When is the right time to buy a closed pub?

By Simon Chaplin

- Last updated on GMT

Related tags: Trade, Public house

'We have seen many pubs brought back to life as entrepreneurs invest in a site, bring back local trade and focus on good service'
'We have seen many pubs brought back to life as entrepreneurs invest in a site, bring back local trade and focus on good service'
If you are considering buying a closed pub, do your homework and you could be on the way to fulfilling a dream, according to Simon Chaplin, director of pubs at Christie + Co

During the past five years closed pubs have been an all-too-common sight in the UK. Ranging from town and city centres to village locals, much has been made of the closure rate, peaking at 50 a week. The reality has been that, of those sold by Christie + Co, more than 67% have remained as pubs — a figure that has increased during the past 12 months.

There are many reasons for a pub to close and it doesn’t always mean it has failed and is doomed to become a convenience store or a residential property. If you are thinking of buying a closed pub, it is worth investing the time to do some research.

Has a new road diverted passing trade? Has the ‘circuit’ moved? Has a new pub opened in the area?

Was the pub targeting a specific market than has now moved away, ie, a wet-led pub near a now closed factory?

Has the pub lacked investment during recent years, resulting in customers drifting away?

Was the previous owner popular with the clientele? Local gossip will soon tell you if they were grumpy and kicked out the sporting teams.

The answers to some of these questions may help you to judge if it has a reasonable chance of being a successful venture. If the answer is yes then move to stage two...

Is the building sound? In most cases the asking price will reflect the current condition but if you are unsure, a building survey may be wise. A closed pub can deteriorate quickly.

Was there an issue with the licence, trading extra hours, complaints from neighbours, unruly behaviour? Ask the local police or local authority.

Business plan
As the site is closed, you may not be able to gain access to any past trading figures. Be realistic on your projections. Ask a business agent to assist with comparable evidence — most will be happy to help.

Is it worth it?
Seek advice on what the value might be once you achieve your business plan. Again a business agent will be able to guide you and a valuation can also look at projected figures.

Answers to these questions may also explain why the pub is closed and not reopened. If all the above looks positive, get started. We have seen many pubs brought back to life as entrepreneurs invest in a site, bring back local trade and focus on good service and products to suit their customers’ requirements. These sites invariably increase in value. Who knows, it might end up being bought back by a pub company, maybe even the one that sold it in the first place!

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1 comment

Closed Pub Finance

Posted by Paul Thompson - Acorn Commercial Finance,

Just to add to Simon's article, operators should be realistic about the finance that will be available to them.
There are now a number of lenders who will assist in the purchase of a closed unit, a professional broker should always be engaged to ensure you get the best deal from your finance company. If in doubt look for the NACFB logo to ensure your broker conforms to the industry's code of conduct.

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