The Pub Itself
Is the pub in a good general state of repair and does it look attractive to customers? If not, could these issues be easily overcome or are the problems more fundamental? What facilities does the pub have and do they correspond with the needs of its customers and the neighbourhood? What is the standard of the fixtures and fittings; do they look in good order, or are they falling to pieces and likely to require replacing?
Swot Analysis
A SWOT analysis is a useful way of evaluating the pluses and minuses of a particular pub. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It allows you to weigh up the important facts about a pub and also make comparisons with others. It combines everything that you have learned about the pub from research and personal visits. It is also useful to add comments on your overall impression and ‘gut feeling’ about the pub.
Here is an example of a SWOT analysis for a fictional pub: The Barking Dog.
The SWOT analysis summarises the important issues about the pub. You should then look at each factor and decide how important it is and also, whether you can influence or change these issues.
For example, a poor product range can fairly easily be improved, whereas extending the kitchen would be more difficult.
Gathering Facts And Figures
Once you have found a pub that meets your requirements and appears to have more strengths and opportunities than weaknesses and threats, you need to consider its profitability.
Expectations And Obligations
You must be sure that you have an opportunity to make a profit and that there will be sufficient income to meet your expectations and obligations.
How much money do you need to meet any personal obligations you may have? Mortgage payments on a house that you wish to keep, children’s school fees, credit card payments and maintenance payments are all examples of your personal financial obligations. It is important to have worked out how much you must earn to cover them. On top of these, you may feel your efforts in running a pub require a certain level of income to make the job worthwhile. You will have to be realistic about this as it may take time to build up the business to fulfil both your expectations and obligations, and some pubs may never do this. You have two choices:
- Find a pub that will meet your expectations and obligations.
Or
- Adjust your expectations and obligations.
Price Research And Competition
Any research you do in an area must include the pub’s competitors. The aim is to ascertain what their strengths and weaknesses are and how best to compete with them. Is there something that they don’t do well but you could do successfully? Is there a demand in the area for something that is not being met by anyone? What are their standards like, and how good is their customer service? It is also an opportunity to check what prices they are charging for their products. Keeping up to date with what your competitors are doing is also vital once you have taken on your pub.
Assessing A Pub’s Profitability
As mentioned in Chapter 2, trading accounts can sometimes be difficult to obtain. Publicans wanting to assign their lease or sell their pub will need to provide verified accounts to support their asking price. It is their responsibility to find a buyer and so they will be motivated or compelled to provide whatever information may be necessary to achieve this. Tenants, on the other hand, are not obliged to disclose their trading accounts to the brewery or pub company (who are responsible for finding a replacement tenant or offer a new lease).