-line licence. However, if you hire the door supervisor from a professional agency, you don’t need a licence – just make sure the agency does.
Is that everything…?
Publicans with passion, knowledge and entrepreneurial flair continue to prove that the dream of running a successful pub can be realised.
We hope you join their number.
But for now… It’s time at the bar. A lock-in? Well okay then. We’ll respond to your questions and suggestions in the comments below…