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).

Profit forecast

In such situations, you will have to gather whatever information is available to put together your own profit forecast. This information can consist of:

• Sales information from the brewery or pub company, ie what products they have purchased in the last 12 months.
• Machine income, which can be provided by the brewery, pub company or machine supplier.
• Rent details, which will be provided by the brewery or pub company.
• Overheads – sometimes outgoing tenants are willing to disclose the main costs such as energy, rates, staffing.
• Business rates – see www.voa.gov.uk/ business_rates to find the rateable value of any pub (searchable by postcode).
• Energy costs – suppliers can provide estimated usage figures.
• Profit and loss estimates are calculated by the brewery or pub company and they may be willing to disclose this information to you.

Sales information from the brewery or pub company

Breweries and pub companies maintain large amounts of sales information on each of their pubs. These are provided to their management teams on a weekly or monthly basis. The information usually comprises sales data for broad product categories and is often converted to ‘barrels’, this being a standard brewery measurement of 36 gallons (288 pints). Sometimes they use the term ‘composite barrels’ where all products have been converted into an equivalent barrelage.