The Pros And Cons Of Pub Tenancies
Date added: Mon, 22/05/2017 - 10:00
Deciding to run a pub can feel like a leap into the unknown especially if you have no previous experience. Where do you start? How do you know it’s right for you? How do you choose between the countless options available – types of pub ownership, location, finances, even the style of pub?
How do you know you are making the right choice?
That’s the beauty of pub tenancies. They are a great way of getting started in the pub trade as they offer the opportunity to run a business without the responsibilities of a pub lease or freehold. Tenancy agreements are also relatively short – five years – giving pub tenants plenty of time to build a successful business, without a significant long term commitment.
For more information about the differences between pub tenancies, leasehold agreements and freehold pubs - click on this link.
Benefits Of Taking On A Pub Tenancy
So what are the pros of running a pub as a tenant?
- It’s a great way to get into the pub trade. Pub tenancies are the perfect way into the pub trade for people without previous experience. The support provided by the pub company, combined with fewer responsibilities for the building itself, help new landlords get their pub business off the ground quickly.
- Smaller start up costs. The costs of taking on a tenancy are much lower than any other form of pub business ownership. Depending on the pub chosen, it can take as little as £15,000 to start up a business.
- Outgoings are lower. Pub tenants are are not responsible for structural repairs and maintenance to the premises, so your profits go further.
- Superb training and support. Greene King, like many other breweries, offers fantastic training opportunities to ensure you have the skills needed to run a successful pub. Our Business Development Managers work closely with pub tenants to help them get the support they need and troubleshoot any issues. They are there to help you make your pub business profitable.
Disadvantages of Pub Tenancy Agreements
Naturally there are some disadvantages of taking on a pub tenancy when compared to lease agreements or owning the freehold of a pub. However, in most cases the flipside of these ‘cons’ is greater security and lower risks for the pub tenant.
- Rent. You have to pay a monthly rental for the premises and, depending on the terms of your agreement, this may increase over the period of your tenancy. On the plus side, as with other tenancy agreements, you don’t have the responsibility for structural repairs to the pub.
- Upfront security deposit. On entering into a pub tenancy agreement, you will have to pay a security deposit upfront. This should not be too surprising – after all, you are taking over premises and a thriving business. You’ll need to factor this into your start up costs.
- Non-assignable tenancy. As a tenant, you cannot assign the business to anyone else. If you fall ill, or decide that you do not want to continue running the business before the end of the tenancy agreement is reached, you cannot pass on the business. Instead you will have to work with the pub company to organise any early departure.
- Property. You only buy the fixtures, fittings and stock under the terms of a tenancy agreement. As a pub tenant you have no interest in the building itself. This remains in the ownership of the pub company and therefore pub tenants do not benefit from any sale of a property.
- Product ties. As a tenant, you will be tied to the pub company and will have to sell the beer and associated products provided by that company. This means that you can’t go to the cash and carry to buy your beer! That’s not so much of an issue with a brewery like Greene King with a rich heritage of brewing award winning ales.
We think that choosing a pub tenancy is a fantastic opportunity for the right person (or people). It allows you to run your own business with the support of a longstanding brewery and an experienced team. This means that you’re not alone. You may be the sole tenant but you have a whole team of people backing you up and helping you make a great success of your pub.
Pub tenancies are not your only option. You may want more responsibility and control over your business and therefore a pub lease might be more appropriate. Details of our agreements can be found here so you can see all the options available.
If you know that a pub tenancy is right for you, the next step is to find a pub. You can search our available pubs using the search bar at the top of this page, or apply today to get the ball rolling.
Don’t worry, filling in the application form doesn’t mean you have to take on a pub! But it does mean we can start talking about they type of pub you’re interested in, and the type of business you want to run.