Weighing up your options

Opportunities remain for prospective operators, pubcos say

WITH the business rates system still in flux, uncertainty looming over Brexit, the chance of a second independence referendum, and the possibility of further licensing legislation on the horizon, the Scottish pubs market has its fair share of challenges ahead.

• Pub partnerships are said to offer a raft of benefits, including securing cost reductions.

Despite this, pub companies retain a positive outlook, and told SLTN that there’s still plenty of opportunity in Scotland’s leasehold market for the right prospective operators.
Clive Chesser, managing director at pubco Greene King Pub Partners, said: “We continue to believe the Scottish leasehold market is very strong and a place of real opportunity.

“We are always on the lookout for entrepreneurial licensees with the talent, ideas and drive to build their business in partnership with ourselves.”

Taking a similar stance, Gary Corney, Star Pubs & Bars operations director for Scotland and the north, commented that the market for leasehold pubs in Scotland “is buoyant in many areas”.
And he added that external factors should not stop a prospective operator from moving forward with a good opportunity.
“There is never a wrong or right time to enter the market as whatever the state of the economy, people will always want to eat and drink out,” he said.

“The most important thing is to find a good pub business that can offer the combination of quality and value that is of enduring appeal.”
Despite the uncertainty of Brexit and other factors, a recent Oxford Economics study revealed the Scottish pub and beer industry contributes over £1.7 billion to Scotland’s economy every year.

Commissioned by the Scottish Beer & Pub Association (SBPA), the research found that the industry also supports almost 60,000 jobs. And there is a continued high level of investment by the industry in Scotland, with £148 million provided in capital funding.

Cities such as Glasgow and Edinburgh have seen a lot of development recently.

This chimed with Corney of Star Pubs & Bars, who emphasised that investment in the on-trade has continued to move forward.
“Cities such as Glasgow and Edinburgh have seen a lot of development from the pub industry in their centres in recent years and innovation and investment are now moving outwards,” he said.

However, with changes afoot politically, risks do remain when it comes to investing, especially as a first time operator.
Therefore, joining forces with an established pub company can be a wise move, according to Brian Davidson, regional operators director for Scotland at pub group Punch.

He said there is “a relatively low level of capital required from prospective publicans who want to take a lease on versus buying or franchising”.
Corney of Star Pubs & Bars echoed this view. He reckons that lower ingoing costs and the reduced ongoing risk “are the two main benefits of leasing a pub”.

“In a difficult market, those leasing have the reassurance that they aren’t ‘going it alone’; they’re in a partnership with the support and expertise of a pub operator behind them,” he added.
“And, if they ‘want out’, they’re not tied into pub ownership.”

Corney spoke of other benefits to a partnership, including ‘industry-leading’ expertise, support with business planning and food and drink training.
For on-trade staff considering becoming a publican, Davidson said that potential operators must “weigh up the pros and cons before making a firm decision on whether to become a publican”; take advice from trusted others wherever possible; and if an operator decides to go for it, always put in 100%.

He also said that Punch looks for prospective operators “to be forward-thinking, tenacious, and have a passion for great customer service”.
Corney of Star Pubs & Bars spoke of similar qualities.

“The essential traits we look for are: a love of pubs, business acumen and a commitment to delivering great service, standards and hospitality,” he said.
“We don’t want applicants to underestimate what it takes to run a successful pub and so whatever their previous occupation or industry, they need to be able to demonstrate these qualities.”