Buying a pub - really bad idea or not?

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elainem

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Hi! My friend is thinking of buying a pub. He has seen one he would like to buy. It is in a rural market town. It was e900 in the Celtic Tiger era, but is now going for e320, including license and the small amount of stock that remains. The family accommodations upstairs is excellent - sitting room, kitchen , bathroom and four bedrooms. There is an acre of ground with the property, and various outbuildings. The pub is small, but in excellent condition and is ready to move into.

My friend looks after his daughter full-time, after he separated from his wife (she lives abroad and takes their daughter during holiday times). He grew up in the pub business so knows the long hours. He thinks that managing a pub with family accommodation overhead will leave him able to combine looking after his daughter with earning money. Currently he has a reasonable civil service job e50,000 but spends about e10,000 on childcare - his daughter has two more years in primary school - the schools in this rural town are excellent.

He has an investment property in Cork which yields about e1000 a month (an inheritance) and he is thinking of selling this to fund the purchase of the pub. He feels there is nothing out of renting residential property now, and in the future, due to second home charge, property tax, PRTB etc.

He currently rents a house in Co. Kildare and commutes to his civil service job in Dublin.

What do people think? Is he mad to do this? Currently the couple who own the pub are in their late 60s and want to retire. They only open the pub in the evenings. They have accounts up until 2009, but none after that - is this strange?

Thanks.
 
One of the reasons that the pub may not open until the evenings is that there isn't any business during the day to justify opening - rural pubs have suffered a lot in the past few years. He might be hard pressed to replace the civil service income with earnings from the pub itself.

While he might save on childcare costs, he may well lose out on free time to spend with his child, if he's working in the pub every day/evening and weekends.
 
They only open the pub in the evenings. They have accounts up until 2009, but none after that - is this strange?
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That is strange. I would say that they have accounts but just don't want to show them. Business would have dropped significantly since then.
 
Totally ignoring the financial aspect of the whole thing but I was brought up in a pub from age 10 and it's a childhood I wouldn't wish on anyone, my father had a 9-5 job previously, my mother was a teacher, they would definitely not do it again, huge impact on family life.
 
Buying a pub

Hi! Thanks for replies. I think my friend is mad - he has been talking again to me about it today. I made the point that the reason they do not have accounts after 2009 is that trade tood a nosedive. He doesn't seem to be put off. We went on a factfinding mission yesterday - there were about 5 customers in the pub he wants to buy - older clientele - compared to the pub across the raod which does food, and where there were about 35/40 people. The pub my friend wants to buy has an older clientele - admitted by the vendors also. My friend likes this but I pointed out that it is the young people who spend money on alcohol. I hope he doesn't make a big mistake. He has put his house in Cork on the market. I think we will go on another factfinding mission next Friday/Saturday night to see how many customers are in the pub. The pub is know as being quiet because of it's older clientele - so I would wonder if he will be able to make a living from it. The pub doesn't do food, but there would be lots of room to put on a ktichen - again this is also hassle and money.

Thanks.
 
My father used to always say it was like he was running a social club instead of a business during the non tourist season, most of the clientele were older men nursing a couple of pints over the whole night, playing cards and saving turning on their own heat and light while he paid rates and lost money by opening.
 
I think your friend is making a mistake. If his mind is made up would he consider taking a leave of absence from work for a year or two and renting the pub. If the owners have been unable to sell they might consider this. He would have a job to go back at least if it goes bad.
 
These days it's all about food - has your friend food/restaurant experience?

I wouldn't worry too much about accounts not being posted. Doesn't mean much for small businesses. Also, pubs are a cash business, so I wouldn't pay too much heed to the books anyway - you should buy based on your own assessment, for example:
a) what is the accommodation worth based on rental income?
b) what is the assumed actual earning power of the pub based on current business?
c) what other investment is required (e.g. kitchen, outbuildings...?)

It's a good sign that the place across the road is busy - there might be some indicators there of potential. Sounds from the description, 4-bed accommodation, outside grounds, etc. that there is good potential there.

I wouldn't necessarily say it's a bad idea. Just needs some careful analysis.

The biggest concerns for me at this point is (a) whether your friend is cut out for this life given his circumstances and (b) has the necessary funding to follow up on further investment required to turn the place around.
 
Buying a pub

Hi! Spear and Dogfish, thanks for replies.

We've just been over to look at the pub again! It wasn't open at 12.30 p.m. today - three of the other 7 pubs were.

Spear - It has great potential for beer garden and for use of the outbuildings (which are all in good condition) as kitchens. The only problem is that he won't have any spear cash if he buys the pub with the money from his house in Cork - which he already has an offer near the asking price on - and it would be hard, I think, to get finance for expansion/kitchen etc.

I just wondered if you know the regulations re doing teas/coffees and snacks only. What are the regulations if he is only going to do snacks and not proper meals. I have a cousin in the U.K. who owns a pub, and to get some daytime trade, started to do speciality coffee/teas in his pub with good fresh, locally produced pastries, muffins, scones etc. He provided newspapers and Wifi and noticed a fair increase in his business, as he got the retired crowd - some who would stay and have a drink over lunch, the local art group (mostly older people) also met there in the mornings, and then started to book his spare rooms for evening meetings. It's maybe a bit English, but he also provided a small play area for young kids, so some of the mums started meeting there also - they obviously didn't stay for drinks, but often returned in the evenings with their partners when they were going out for the night. I suppose what my cousin in England (Dorset) created was a sort of 'community' pub, I don't know if this would work in the pub by friend is thinking about buying in a rural, but busy, town in Ireland. There is a weekly mart in the town, and a farmer's market in the town square across from the pub.
 
wbbs said:
Totally ignoring the financial aspect of the whole thing but I was brought up in a pub from age 10 and it's a childhood I wouldn't wish on anyone.
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Ditto, I wouldn't wish it on anyone! Some things to think about:

  • Your friends daughter will be on her own all evening every evening, who will make dinner for both of them? Who will supervise her, help with homework etc?
  • What if she has activities in the evenings or on Saturdays? Who will bring her there and collect her?
  • What about holidays? Who will mind the pub and the house then? There are extra security concerns with leaving a pub empty while your on holidays
 
Holidays! There are no holidays when you run a pub! Lucky to have Christmas Day off and even then we used to have people banging on the door wanting a drink. We used to have to turn off the telly and the lights and pretend not to be there.
 
Buying a pub

Hi! Everyone, thanks for all the info and advice on buying a pub. I think my friend has decided to leave it for the moment. I showed him the thread here. I also asked a cousin mine who runs a family pub in a small rural village in Mayo, to talk to my friend. My cousin is very private so was a bit wary of asking him, but he was so dead set against pub life, and is so desperate to get out of it himself, that he willingly talked to my friend. Bascially, he said, even without a mortgage on the pub, it was hard to make ends meet, and that he always felt he had to be trying to do something to make his pub different from the pub down the road, in order to attract customers. He talked about doing food, and he said he found it a nightmare with all the legislation and staff issues - and there was very little profit from it. My cousin talked about the huge overheads and stress involved in running a pub. My cousin never married and feels the stress and strain, and unsocial hours of managing a pub on behalf of his elderly parents, has affected him in terms of being able to develop a long-term relationship with someone. I think my friend is now convinced, certainly for the moment, that running a pub may not be such a good idea, or may not really solve the problem of childcare/looking after and being there for his daughter.

Thanks again.
 
Could he afford to buy the property itself, live in it and either sell the licence or lease the pub part out as a pub or retail outlet?
 
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