Landlord and tenant: crossing the great divide

Cherry-picking good ideas

Louise Lawless was an assistant manager in a Mitchells & Butlers All Bar One, then worked in IT and recruitment for Fuller's Brewery before dipping out of the industry for a few years. She's now back, since February running the Old Nun's Head, a 20-year Punch Taverns leasehold in Peckham Rye, south London.

"My parents had pubs so I suppose it's in my blood. But I knew it had to be the right offer, right location and the right pub.

"We looked at many opportunities right across the board. The Old Nun's Head had been my local for four years. It had a good reputation and I saw a lot of potential in it.

"Business is going well and as it's really a winter pub I'm expecting to see trade improve. We've just recruited a chef who used to work at the French House (famous Soho bar and restaurant) so the menu should be taking a step up — we're currently 35% food having grown it from 30%.

"There are definite advantages in having worked in the industry, especially from my experience in the tenanted division at Fuller's. I certainly saw how not to do things, and got some good ideas. "Punch is fine as long as you pay your bills, like any landlord."

The right amount of working capital​

Jayne Gillen was a regional manager with Whitbread when its leasehold estate was taken over by Enterprise Inns. She stayed on as a divisional director for two years and then took a job in contract catering before returning to the trade. Since the beginning of last year she has taken three pub leases in her home town of Winchester, two with Greene King and one with Wadworth.

"The Corner House was a failed pub that had been both a boozer and a restaurant. I knew the site well and thought it would work as a kind of hybrid, and in January 2009 it reopened as a Continental café bar trading 8am to midnight.

"Greene King helped me put it into order. They've been brilliant. I think they're pleased I've taken a pub that was about to be boarded up, and now they're getting rent on it. I find them very good to work with. They've got an old brewery approach rather than the property approach of big pub groups.

"The St James Tavern is completely different. It's a traditional tenancy with Wadworth. We have five cask ales on and it attracts judges, surgeons and the well-heeled in general. Wadworth is also super to deal with.

"Then, two months ago, I took the Green Man, again with Greene King. It had been closed for 14 months and I've put a lot of effort and money into it. It was a derelict site, but it's brilliant doing something from scratch, it's like a blank canvas — though it's not for the faint-hearted.

"The Green Man is now a destination lounge bar downstairs, aimed at over-35s, and we're about to open a restaurant upstairs.

"I think the problem with the leased model is that pubcos have put too much pressure on area managers to let pubs and they've ended up putting too many square pegs into round holes.

"People have come into the trade under-funded. When you take a pub you need twice as much money as you think you need, at least £40,000 of working capital. And often the rents do not equate to what the business can make. A huge reality check is required to understand the true cost of running a pub.

"Hopefully the new code of practice will make the big pubcos less shark-like. When I was a regional director I took a very moral attitude. You know when you meet some people who come to you for a pub that they're going to screw it up. They have a dream of running a roses-round-the-door pub and they've no idea what it means. It's your job to put them off.

"Now I'm running my own pubs I can see I was still too arrogant in what I thought licensees could do. It's surprised me to find you just don't have the time to do all that's expected of you."

Employ an accountant​

Graham Sutherland was a business relationship manager (BRM) with Punch Taverns in Glasgow, from 2006 to 2009. After a brief stint with G1 Group and Trust Inns, the opportunity came up to take the Wise Monkey in the city's West End. He's now opened his second Punch leasehold, the 1901 on the south side of Glasgow.

"When I looked at the Wise Monkey I asked myself why it had failed. Is it the pub or the person running it?

"I knew money had to be spent on the place, inside and outside, and I did a deal on the rent I thought appropriate. It's not the cheapest, but I knew it was a realistic one.

"So far it's going according to plan. It's a student-oriented bar with live music. I took out the pool table, introduced fresh food and put the prices up — I lost customers who wouldn't pay £2.70 for a pint of Tennent's.

"I used to look after the 1901 and knew it was a good business with good potential if you spent money on it and brought the food up to scratch. I knew what the rent was, too.

"I'm on the same agreement as the last tenant and I wouldn't have taken it if it wasn't right. In fact I did the rent review on it myself five years ago and I thought it was quite soft at the time.

"It's going very well. Turnover is already up 30%, just from putting up the price of a pint and changing the menu. I'm just waiting for Punch to do a refurb on the outside. The previous lessees hadn't reinvested the money they made to get longevity from the business. They spent everything.

"I put a lot of successful operators into pubs as a BRM, but I hadn't intended to be one of them, the opportunity just came along.

"There was no favouritism from Punch. It wanted business plans, projections, and I had to find funding and do the induction training like any new licensee.

"I had advantages, though, in knowing the business. You have got to get the right figures from the BRM and employ an accountant to look at them. You've got to get the right GP on food and drink, and rent should be 8% to 10% of your annual turnover.

"My advice is to use the people around you, the professionals, accountants, solicitors, and don't go in under-funded.

"I don't see a problem with the model. It's a good way of developing and expanding a business, and it's possible to negotiate discounts now. In fact, I'm looking for more pubs.

"The only thing that's surprised me is the time it takes to get a question answered. Your queries seem to get lost. It's not the BRM's fault, though. I think the system at Punch has changed."

Getting the basics right​

Bob West was a regional manager for 29 years and has worked for various brewers and pubcos. He took redundancy from Enterprise Inns a year ago and now has a five-year tenancy with the company running the Shiny Sheff in Sheffield.

"I was regional manager for the Shiny Sheff five or six years ago. It was a former Whitbread managed house with tremendous demographics and no competition — and I got a good deal.

"I was in a position to know what I could negotiate on and I knew exactly what I was talking about. I knew the sort of agreements on offer and I knew what the pub could do. In fact, I didn't have to negotiate at all. I put a deal to them and they accepted it.

"I had a list of stuff that needed sorting and it got done in a few months. I invested more than £10,000 myself in internal decoration and catering equipment.

"I understood that I had to get the deal right to start with and so far the business plan has been spot on. Trade is gradually building. All my former colleagues thought I was mad. But I've got a busy pub full of locals.

"It's been a big lifestyle change for me. It's not rocket science, though. It's about getting the basic things right — and putting in a lot of hard work! I knew how the overheads can impinge on a pub business. You make a profit and it evaporates. You have to consistently deliver what the customer wants.

"Others coming into this trade expect too much, I think. My advice is to be realistic, have a clear idea of what you're doing and negotiate.

"There's too much doom and gloom in the pub trade, too. I used to find a lot of licensees talking their own trade down — complaining about the rent, the price o