Leasehold model has plenty to offer

Enthusiasm and business sense key to making most of a tenancy

• Star Pubs & Bars is investing £1.7m in refurbishing its Scottish tenanted estate this year. Its outlets include Dundee pub The Mercantile (above).

WHETHER you are a veteran operator or relatively new to the trade, opening a bar, pub or restaurant can be a daunting, not to mention expensive, prospect.

From purchasing or renting a unit through to compiling a food and drink offer and marketing the business, there are a fair few hurdles to overcome.
Pub companies have argued that the leasehold model can present a gentler alternative for those looking to run their own business.
Clive Chesser, business unit director for Belhaven Pub Partners, said leasing a pub remains a cost-effective way of taking on your own outlet.

Previous experience is not essential, and we look for other qualities in our tenants.

“Taking a tenancy or lease offers potential licensees a lower cost of entry to the business and enables great entrepreneurs with a clear vision for their business to partner with an established pub company, recognised and understood by customers,” he said.
And demand for leased pubs is said to be high.
“Generally, the [market] looks pretty strong,” said Brian Davidson, regional operations director at Punch Taverns.
“Most of our pubs that become available generate strong interest and are let within a matter of weeks.”
Davidson’s comments were echoed by Chris Jowsey, trading director at Star Pubs & Bars, who said applications from prospective leaseholders have increased since 2011 as “overall confidence in the property market and the economy as a whole filters down into the pub market”.
With demand strong, choosing the right tenant for a particular site can be a tough call.
And while experience of running premises, or working in the trade in general, can be helpful, it’s not essential.
Attitude, say pubcos, is everything.
“We firmly believe that previous experience is not essential and look for other qualities in our tenants and lessees,” said Chesser at Belhaven Pub Partners.
“This means a strong customer focus, great standards, entrepreneurial flair and the charisma and personality needed to run a pub or restaurant.”
Passion for the industry is the most important quality a prospective tenant can possess, according to Jowsey at Star Pubs & Bars.
“The qualities that are essential to success and which we look for from candidates are a passion for pubs, underlying ability, business acumen, a strong vision for the pub they want to take on and the commitment and energy to give 100% to their new pub,” he said.
“Everything else can be trained or learned.”
The importance of a keen business sense was also cited by Lesley Welsh, director of Iona Pub Partnership.
“In fact some of our most successful tenants are those that haven’t come from this industry but have a business in another field,” she said.
“We have a site in Bishopbriggs, The Avenue, which for years had never worked.
“We were approached by a local businessman who operates soft play outlets and almost from day one he has turned the business round, increasing turnover to five times what it used to be.”

It’s not the one size fits all that it used to be, it’s about tailoring the lease to an operator.

And regardless of an applicant’s previous experience, there’s never been a better time to enter the industry, say pubcos.
Davidson at Punch Taverns said that the pub company/lessee relationship has evolved in recent years, and there is now “more consistency and transparency than ever before when discussing business opportunities”.
“This is turn leads to a greater level of trust on both sides, which helps to keep the professional relationships strong at all times,” he said.
And Welsh added that pub companies are making an effort to be more flexible now than they have in the past with regard to their lease packages.
“It’s not one size fits all that it used to be and it’s more about tailoring the lease agreement to a specific unit and operator so it works for both parties,” she said.
There is also more of an emphasis on continued support for lessees, with each company employing business development managers to liaise with their tenants.
Lessees are now provided with a range of services from their pub companies, including staff training, advice on cash-flow and finance and marketing support as well as investment for refurbishment projects.
Jowsey, at Star Pubs & Bars, said the key to attracting and retaining lessees “is for them to have both a successful pub business and a strong partnership with us where we can be seen to be adding value”.