Retirement raffle – its an investment!

I have recently completed another review of the pub market from my perspective and my record remains pretty good. Every so often I review the pubs that have shown up as potentials and look at where they are against my thoughts at the time, its nice to check. Where I concluded that there was simply not enough demand to support the house they have closed, on this I remain 100% accurate. Where people have lost their way with the business and are treating the commercial sale as a residential one they remain on the market. The trouble with this approach is that the emotions associated with selling a home are not supported by the reality of the trading figures, again I am bang on target.

This time around there are a couple of quirks of the market that surprised me. One premises that has been occasionally and very cautiously marketed, I got as far as the ferry on one occasion before they changed their minds, has ceased trading. It is always sad to see a venue cease trading under any circumstances but I was surprised to see plans to extend the post office counter to become the only trading activity. The pub rescued the post office service many years ago when it couldn’t survive on its own for this to have now overtaken the pub in terms of trading viability is both astonishing and sad. I suspect that family dynamics may have held greater weight in this decision than pure economics but nonetheless its a surprise. My thoughts were that the early toe in the water would be followed by a more firm commitment to sell in the future and certainly I kept a close eye on developments.

The second venue that surprised me was an outside option whose status I am unsure about. This venue is marketed by one of those awful business selling sites that requires the DNA of your first-born before you can ‘join’ and then bombards you with irrelevant garbage, needless to say I have progressed no further than the front page. It was during my search for more information on a premises that is being sold by the owners of 4 years due to “retirement” that I discovered how they had come about the purchase. The pub was last sold via a raffle with tickets costing £20 each and the winner getting the freehold. Fair play to anybody who can take £20 and in just four years have a return on investment that allows them to retire but again I feel there is more to the story.

So what Have I learnt? Well commercially failing post offices can surpass the turnover of a well-loved local pub and that a raffle is a legitimate way of selling a pub. Before you leap to the keyboards to pen me a comment pointing out that the trade is in a dire state and I would have to be mad to buy a pub please remember, as I have said many a time, it is not a choice. Don’t bother scouring the web for the trade news that told us this was the worst New Year in the on trade to date with more people staying at home and even youngsters eschewing alcohol, I have seen it already. Even whilst reading the bad news stories my mind was ruminating on potential extensions for letting rooms. For some there is just no escaping the trade we just adapt to the difficulties and plough on.

It’s just a step to the right

I spent an excellent couple of hours yesterday discussing the potential of the broadway. Obviously I cannot move straight into this venue but, with slow progress being made, I think that I could run it under a manager. The thing with operating under a manager is that the business is only being held that means that it isn’t growing but also that it’s prone to attack from competition. But if an opportunity presents then it may give the resource I need to cover the remaining pause time.

The broadway is an interesting building and offers at least three, probably four, letting rooms which is a big plus for me. Despite the best eyes in the business we can’t fathom the financials on the business which, of course, means we can’t arrive at the asking price. A combination of google earth, two sets of sales details and Facebook allowed us to conclude that the ground floor cellar led to a horrible pipe run to the central bar, probably installed when beer was cheap. The trade route to the cellar appears to be equally unpleasant and at odds with the suggested alternative use for the adjoining land.

Some careful zooming revealed a pub that suffered from an instability in its base offer with more font changes than a supermarket shelf. My plan for any venue would stabilise the base offer and return to community use so that side of things is covered. The trading area is split into what, despite the sales details, could be reasonably classed as 30 and 45 cover areas, one served by the bar and the other used for dining. The premises includes a post office but no value, either community or fiscal is associated with it. If the post office stays it needs to move for practical and logistical reasons but I’m not sure post offices are as essential nowadays. I am sure that community banking services and internet assistance could provide the same services without the complications of working for the GPO.

With only three pubs in the area and a large number of chimney pots the trade should be good, although the figures would seem to disagree. Based in a village that has lost the majority of its services I am feeling a ‘pub is the hub’ opportunity to trade larger purchases and maximise the benefit of economy of scale. A “higher than average welfare dependency” seems to be a natural result of “coastal” so is not a cause for concern and I am sure that with the higher value homes in the area there is support for a community asset.

As you can see there has been a lot of thinking. Andrews office is awash with scribbled plans and rough figures which replicate what is going around in my head. This venue was on the market a couple of years ago ( pre pause) but got taken off when I enquired as to financials. I think, as is common in this trade, that a good weekend teased the vendors into staying a bit longer. Are they serious this time? Who knows. In the licensed trade there are a lot of people who want the reassurance of purchase offers as validation of what they are doing. I think that this justifies a re-engagement with my estate agent and a discussion as to intention and expectation, who knows maybe a viewing …….