Why is opening a pub so hard?

by PottedNick. Posted on Sep 14, 2020    126    159


This is something I've been thinking about at the moment, in the heat of a global pandemic, but it's also a question I'm interested in more generally. I live in London, England, and the pub is a staple of British culture. But throughout my lifetime (I'm in my late-20s) we've been fed a narrative of inexorable pub closures, mainly in non-urban areas, but also in our cities.

Walking through London now, you're bound to pass several boarded up pubs, especially if you stray from the busy areas. Yet equally, in non-pandemic times, every pub I'd go to (and I've been to a pretty decent range of pubs across the country) was relatively busy. So the consumer demand is still there and I would've thought the supply of premises going up would drive prices down, so why aren't pub closures plateauing?

I have a kind of romantic notion of trying to snap up a very cheap lease for a pub at the moment, given that the conditions for pub ownership are not good, and then running it with some friends/colleagues in tandem with my other small business (media comms). My heart wants to do it but my head says this is a stupid idea but I'm also not quite equipped to say why opening a pub seems such a surefire route to financial ruin. Any thoughts or observations gratefully received!


Comments

c_chan21

I’m confused on all these posts about slim margins on the drinks.

They sell a bottle of corona for 5 bucks. They buy it at like a dollar.

Shot of whiskey? 6 bucks. Pour 3 shots and the bottle is paid for

Zillaracing 2

Excise tax my friend! Depending on where you live is around 25% (usa). that's on top of your normal sales tax which will vary between 8-12% depending on where you live. Governments are straight up robbing you. Plus the cost of doing business. POS will be taking 3-6% plus 8-25 cents per transaction. -all varies on your dealings. Add that to all your other expenses, rent, utilities, insurance, liquor costs, payroll, services like linens and CO2 and/or N2. Things get tight. I try to keep my liquor costs between 20-25% of my total sales but it's really tough. Usually it's around 27-30 but has been below 20 when craft cocktails were the big thing.

Edit: I'd also like to point out that the majority of bars -not bar/resturants- have taxes built in to their pricing so that $6 whiskey includes tax.

always_creative 3

It's the costs that those small transactions need to cover. If you're in a busy area rent could be $10,000/mo or more, that's 2500 coronas/month before you've even gotten to any of your other costs. You're going to at least need a couple of heavy nights a week to make it work.

TPAKevin 5

Big gross margins on liquor and sometimes beer. That doesn’t necessarily translate to big net profits on the business.

TorturedChaos 4

As u/rossmosh85 said

>Super high fixed costs.
>
>I'd imagine the average London pub has a fixed monthly cost of about 20k. Assuming the average cost of a drink is £1 and you sell it for £5 you need to sell 5000 drinks a month to break even which is about 167 a day.

So yes, individual items have a high markup, but not a lot of dollars in profit.

I think a lot of non-business owners way underestimate how much money flows right through the business to cover fixed monthly cost. If you are selling low dollar items, you have to move A LOT of them to keep up with that fixed monthly cost, then pay for inventory, then try to make a profit in top of that.

[deleted] 4

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stealthdawg 1

Not sure where you're at but when I had my bar we got the same rates as the liquor store. There was no pouring tax but we did have to buy through distributors.

In addition, our liquor licenses are on a quota system so you have an initial license fee of >$100k such for the license to sell liquor.

The drinks costs that much because you have to pay for all the overhead, much less to do with the marginal costs. Food \~30% gross margin, Beer \~70-80% gross margin, and liquor 90%+ gross margin, but the overhead will kill you.

dgillz 1

> At least here in the U.S. restaurants have to buy beer and liquor from special restaurant alcohol distributors and then have to pay a "pouring tax" so alcohol costs bar owners more than it costs, say, a liquor store owner.

This is only true in some states. Liquor is so damn crazy here, it varies from county to country within the same state and even city to city within the same county.

alpine_jellyfish 9

I'm not sure but I think it's the overhead costs. Rent of the building, paying the employees to be there to pour the drinks.

c_chan21 1

I understand all overhead. But vs my industry where I’m marking up 20% on items vs 400% of items, I’m struggling to see the low profit margins.

elev8dity 2

The bar I work at only make money Friday, Saturday, and Sunday. We used to be open 7 days a week. They stopped being open Monday given how few customers they would get. We are in the middle of downtown with tons of nearby condo skyscrapers. The whole city sleeps until Thursday and then it just gets wild, but there are new bars opening all the time and closing because there simply isn't enough customers for all the venues available.

jcb193 8

Not every hour of the day is Friday night at 8pm.

Zulunation101 1

Margins and breweries.

NedPenisdragon 1

In addition to the million other reasons listed here that are financial, there are organizational behavior reasons that make it an extraordinarily tough proposition.

Arguably the single most important driver of organizational success is company culture. Bars are extremely difficult environments to promote a good culture. Bartenders are almost always in the position for either the money or the lifestyle, so they're not exactly promoting the interests of the business over their own interests as individuals. Bartending is also not typically a career in the same sense that something like accounting or a trade is a career. There are people who make a life of it and do it at the super high end, but they probably make up less than 1% of all the people who do it.

The reality isn't glamorous in the slightest, and while there are other jobs that are dirty and dangerous, those jobs have a sense of accomplishment that bartending lacks. A builder can point to a completed project and say, "I made that." Does a bartender get to point at a client and say, "I made him drunk"?

A bar sells literal poison, and alcohol kills people and destroys lives every day. So long term, it's not a healthy environment. Your best client is in a real sense slowly killing himself and you're helping.

So there's turnover issues where highly driven, highly professional people will likely move onto different jobs. The best employees just won't stay in that environment long-term.

This means that bars are often one person shows, where a manager or owner is responsible for everything and relatively poorly compensated for it. There are just easier ways to make money with those talents.

Keep in mind, you don't want your hobbies and your work to ever be the same thing. If you like drinking, you like getting drunk at a bar, not being sober while trying to run one. I used to work for a video games website because I loved video games. Pretty soon, video games became work and stopped being fun anymore. It took me years before I could play something to just enjoy it. The ideal bar owner is a teetotaler, but why would someone who doesn't drink want to constantly be around drunks, and how does that person understand their product?

Outside of romantic notions, it is a terrible idea in practice.

Banjo_Bandito 1

Right now? Lol. I feel like that’s pretty obvious. The federal government for some reason is trying to wipe out the privately owned restaurant business.

BenG1984 1

I've worked in UK pubs for 16 years, people have a romantic idea of what it's like, they don't see the 16 hour days, no chance of a real day off, tiny profit margins (unless you own the building), staff costs, power costs, various compliances to follow (getting more all the time), the list is endless. People take over and find a this out and jump ship. Or if it's a brewery owned place that just puts a manager in, they have a turn over of managers and the core customers don't like it. They'll get alienated but various ones and before you know it you've lost your consistent trade because the manager keeps changing.

My advice would be to steer well clear of getting into this business, it's shit.

Dom1845 1

I had a tenancy on a pub in London, do not take a lease from a brewery you will not make good money no matter how much effort you put in or how busy you are. You need a freehold.

aletino999 1

I hope you can acomplish this goal. Best of luck

stealthdawg 1

Simply put, the intersection between people who want to open bars/pubs and savy businesspeople is very slim.

Bars are attractive businesses in certain terms. They can be great, social havens. Your local barhand can beloved by all. Survivorship bias makes it look great. That coupled with "I drink at bars, I could run one!" which is one of the biggest examples of cognitive dissonance ever.

People love to give away the bar because 'liquor is cheap' and it makes them look great and feel like a champ. People don't know how to manager others, have employees who steal, etc. That's all a part of doing business and they don't know how.

A bar/pub is a business and must be run like one. You can't have fun first and do business second. You must do business first and have fun because of it.

flt001 1

Tax. In the UK the beer is taxed then VAT, duty and then tax on any profits.

You can’t make money on drinks really. You need food too.

cliveqwer11 1

I worked in a pub in London in mid 90s my till card was linked to the beer dispensers and at the end of the Night we were told our over pours and how much that had cost the pub......

Rebel_traveller 1

Really interesting thread. Why not consider a café by day, bar by night. Find a few niche products and tap into the groups of customer in the local area. A health oriented place selling mocktails seems like it could do well in the right area.

jackandjill22 1

Interesting.

herefortheworst 1

Wetherspoons hasn’t helped over the last 20 years. That guy has a lot to answer for, especially for his recent treatment of his staff during lockdown.

Creatibly 2

Before opening a restaurant, listen to some of the videos by Peter Thiel who helped found Facebook. He pokes a lot of holes in the business model.

Mxblinkday 2

Thin margins. Relatively low barrier of entry. Large supply of similar businesses.

PineapplePate 2

I'm not entirely sure how it works in the UK but I know a large barrier to entry in the US is liquor licenses and the politics of getting one. They are very expensive and only so many are given out per area (zoning district?) at a time. As such it helps to know a lot of people and have something like $50-750k for the license

Geminii27 2

If you're thinking of doing this, you might want to get some experience under your belt first working pub jobs, so you have first-hand ideas of what they actually involve. Once you know how to do every physical, managerial, and business job in a pub, then ask yourself if you want to run one.

RetrieverTrainer 2

Definitely. If you haven't been working in bars and restaurants or pubs, then you have no idea what you're talking about. The best place isn't behind the bar where there is a big solid wall between you and the patrons, but waiting tables, that's where the real problems are. I've worked it all in college and afterwards to pay off student loans - biker pool halls, pubs, private clubs, burger joints and private golf clubs. Getting people out at the end of the night can be a real problem. Fights are a huge problem in some places. Credit cards that are over limit. Cash that mysteriously disappears. Drink waste, food waste, wrong orders, the list goes on.

ChaLenCe 2

That fear you hold is your best asset in the beginning. If you let your heart lead, let your brain use that fear to check and double the systems and services you're afraid of failing. That "fear" is your fuel to make your business better, so don't doubt your ability to run a business well. You've already reached out to a community of small business owners, you've demonstrated at a minimum that you believe in yourself.


My main piece of advice would be not to go into business with a friend. I've lost two in the 5 years since starting mine. Find someone you respect for a partner, then find an investor who doesn't need the money if you succeed or fail. This will give your young business the space it needs to grow.

One piece of marketing that I think would work (just my 2 cents) - try and find something in your pub that people love. My favorite pub in Uni was known for two things - making a "Snakebite" (cider + Guinness) and closing at 2 AM with "the Floor is lava" - everyone got on top of chairs, tables and the bar (yeah I know, super safe) and the last person on the floor when the song ended had to pay for the whole last round.

bonejohnson8 2

People are right about the bad margins, but you are onto something. As leases fall apart and pubs close, the demand for the remaining ones will go up. It might not be the best investment, but there is a sweet spot where people who snapped up cheap leases will prosper in an environment like this. That being said it's a cyclical thing, and you are just as easily the next victim as the next success.

Geminii27 3

> As leases fall apart and pubs close, the demand for the remaining ones will go up.

That does assume overall demand will not drop. Changing societal standards can torpedo that. Younger people don't drink as much. Supermarket alcohol quality is improving. People don't stay with jobs in the same area for as long, meaning pubs aren't the social hubs they used to be. Alcohol itself isn't as tolerated/encouraged as it was in previous decades and generations.

bonejohnson8 1

> People don't stay with jobs in the same area for as long, meaning pubs aren't the social hubs they used to be.

I think this might be good for pubs, I just moved and one of the best ways to meet people is heading to a bar (barring COVID.) It's definitely good to question the first principles though, if demand does drop off a good pub can turn into a pub that slowly loses more and more money until it's unsustainable.

giddygiddyupup 2

Wait for someone else that actually knows what they are talking about, but I think because profit margins are so slim in the food/beverage industry. People tend to want inexpensive drink in a high rent area, which is tough from a business perspective. And staff turnover tends to be high.

tonymcgeese 5

The grind of a microservice industry, I feel, is the most challenging business to try and make a profit. Day after day, night after night, serving small ticket items for slim margins. Dealing with low wage (cause not much money is made) employees and all the headaches they bring.

I would only consider it if I had amazing built-in foot traffic from some solid anchor stores, maybe a high tourism spot. Even then, I think I'd let someones lose their money.

Sorry to be negative; you should just look at it real hard.

Cheers

Ricoswarez 3

Many bar owners get into the business for the wrong reasons. The main one being they like drinking and have experience doing so.

A good parallel to this logic would be opening a pharmacy because you like drugs.

Don’t drink in your own establishment, don’t hit on your staff, and treat that bar as if it is your office and not playground. You’ll do well, cheers.

tommygunz007 6

If you are 'drinker' I would not open a bar. If you are business person, then I would. It's two different mindsets.

The bars, and businesses that generally fail is when people say "I bet there is people just like me, that really enjoy only drinking GIN and would go to a bar with 100 types of gin. The reality is nobody is going to that bar. Same with a lot of craft breweries. You better also have whisky, food, cocktails, etc because women often drive the male clientelle too and most ladies want a fresh cocktail. So your craft brew gin house is now basically like an all-around pub. Suddenly your dream becomes a nightmare because it's not what you want, it's what your customers want.

When you run it as a business, you see everything as a cost. Every straw, every napkin, every advertising dollar. You don't think of it as what you sell, but what the margin is on what you sell. It's cool to have a $1000 bottle of wine, but if it sits there, you just tied up 1000 into something not selling. Better to have $5 wine and sell the crap out if it. Being a businessman who 'owns a pub' is a completely different mindset and are the ones who succeed.

rossmosh85 7

Super high fixed costs.

I'd imagine the average London pub has a fixed monthly cost of about 20k. Assuming the average cost of a drink is £1 and you sell it for £5 you need to sell 5000 drinks a month to break even which is about 167 a day.

  PottedNick 4

Thanks, I find this breakdown interesting though I don't have much context. For me, I would assume that most London pubs would average at least 167 drinks a day (presumably factoring a lot higher sales at the weekend). But presumably there's a tonne of tax to factor in there.

BruinsFan478 8

That's 167 drinks a day to make $0 in profit. You would need to average higher to make any profit.

BeetrootPoop 14

I worked in breweries in the UK for a few years and also sometimes wondered this. On the face of it, we sold a 72 pint cask or 50 litre keg to a pub for somewhere between £60-90, then in theory that cask becomes 72 times £5 or whatever the landlord can sell a pint for. So if run efficiently, you'd think a pub would make money.

The problem is the little erosions to margin. Beer wastage if you don't sell the whole cask or when you clean your lines. Keeping the lights on, paying staff on a weekday afternoon when there's nobody there. VAT I guess is a big one.

The other problem is that my back-of-the-envelope COGs analysis assumes freehold, outright ownership. That's crazy expensive (multi millions for any London pub). Realistically, people are either installed as managers or tenants to a brewery or pubco. This means buying beer for sometimes much more money from the freeholder and fines if you want to buy from independent companies. Worth remembering that generally if a pub lease is for sale (even buying out a lease can cost 100,000s) it's likely because it's loss making. So it's the same as anything - if you've got millions to put upfront, you can probably make a living, otherwise you are really a glorified employee.

The last thing to think about is the lifestyle. Dray deliveries start at the pub at 6 am, then it's a full day's work until close at 11 pm, then clean up. Pubs are open 7 days a week. To keep their heads above water, landlords end up doing everything themselves, including dealing with sometimes rough customers and fights etc. Speaking from experience, it's a real health risk being stressed/tired because you are working 100 hours a week and simultaneously have such ready access to alcohol.

My best mate was a pub manager for 3/4 years. Really busy, popular pub in an affluent London suburb that successfully charged a premium and sold food etc. I always assumed it was making a killing. Unfortunately it folded last year and he told me the place lost money the whole time he was there, exacerbated by the behaviour of unscrupulous, alcoholic business partners. Unfortunately the experience took a significant toll on him health wise.

  PottedNick 5

Fantastic post, and sobering, no pun intended.

BeetrootPoop 3

Something I forgot to mention - people are generally drinking less (think European beer market contracts 1-2% per year on average) and drinking at home more and more. So pub owners with already slim margins and are fighting one another for trade.

Speaking hypothetically, if you did do this I think the key would be to differentiate yourself from the 10,000s of other cookie cutter pubs. Look at what people do in London now (well, pre COVID): a lot of it is instagrammable 'experiences' like Flight Club, the Crystal Maze, escape rooms etc. How can you make a pub a destination venue rather than a depressing hole in the wall? I'd probably theme it - like fill it with free arcade machines or, I don't know, put a mini football pitch, cinema or bowling alley in it, just something really stupid that can get you press and people through the door. Anyway, if you're still thinking about it, I'd run up a list of things you could try then go and find a consultant who knows the pub industry and pay them to tell you how to turn a profit.

  PottedNick 1

Well, to be honest, my vague plan (and I should reiterate this is only the vaguest of impulses at this point!) would be to run the pub in tandem with my existing business, which is a successful small media business. Firstly, to mitigate some of the financial burden by utilising the pub as workspace during the day, and secondly to make a public feature across video and audio broadcasts (so that I can reduce my production costs and also roll those savings into a marketing plus for the pub). Obviously, some elements of that plan are contingent upon being able to do some sort of public events in the future...

imchris_ 1

Live stream the pub, like the Simpsons episode in the taxi.

Rebel_traveller 3

When I think about the seemingly successful pubs I know in Glasgow they are all venues with something unique. One specialises in sports tv, one folk music and another is in the arches under an old bridge and does standup poetry, an electronic music place, one with a tiny room and real fire... You get a very different feel in each.

BeetrootPoop 1

Yeah I agree, I've spent too much of my life in pubs and maybe 10% of them were memorable beyond being a convenient place to have a pint. Almost every one of those memorable pubs had a real niche and community, and in hindsight was probably run by someone who had done it for years and owned their premises outright so they could offer the products and activities they/their customers were passionate about without compromise.

Pubs are fundamentally entertainment spaces - alcohol is one side of that, social gathering and activities (music, sport, whatever) are others. I think many would be more successful if they considered their business in that way, and reached out to non-traditional groups needing space - run board/video games events maybe, art classes, or somehow involve young mums in a toddler group and basically just clean the place up and do whatever it takes to appeal to bored people sitting at home. Sure, we've all got Netflix etc. in our living rooms, but we're (mostly) social creatures if given the chance.

Not saying any of that is easy, but the industry needs to innovate a bit to survive.

Rebel_traveller 1

I think lots of woman with children would really like this idea of holding craft and toddler groups in a modern pub. Make a pub a real community space! Reminds me of a recent radio piece (yes, radio 4...) I heard about men and women who had started a sewing group specialising in swear words and rude words. Where else to meet but in a pub. I've met as part of all sorts of groups over the years in pubs.
I know lots of people also in their 20s who are abandoning pubs cos they have the believe that it's all about drinking. I don't think a pub has to be this - it is after all a public house, so it is best as whatever the target public needs/wants.

karaokelove 44

I run a "pub trivia" business, so I work with a lot of pub owners. From my experience, many of these places that go under are just terribly mismanaged (at least here in the US). A lot of bars seem to be opened by a group of friends who think it would be fun to open a bar together, and they have no idea how to actually operate a bar. Or there will be 4 owners, none of which are ever on the premesis. Or they'll just sit around and drink all day in their own bar. Either way, it's an issue of people opening bars who don't really know what they're doing or have unrealistic expectations, so the bar goes under. If you're going to open a bar, do it with business partners who know what they're doing; don't do it with friends.

thisismyusername51 5

This! I worked at an Irish Pub in college. The owner used to stay late into the night with the staff to drink (I didn't because I was broke AF and needed my money.) but it's definitely common. Found out a few years after I left that he'd ended up drinking away all of his profits, and the place closed. For a bar owner, drinking your own stock is a double hit. You paid to buy it and now you're not selling it so it's like you're paying twice for it. Reduced inventory and lost profits.

Damaso87 3

IASIP

madkungfu 17

My wife has tended bar for the last 10 yrs. This is spot on. Owners typically have little business experience. I also think people have unrealistic expectation of revenue. You see money flowing on a Friday night but don't realize there can be 2-3 nights a week where it doesn't pay to have the doors open.

z64dan 48

Lol " A lot of bars seem to be opened by a group of friends who think it would be fun to open a bar together, and they have no idea how to actually operate a bar."

You mean like OP?

madkungfu 13

Tbf, it isn't rocket surgery.

YodaCodar 3

rocket surgery while on mars though.

11_25_13_TheEdge 4

It's not rocket surgery but it is brain science.

Running a bar or restaurant is just like running any other business. If you don't have any experience with it you'll fail. People watch a restaurant or bar operate around them while they are visiting and think it looks easy. Then they are responsible for the day to day operations; including but not limited to inventory, bookkeeping, guest relations, and managing a staff - all of which is its own challenge.

lost_in_life_34 23

I'm in NYC and this is what I've noticed

​

The best bars are in Manhattan where the most people are and close to transportation. that's where the rents are the highest too. I've seen bars away from the busy areas and they seem to serve a few regular drunks and that's it. the ones in the high rent areas will be full doing peak hours

​

Having a bar in Manhattan is more than alcohol. you need decent food too in order to lure in the lunch time traffic along with tourists.

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sports is expensive. you can't just get a streaming sub for $60. Direct TV and cable for business costs thousands of $$$ a month

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utilities are expensive. 3 to 5 times higher than residential rates

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you have to be open late and that means something like 60 to 80 hour weeks

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the work doesn't stop when you're closed. people coming in for food expect fast service and that means prepping a lot of food to be cooked fast when ordered

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cleaning is during closed hours

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you have to pay people and hire good people. your regulars during a slow time aren't degenerate drunks but valuable customers and need to be treated that way

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insurance is expensive

Hitz365 45

In the UK, many pubs are owned by major breweries (more like corporations with lots of property than actually brewing beer). Pub landlords are obliged to buy the beer directly from the brewery, regardless of whether they can get it cheaper on the open market. They'll often have electronic measurement of how much is sold that is reported directly to head office, so it's hard to game the system.

A poorly performing pub will be shut down or the manager replaced. The breweries are often the landholders and the 'landlords' are really just live-in managers. A good performing pub might find its targets continually increased.

Margins are very tight on drink, hence the trend towards selling food.

Beer duty has gone up for years too.

It is of course possible to run a successful pub, but it probably won't be a traditional pub as you know it. It might have to be mostly restaurant, or cater to the Camra crowd where there's demand, or whatever niche you can come up with. The days of a quiet pub with the all day crowd that only gets busy on Friday and Saturday are gone (unless you like the landlord lifestyle and not in it to make money).

rmc1211 1

This. Tied leased houses - you have to buy the beer from the company you lease from. Then when the lease is due for renewal, they know exactly how much you sell and can put the price of the lease up if they think you can afford it. You work. They earn.

  PottedNick 3

Yeah, the question of wet/dry rent is obviously a big one. But I imagine that as the market because ever more flooded with real estate and prices drop, then surely the incentives to rent from breweries are reduced (especially as your locked into relatively high beer prices). I can't really see an advantage to renting from a brewery except indemnifying yourself on the rent.

Hitz365 12

I don't have much insight into the real estate side of it but the larger breweries seem able to let properties sit empty. My assumption is that the independent properties are also in the least desirable locations.

It must be so hard. 100+ year old properties with tiny kitchens, built for a different use case in a different era.

Just like a run-down area with empty houses, the market is telling you what the situation is. Could you speculate on a property and make it work with a really good niche? Sure.

​

>so why aren't pub closures plateauing?

Consumer habits are also changing. Younger people drinking less, expensive beer, smoking ban, brewpubs, trends away from cheap lager. People spending less time in jobs and likelihood to move around the country meaning fewer communities around which the pub is the hub. The rise of coffee shops, cheap supermarket booze (and better variety). Take your pick!

  PottedNick 1

Interesting post, and particularly interesting point about the unevolving facilities in some of these premises.

But, to sort of counter (and sort of play devil's advocate) there are lots of vacant premises in quite desirable parts of town. Ok, a pub won't stand empty for long in Soho or Mayfair, but round me in Brixton/Stockwell/Kennington, which is a very yuppy, gentrifying part of town, there are stacks. Now it may be that the breweries own these properties outright, no mortgage commitments, so it makes more sense to leave them vacant and stop them taking business from their other pubs in the area than it does to sell them off or reduce the rents/terms. I don't know.

And on the point about changing consumer habits, I agree with all the things that you list but, equally, I could put together a list of changing consumer habits that could support increased pub visits (higher average wage, declining birth rate/average parent age increasing, young people not buying property at the same rate so more disposable income, huge variety of world beers/increased middle class migration from other countries...etc). So I'm sure that many of the consumer habits that you mention are having an impact, though I wonder if this is more a case of like old fashioned boozers who are disproportionately affected by measures like the smoking ban or cheap supermarket alcohol, being squeezed, and then the tier of gastropubs (and the tier of bougie well-located pubs below that) becoming a homogenised core for pub consumers. I would be curious to see data on whether actual footfall in Britain's pubs is decreasing, or whether busy pubs are getting busier just as lonely pubs are getting lonelier.

Hitz365 2

Some stats from the Office for National Statistics here:
https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/articles/economiesofalesmallpubscloseaschainsfocusonbigbars/2018-11-26

Footfall looks to have migrated from the closed pubs. As the link shows though, smaller pubs outside cities are closing at the highest rates. Brixton/Stockwell/Kennington wouldn't be in that group.

You could be absolutely right that there's an opportunity. You wouldn't be the first to think that. You'd have to do something different though, and it's a case of what you're willing to compromise on before it no longer feels like the traditional UK pub that people love.

Do you push out the old men who sit at the bar all day? Reduce the size of the bar area to make room for more dining tables? Sell more expensive beers that bring in a wealthier clientele? It's all possible and maybe even viable, but each decision might find you moving further away than the wholesome image of the old boy sat at the fireplace with his dog drinking the hours away.

  PottedNick 2

Really interesting stuff, thanks for sharing it.

I’m certainly not sitting here thinking that I’ve cottoned onto a great untapped possibility. I look at the market and see conditions that I feel could make a pub business work - but then I check myself because I know how hard it is from the numbers that are failing. So more than anything I want to understand why it’s hard, and if the answer had been “owners are all drunks who bankrupt themselves letting their friends drink for free” then perhaps I would feel pretty confident about putting together a business plan that avoided that!

But, as anticipated, the situation is very nuanced, the business very difficult and I certainly don’t presuppose any qualities in myself as a publican that others would lack. But lots of food (as well as drink, I get the idea) for thought!

Cheaperthantherapy13 9

Is it still common for English pub owners to live over the pub? Living where I work seems both charming and an absolute nightmare.

tabbynotacat 21

This is the answer OP. This guy pubs

SafetyMan35 222

Very slim margins. Not managing inventory properly (ex. A pub uses 100 pounds of ground beef a week, but their supplier offers them a 30% discount if they purchase 200lbs of meat so they purchase 200lbs thinking they will use it and therefore increase profit by 30%, but in reality, the beef spoils and they paid more for the 100lbs they used), Running tabs for the regulars but never collecting on the tab, employees or staff giving away free drinks.

Watch some episodes of Bar Rescue to see the breakdown of some problems in bars/pubs https://www.youtube.com/results?search_query=bar+rescue&page=&utm_source=opensearch

Quantum_Pineapple 1

Almost all service sector is slim margins. It's absolutely bat shit insane if you look at the numbers. My brain won't let me rationalize even working in places like that anymore. Glad I've moved on!

HotelMoscow 1

I love that show

RandyHoward 5

> Watch some episodes of Bar Rescue to see the breakdown of some problems in bars/pubs

The biggest problem they reveal on that show is that idiots shouldn't run bars.

stormfield 10

I worked in US bars for 5 years before starting a related business (distillery). I'd never want to own a bar. Huge number of moving parts involved, expensive locations, a lot of staff that need constant supervision and has high turnover, and requires working on nights and weekends and holidays. It is possible to do well at it, but requires a very specific kind of personality to succeed at, and requires you to have very good stress management skills because you will frequently be tired, busy, and very close to a lot of booze.

nobody2000 14

This is one of the actual significant contributors to food waste (not shit that the average person buys that goes bad).

Every restaurant ever has accepted waste as a part of what they do, but you have to work on that balance. You're never going to perfectly forecast your demand, so you need to ask what's more important:

  • Selling out of something and avoiding spoilage while missing out on revenues/profits
  • Buying too much of something, it goes bad, but hopefully the sales you did make made up for the loss.

    ***

    Honestly, if I ran a pub, in terms of food I'd take every shortcut I could.

  • I'd make sure I had a walk-in freezer or a couple of 3-door reach-ins
  • I'd make sure I had a turbochef/merrychef that could crank through frozen items
  • I'd buy as much freezer-to-oven stuff as humanly possible.
  • I think I'd only bother with a pitco fryer for super high volume items (fries, wings, etc).

    This is pretty much how all the non-gastropub bars in London do it. They order through the same distributor, have identical menus, and everything is cooked on some accelerated cooking appliance.
NoBulletsLeft 10

I used to live near a really good BBQ place that had a simple system to avoid buying too much meat. They would just close early when they ran out of food. Usually this meant like maybe 15-20 minutes, but I remember being there to pick up a takeout order and they were getting ready to close an hour early because there was a big crowd earlier and they ran out of food.

Locals were used to it and it was kind of a running joke.

wreckem_tech_23 2

Most quality BBQ joints close once they’ve served what they grilled that morning. In TX at least

countrykev 8

The flipside to that is not being open when customers expect you to be, and missing business and repeat customers because they went somewhere that was consistently open when they wanted to eat.

That could certainly work in a small town or a long-established place where your food is just that good. But for a startup? I think that wouldn't fly.

NoBulletsLeft 1

Oh, absolutely. This place had the best of both worlds: it was on an intersection with lots of car and foot traffic, plenty of on-street parking, and it catered primarily to the neighborhood people who knew their quirks. At the time I think they had been in business for over 20 years.

I haven't lived there in about 15 years, but last time I went by, they were still in business.

EssentialParadox 4

This is such a key piece of advice to those operating a service business with opening hours — don’t be cheap and inconsistent on your opening hours.

It takes a lot of effort through word of mouth and advertising spend to get a customer to actually plan to visit your business one day. If that experience is that they show up and you’re not operating within your advertised opening hours, they simply won’t come back.

SafetyMan35 9

There was a bar near me that advertised they served food until 9:00. We often times would show up at 8:30 and they weren’t serving food because it was slow so they sent the kitchen staff home. This happened a couple time and we simply stopped going. The bar shut down last year which was unfortunate because the one time we were able to get food it was delicious.

jestergoblin 19

A lot of BBQ places are "open until we run out" due to how long it takes to prep smoke the meat - a brisket is a 15+ hour endeavor.

exploitedworkerbee 14

I worked at a place like this once upon a time. The owner insisted we NEVER said "run out," they would "sell out." Made it sound like the food was super desirable instead of that the required amount was planned poorly.

ja2854 82

Bar owner here told me her employees developed a scheme to launder the money from the drinks into the tips. Basically they'd charge less for the drinks and have the clients pay a larger tip but less than what the drink would actually cost.

ZZaddyLongLegzz 1

I’ve had this worked out with a few bartenders. Even as low as $20-$40 cash for an unlimited tab that was presented as a blank receipt

One_Discipline_3868 1

The scheme in the restaurant I worked in (I found out after I left) was to void off the sodas before closing the tickets. $2.50 for a soda times four people is an extra $10 a table.

CarbonFiberIsPlastic 5

Not laundering FYI. This is skimming. Laundering is cleaning dirty money through legitimate businesses. Skimming is a form of theft/fraud from employees.

Damaso87 14

Why would they even be able to charge less for a drink? Isn't that set by the owner?

Kiyae1 1

Regular drink is $5, plus $2 tip = $7
Double drink is $10, plus $2 tip = $12

Bartender sells a double, rings it up as a single, charges $7, plus $2 tip = $9 and they pocket $4 of that as their tip basically.

That’s one way to do that. Or ring up call liquor as well liquor and pocket the difference for yourself.

Damaso87 1

Wouldn't inventory be off, though?

Kiyae1 1

It would be but that’s just an example of ways to do that kind of thing.

PineapplePate 1

POS systems have a lot of different ways to modify items and their prices. If some sort of backdoor or coded entry is required for management function I wouldn't put it past someone to YouTube or Google the POS and find a demo video or something about it/write down the mamagers' numbers. If it came to it they could also just ring up something cheaper, though that sounds a lot more obvious to spot somebody doing.

stealthdawg 3

That's a lot of trouble to go through when in reality it's just as easy an employee looking over the manager's shoulder when he puts in his pin one day, coupled with a business system that has weak checks/monitors and lazy management.

smellyfartypoopypant 2

If you sneak in liquor put an old sticker on it and with poor management owners very easy to do or just use the owners booze if they are completely incompetent.

Damaso87 1

>If you sneak in liquor put an old sticker on it and with poor management owners very easy to do

But this wouldn't be a loss on inventory like op mentioned

>or just use the owners booze if they are completely incompetent.

I think this aligns a bit closer with op story.

smellyfartypoopypant

Not me but friend. even without theABC sticker if they do come in just say the sticker fell and the abc officer makes you throw away the bottle no penalty

stealthdawg 2

There are tons of ways to cheat the system and equally tons of ways to catch and prevent such cheating.

CFRAmustang 3

Give them top shelf, charge them for a well drink.

Damaso87 2

So you mean replace a top shelf liquor with a well, ring it as well, and take the cash out of the register? And do what with the receipt?

CFRAmustang 5

I bartended briefly many years back, just throwing out a way it could work (I never did anything of the sort).

No, I mean somebody walks up and says they want a shot that costs $8. They hand you a 10 and tell you to keep the change, you pour the shot, select well in the POS for $4, and throw the $6 back into your tip jar.

edit: Nobody ever asked for a receipt in my experience.

Damaso87 4

But isn't that the same as simply not ringing the drink? Counts are going to be off eventually.

CarbonFiberIsPlastic 1

Pretty much the same thing. But I think not ringing at all is “more” fraudulent in the bartenders mind. But just ringing the wrong drink “doesn’t hurt anyone” while making them loads more.

Damaso87 3

The best method is to just short pour everyone by 10% and then pour yourself that amount at the end of the night.

ja2854 13

This was some time ago. Was a restaurant I built in 2012. I'm sure the systems are more sophisticated now but that won't stop employees from developing schemes.

Its just another hurdle in that industry.

TheNamesDave 9

True. I’d recommend the book How to Burn Down the House: The Infamous Waiter and Bartender's Scam Bible by Two Bourbon Street Waiters

https://www.amazon.com/How-Burn-Down-House-Bartenders/dp/0974867705

Prowlthang 9

I worked in security & inventory control for nightclubs in the late ‘90’s and there were processes & systems for both service & audit - admittedly those were much larger venues but this isn’t an insurmountable hurdle it just requires that you treat the business like a business and implement systems.

NoBulletsLeft 21

Pretty much this.

My wife used to work as a bartender and at the last place she was, she'd often tell the owner that other bartenders were cheating her, even show how it was being done. Owner simply didn't care. She ran the place like it was her personal hobby, not an actual business, then threw temper tantrums at the end of the month when she saw how much money they were losing.

Restaurant & bar ownership attracts a strange kind of personality!

PineapplePate 8

If Bar Rescue and Kitchen Nightmares has taught me anything, it's delusion and cigarettes /s
It really does attract a wide variety of temperaments and personalities lmao. Couple that with the high stress environment, pointy objects, and most everyone having a vice, you're in for a wild ride.

TemporaryBoyfriend 25

Management begins with measurement.

ja2854 1

Wdym?

Magnum256 2

There's a saying in business, "if you can measure it, you can manage it", basically it means that you want data, data, data. You want to know every single detail, have it all mapped out. How much product you're consuming, the price, price per unit, etc. etc. and you want to verify your numbers are lining up by actually keeping tabs on things.

It doesn't mean you need to micromanage everything forever, but you need excellent measuring systems in place that are proven to work if you ever hope to have a proper handle on managing any business.

TastyMagic 9

Not OP, but bars and restaurants sell things that are tricky to measure and that is often where the schemes occur.

For instance, a 750 ml bottle of vodka should have 17 1.5 oz shots in it. But that assumes a perfect pour every time with no spills, no over pours etc. which is nearly impossible. So maybe you're fine with only 15 shots coming out of each bottle. Regular auditing of stock and receipts would tell you if you were hitting that average. But what often happens is that the audits don't happen or things are 'close enough' that nobody cares. Staff can see this and might start doing things like ringing up a single shot but pouring a double shot and pocketing the difference in price. Or giving someone a 'free' drink in the hopes of getting a better tip. Because margins are so slim, those little things can add up and really eat into profit.

thisismyusername51 4

They make pour spouts for alcohol that measure exactly one shot (instead of allowing someone to eyeball it).

WayneKrane

Eh, I hate bars that do that. If I’m paying $15 for a drink please be a little generous or I’m not going to patron your bar. Those limiters ruin the experience of a bar for me.

PraiseStalin 6

That's a very specific thing that is ruining your experience, mate.

rmc1211 3

Use optics like most British pubs

TemporaryBoyfriend 18

> I'm sure the systems are more sophisticated now but that won't stop employees from developing schemes.

If you were measuring how much booze you were going through, and comparing that against receipts, you'd have detected something was fucky within a few days.

8483 1

Problem is, they can bring their own booze and charge cash. No receipts, no missing booze.

TemporaryBoyfriend 1

Heh. They’re going to smuggle in 40 bottles of their own booze, then smuggle out the empties?

8483 1

Surprisingly, they could if there's no supervision.

Doesn't have to be 40 bottles.

Just bringing 1L of Jack Daniels can make a lot of money.

If the bottle is $20, they will break even by just one glass. They can make like $500 from one bottle.

In a busy night, 1 bottle of Jack is nothing.

This is why it's SUPER important to forbid a single drop of alcohol from leaving without a paper trail.

If you see a bartender pouring something without a paper trail, immediate firing on the spot.

The problem is, the waiter and the bartender can be in cahoots, so having a person of trust handling the POS is a good idea.

ja2854 5

Hawk eye management then.

But employees told me they work better when we let them be and don't micromanage.

Edward_Morbius

Yeah, mine said that while they were selling TVs out the back door.

ja2854

Mine said it while moonlighting on company time on a company computer.

Jengalover 1

Test them. And then trust them.

ThePlatypusOfDespair 8

Inventory management and people management are two different things.

TemporaryBoyfriend 23

Counting the booze at the end of the night isn't micromanaging. Having a system the counts the number of shots dispensed isn't micromanagement either. It's just good business.

ja2854

To them it is. Any sort of inventory is mistrust and toxic management. When its just good business.

Zillaracing 94

Hi multiple bar owner here. Bartenders come up with all kinds of schemes but all are easy to catch so long as you pay attention to your daily and weekly sales reports that your POS produces. You wouldnt believe some of the stuff they tried, lol. Have a great team now and even with the pandemic, am on track to do a half million is sales at my flagship bar.

bcacoo 1

500k in sales for the year? Honest question, how do you stay in business? I know nothing of the bar/restaurant business except that mark-up on drinks is high; but even if the cost of drinks was 0, I'd think staff, rent, utilities, licensing, insurance, etc, would exceed 500k. But the in my head numbers may be skewed high (I'm thinking 5k/month for rent, average 60k/year per employee all inclusive (health insurance, leave, benefits, payroll taxes, etc.), 1k/month insurance, I don't know what licensing for food and alcohol sales involves.

Zillaracing 6

I've owned this bar since '03. It was tough at first. Basically only got paid in tips when I worked and I worked a lot. Now, it's an established local bar near a major university and pulls in 8-12k a week. Where I live, the service industry min wage is only a little over $2 hr, however, they are required to make normal state minimal wage of $10 hr with tips. My bartenders pull in $1000-1500 a week in tips so I rarely have to pay them much of a paycheck. I pay my manager $400/WK plus weekly bonuses if he hits his quota of 10k. Plus he bartends. I also have lots of coin ops and own 8 touchtune jukeboxes up and down the street.

You're close on the rent, I pay a little over 6k and 400 for insurance. No employee benefits atm.

[deleted]

[deleted]

Enjoy-Life 3

How is $52,000 - $75,000 a year bad? Sounds like he is giving opportunities to hard working people.

Zillaracing 4

They pull in 6k/mo cash in an area that averages half that. I think they're doing just fine. That's more than I pay myself.

bcacoo 1

So my labor costs were significantly off then. What about things like licensing and insurance (liability, not health)?

Zillaracing 3

We're a bar only so the ABC stuff is only 2500/yr plus a small local business license fee that I can't think of off the top of head. Insurance is liability only.

bcacoo 2

Costs sound much more reasonable than I expected. Thanks for the info!

Destyllat 4

restaurant owner/operator here. you have at least one bartender absolutely cleaning up with theft. I guarantee it.

ICaughtAPigeonOnce 2

Bartender here, can confirm there is no way to stop our cocaine-fuled schemes from working (for at least a little while)

wamih 2

Aloha has a great feature in their reports to flagging & email admin (GM/Owner) when someone is often editing tabs.

notlikelyevil 70

We installed hidden cameras (we did the server network part) in a small town bar, the owner was monitoring every shift going crazy trying to figure out how he was losing so many liters a day, sometimes 10 percent in a busy bar. He never saw one free drink given or one over pour. Security cameras saw nothing the first day... Then we noticed something weird in the file sizes, it would store in chunks of one file per hour (early days windows DVR software) with larger file sizes when it was active were bigger.

Turns out the bar was reopening an hour or so after close with 20 to 40 people getting discounted drinks for cash.

Two staff were doing this and taking it in.

marrymeodell 3

I feel like I saw a similar situation that was a caught on some hidden camera TV show

Zillaracing 12

Ah, good ole after hours. Bartenders are a different breed! Haha

anticultured 21

Wow, that sounds criminal on multiple counts.

notlikelyevil 36

Yeah he was panicked and thought he'd lose his license I told him to do nothing and call them and report it right away and then just do what they say. There was a police raid and he had no penalties.

anticultured 6

Fantastic outcome! Good call on your part.