As part of the Making Money in a Pub series of articles from StayClean Clean Beer Lines Blog, we have a quick look at the standard questions arising from those considering a brewery ties tenancy or management agreement.
What is the difference between tenancy and management?
Management roles are employed positions and we do not offer these. A pub tenancy differs because as a tenant you will be self-employed, we will own the property and be responsible for the building and you will be responsible for the pub business and all associated costs. You will pay an agreed rent to Thwaites and purchase all wet products from us. You are your own boss but not on your own as you will have support from your area business manager and other support departments.
How much cash will I need?
Pub tenancies all have different costs and cash requirements vary from pub to pub – anything from £5000 to £70,000 may be required. In all cases you will need a bond, finance to cover initial costs, working capital and funds towards fixtures and fittings.
How is the rent calculated?
The rent is calculated by creating a Profit & Loss account based on realistic trade expectations and open market rent figures. Each pub will have individual calculations which will be based on turnover and overheads and will be provided prior to signing the tenancy agreement. We insist you take independent advice on the figures we offer.
Do I have to buy all products from the Brewery?
Generally yes – a pub tenancy has a full tie on all beer, cider, wine, spirits, minerals and alcopops.
Brewery Finance Agreements
A loan may be available, dependent on the individual property, for fixtures and fittings by agreement with the ABM – ideally a deposit towards the F&F is paid and the balance can be repaid over a maximum of five years. The interest rate charged is currently at 10%. In certain circumstances a “bond builder” arrangement can be made when full bond is not met.
Do I need any qualifications to run a pub?
You will need to have successfully completed the Award for Personal Licence Holders (APLH) and possess a Personal Licence. We also require all new licensees to attend our Thwaites Unique Licensee Induction Programme (TULIP) – a 3 day course that covers all aspects of running your own pub business. Licensees who haven’t held a long term tenancy previously will need to complete the BII PEAT (Pre-Entry Awareness Training) which gives an independent overview of pub tenancies and associated terms; you can complete this online click here.
How much money will I make running my own pub?
This depends very much on the nature of the operation and the performance of the operator themselves. As part of the application process, you will be required to complete your own forecast P&L (profit and loss) which will highlight what you expect to make out of the business.
Do I get my money back if I leave the pub in the future?
On leaving the business you will get money back for the fixtures and fittings (as valued on the leaving date) together with current Stock & Glassware and your security bond. If there is any debt outstanding on the goods and/or rent account, this figure will be deducted from your entitlement.
Other Pub Tenancy Resources
All of the breweries offering tied tenancy and pub management roles, have frequently asked questions regarding prospective pub tenants. They have varying degrees of usefulness. although be aware they don’t individually paint a complete picture, so it is worth reviewing a few: