Avebury Taverns is one company that offers aspiring licensees a variety of routes into the pub game.
One thing that the pub industry does offer the entrepreneur is the chance to get a start in business with a minimal investment and steadily build a substantial operation.
Avebury Taverns is one company that has paid particular attention to offering the kind of agreements that can give newcomers a firm foothold from which to progress.
Two years ago it was one of the first to introduce a one-year Foundation Agreement which gave licensees the chance to test the water before they get in too deep. That was followed by the Tracker Agreement which allows them to pre-agree a deal for their future following the first year. And now Avebury is trialling the Keystone Agreement to offer yet another way into the industry.
"It is aimed at either highly-skilled individuals who are under-funded or good retailers with little experience of pubs," explained Avebury managing director David Myers.
Like the Tracker Agreement, Keystone enables people to agree a future deal so they are clear what they are working towards. But it gives them a longer run-up of two years and offers a higher level of support during that time.
New licensees will get the services or a stocktaker and accountant plus regular business reviews by their business development manager, "to make sure they're on track," said David.
"These pubs will have more intensive management from us and put good people around licensees to help pilot them through the first two years," he added.
Keystone is being trialled at eight pubs and initial results, said David, are "encouraging".
"The lessees are mainly ex-pub managers who are getting the opportunity to float their own business. We are putting our own capital at risk here. They have lower in-goings than you would normally expect but they are all experienced people."
At the other end of the scale, the number of long-term lessees on the Avebury estate is also growing.
Seventy per cent of the 750-strong pubco is on a lease agreement of between 10 and 30 years, reflecting a demand from both inside and outside the industry, said David.
"The more we work with our existing tenants the more they want longer-term agreements," he added. "Quite a number have now invested six figure sums in their pubs so they are looking for greater security. Also, more new entrants are demanding a long lease."
Lessees can choose between the Avebury Advantage agreement and the just-launched Advantage Gold, which offers licensees who think they can hit high volumes freetrade-style discounts on beer of up to £90 per barrel in exchange for a bigger rent.
One of the first licensee teams to take up the deal, Joanne Hodges and Paul Watson (see Case Study), started out new to the trade on a Foundation Agreement just three years ago and are now looking to a long-term relationship with the pubco.
"That's hugely rewarding for our business," said David. "Very motivational for our people."
He recognises, though, that not every licensee will be in it for the very long haul. "About five to seven years will be right for most people, so our tenant churn of 20 per cent a year is probably not far off what it should be," he said.
Case Study: the Clifton Hotel, York
One of the first houses to switch over to the new agreement Advantage Gold is Avebury pub of the year the Clifton Hotel in York.
Tenants Joanne Hodges and Paul Watson trebled turnover in the first two years of their initial three-year deal with Avebury and have now committed themselves to the long-term development of the business.
When Joanne and Paul took over the Clifton it was run down and trading poorly.
Careful financial planning and management allowed them to raise enough funds to redecorate throughout during the first year and trade improved significantly, making it easier for them to encourage the development of seven darts teams, two pool teams, a football team, an angling club, a pigeon racing club and a golf society. Their quiz night became a runaway success and four letting rooms are busy all the year round. Sunday roasts followed by Sky football ensure a strong start to every week.
Now they have signed a 25-year lease on the pub to provide them with added security and more freedom to use their expertise to develop the business.
"We knew we wanted to stay at the pub and carry on building the business," said Joanne. "So going for a long-term lease was a straightforward decision.
"The Advantage Gold package means we pay a higher rent but we believe we can do the barrelage to earn the bigger discounts, so we should be better off. We have got a new play area set up in the garden which we expect will really take off this summer."
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