A lively time for leaseholds

Recovering economy and low entry cost boosting tenanted sector

• The Real McCoy (Iona).

AN increasingly healthy economy, coupled with a comparitively low level of personal investment for operators, is said to be driving interest in the tenanted pub sector.

Pub companies claim interest in their available leases has been growing steadily in recent years.
Brian Davidson, regional operations director (Scotland) for Punch Taverns, said the company “continues to see strong and growing interest in our pub and hotel lease opportunities in Scotland”.
Rosemount Taverns director Craig Bruce, meanwhile, said the firm has seen such strong interest from people seeking leaseholds that it currently has no vacancies across its 50-strong estate.
And the industry is drawing prospective tenants from a variety of different backgrounds.

What matters to us is boundless enthusiasm and entrepreneurial flair.

“We find that there is a good balance between both experienced operators and people new to the trade,” said Davidson, at Punch.
The sector is also increasingly being seen as an alternative for multiple operators who are keen to expand their estates, according to Chris Moore, property and strategy director at Star Pubs & Bars.
“The majority of Star Pubs & Bars applicants are experienced leased trade operators but a very definite trend is increasing interest from and appointment of freehold operators who recognise the benefits of a lower cost, lower risk business leased model that enables them to expand their business operations without tying up significant capital,” said Moore.
He added that the leasehold model is also proving popular with chefs keen to run food-focused outlets while drawing on the support of the pub company.
Regardless of their background and experience, it’s a prospective lessee’s attitude that’s most important, said Clive Chesser, business unit director at Belhaven Pub Partners.

• The Ryries (Punch).

“What ultimately matters to us is boundless enthusiasm, the entrepreneurial flair to make a success of our Belhaven pubs and a strong focus on customers and standards,” said Chesser.
It’s also vital that any aspiring tenant approach the pub company with as detailed a pitch as possible.
“It should include a full business plan covering financial projections,” said Lesley Welsh, director at Iona Pub Partnership.
“It is such a big commitment both financially and emotionally that we have to be sure the decision has been well thought out and plenty of ‘homework’ has been carried out on the particular unit. We find this to be an invaluable tool for both parties, and helpful to review after a period of trading to see if expectations/plans have been met.”
Financing is also an area any prospective tenant should give serious thought to.
“As with all new business start-ups, some amount of funding will be required,” said Davidson at Punch Taverns. “The amounts can vary quite significantly depending which business you are interested in and the lease type etc. so it’s best to discuss your initial funding availability with our recruitment team at an early stage.”
While securing funding and drawing up a business plan can be time-consuming Bruce, at Rosemount Taverns, advised budding lessees to consider applying for leases sooner rather than later.

The availability of good tenancies makes this a good time to enter the market.

“There are definitely signs of improvement in the Scottish on-trade at present,” he said.
“This, coupled with the availability of good value tenancies, makes it a good time for new operators to enter the marketplace.
“If the trade continues to become more buoyant, the ‘cost’ of a tenancy (in terms of deposits; rents; discounts etc) will inevitably rise.”

• The Black Bull (Rosemount).