The right time to take on a lease?

Pub companies say the leasehold model can help support licensees

Pulling a pint

THE current climate, be it commercial or political, surrounding the Scottish on-trade means those running licensed premises have some choppy waters to navigate.

That said, there are options for prospective licensees who want to start out on their own or are looking at getting back into the trade but don’t have hundreds of thousands of pounds to spend on a freehold.

Pub companies insist that the leasehold model offers a range of benefits to licensees – particularly in uncertain times.

Applicants need to be passionate about pubs and show they have a good head for business.

“Leases are a very affordable way of starting a pub business,” said Gary Corney, Star Pubs & Bars’ operations director.

“They are traditionally popular in uncertain times as a licensee’s investment and therefore exposure is reduced.

“In a difficult market, the partnership of a leased pub is especially beneficial. Every licensee has a dedicated business development manager who can act as an invaluable mentor, coach and source of some business insight.”

This relationship between business development managers and lessees was also stressed by Gerry Carroll, chief executive of Hawthorn Leisure.

He said: “It’s about affordable entry level support from business managers and other services.

“Pubcos have had to up their game for sure. There has been a cycle of buying clubs and highly technical solutions but what really matters is a peer-to-peer style relationship between partners and business managers, working corroboratively to implement business building ideas.”

While the trade is facing its challenges, pub companies claim there have been signs of increasing confidence in the market, with more interest in leases from both new and existing lessees.

Michael Thomas, operations director at Iona Pub Partnership, said: “Although the market we operate in is still very tough, we are starting to see some signs of easing and we are managing to generate far more interest in units than the same time last year.

“A sign of this change can be shown by partners beginning to feel more confident about the market, and are looking to take on multiple outlets with us. Something we are more than happy to look at with them.”

Before leasing a pub there are a number of factors to consider – one of the most important being the choice of pub company to work with.

Thomas of Iona advised operators to “look for the company that can provide them the highest level of support and guidance”, adding: “In all areas of their business, not just in how to sell beer, but also a company that can guide them in building a food business, and one that can provide bespoke marketing advice.”

As taking on a pub is no small task, Carroll at Hawthorn said that research beforehand should be extensive.

“Know the pub you’re looking at and the area inside out, understand the competition and your trading strategy to take market share and add new customers,” said Carroll.

While it may be assumed that applicants for leases must have a track record in managing pubs, anyone with business nous has the potential to become a lessee.

Star’s Gary Corney stated that applicants should have a passion for pubs but bar management experience is not essential, as training can be provided.

“Applicants need to be passionate about pubs, show they have a good head for business and demonstrate an understanding of hospitality and the need to deliver a great experience for customers,” said Corney.

“You can buy food and drink in the supermarket; it’s delivering an outstanding experience that is the key to success for licensees.”