How to purchase and run a pub, and the place you may snap one up for £100k
Jeremy Clarkson has invested almost £1million into buying his own pub in the Cotswolds – but how easy is it to make a profit from running a pub?
The Clarkson’s Farm TV presenter purchased The Windmill hostelry in five acres of the Oxfordshire Cotswolds countryside as a freehold. This means he owns the pub outright and can choose what beer is served.
Only about a third of Britain’s 46,800 pubs are freeholds. The rest are run by tenant landlords and managers who are often employed by a public house chain or a brewery group that owns the property and stipulate what alcohol can be served.
With pubs closing at the rate of more than one a day – 509 calling last orders last year, according to the British Beer and Pub Association – it’s a financially resilient buyer who takes one on. However, any prospective buyers need not be as wealthy as the former Top Gear presenter, whose net worth is believed to be around £55million.
Websites such as Propertylink advertise freehold pubs from about £100,000, such as Ramage’s Bar in Kilbirnie, Ayrshire (£98,000) and The Goat in Penygroes, Caernarfon (£100,000).
Pub industry trade publication The Morning Advertiser also offers details of taverns for sale.
After the initial business outlay, turning a profit from running a pub is an ever-increasingly tough challenge. Fewer people are spending money going out due to the cost-of-living crisis.
The average spend on a pub visit is just over £20, according to data collector Statistica.
Even the star pulling power of Clarkson is no guarantee he will make money. The film director Guy Ritchie spent £2.5million on the Punchbowl pub in Mayfair, London, in 2008, and it was popular with local celebrities, yet he sold it to pub chain Cirrus Inns in 2013.
But a great success story that has been bucking the trend in recent years is community-owned pubs. The number has doubled in a decade to 182, with 16 opening in 2023. Many get a boost from a financial grant, such as the Community Ownership Fund.
Jeremy Clarkson has invested almost £1million into buying his own pub in the Cotswolds
Investor Alex Begg with wife Rosie and locals raise a glass at The White Swan in Gressenhall, Norfolk
Alex and Rosie at the bar with some of the regulars and shareholder at The White Swan
Terry Rogers, 45, who is manager of the Auctioneers Arms in Caverswall, Staffordshire
Chris Cowcher is head of policy at the charity Plunkett UK, which guides communities on how to buy pubs when they are under threat or closed. He says: ‘People often talk about how much they would like to own a pub. These days it is far more than just about serving drinks and food – to survive, you have to offer far more.’
Cowcher adds: ‘Costs can be crippling and if you do not have Jeremy Clarkson’s deep pockets, a great solution is to get your whole community involved in buying shares in a pub – typically at least 100 people investing a minimum of £50 each for a stake. This way, locals have skin in the game and are enthusiastic in ensuring the pub thrives as a business.’
He adds: ‘Share ownerships typically raise £200,000 in communities to purchase a property. We provide guidance and paperwork on setting one up.
‘There are also grants available that we can help people apply for as well as the option of taking out a bank business loan.’
Pub finance interest rates on secured loans and commercial mortgages from specialists such as Rangewell start from 2 percentage points above base rate – so 7.25 per cent. The White Swan in Gressenhall, Norfolk, had stood by the side of the village green for more than 500 years but was near to closing until locals stepped in five years ago. Fruit farmer Alex Begg is among the 440 village residents who invested at least £50 each to buy the pub.
Giving more does not give investors a bigger say, but a larger share in the pub – with potential to earn dividends if the group decides the pub is making enough money to give back some profits. However, investors should go in without expecting to make money.
About £270,000 was raised by selling stakes in The White Swan, a further £70,000 came from a Community Ownership Fund grant and £50,000 from a bank loan. This covered not only the £190,000 to buy the pub but a further £200,000 to do up the dilapidated building. Begg says: ‘It is important not to underestimate the renovation costs when buying a pub. The White Swan could not have been run as a viable business without the restoration as it was dated, with old-fashioned electrics and plumbing that needed upgrading to modern standards.
‘We had to rip out the old loos and make a new entrance way right at the centre of the pub.’
Although families are welcome, it was necessary to put a children’s play area outside in the garden to ensure they did not disturb other pub guests.
Owners must also consider high ongoing costs if the establishment is to balance the books and survive. The biggest expense is typically staff wages.
The Auctioneers Arms in Caverswall, Staffordshire, closed in 2016 but the community raised £350,000 to buy it and reopen in 2018.
Some 135 investors put in from £50 each to raise £102,800. A further £98,000 came from a Better Society Capital grant, which is an organisation that uses money languishing in dormant bank accounts to give to good community causes. A bank loan was also taken out. Terry Rogers, the manager, says: ‘We now have a healthy turnover of close to £600,000 a year – but about a third goes on paying staff salaries. We have six full-time and 16 part-timers.
‘Among these are people with challenges, such as autism and ADHD, who might otherwise struggle to find work. But now they are not only valued members of the local community but bringing something extra. We also offer apprenticeships. Having social skills is key to success in the hospitality industry.’
Establishing a pub with shareholders has challenges that would not have been faced if going it alone like Clarkson. Ideas such as putting in a pool table, Sky Sports on TV and a jukebox were thrown out as not all The White Swan customers wanted them.
The pub also went cashless to cut out the potential for theft and made it easier for accountants. Rogers says: ‘Some customers still want to pay by cash.
‘In such cases we are able to pay by card on their behalf.’
The Auctioneers Arms finds that quenching the thirst of customers is the best money spinner – with three cask ales, three lagers and spirits including half a dozen gins. The pub is ‘wet led’ – with drinks accounting for 85 per cent of revenue. Among the favourite tipples is Titanic Plum Porter made by the local Stoke-on-Trent Titanic Brewery, at £4.10 a pint. About half of this is taken as profit to be reinvested into the public house business.
The White Swan has a great value food menu, including a £15.75 Lowestoft haddock, chips and mushy peas. It also offers catering skills training to attract and retain staff.
To ensure a fresh pint is pulled, The White Swan stocks 36-pint casks of ale, typically costing £70 each rather than the usual 72-pint size so none of the four casks of ale on tap sit around for more than a week before being drunk dry –with disciplined bar staff ensuring the necessary pipework and pumps are cleaned between changes. Among the favourites on tap is the £4.50-a-pint Worth The Wait by local Norfolk brewer Beeston Brewery.
The White Swan has a turnover of around £500,000 a year. It’s a healthy return, but the cost of wages, general upkeep and buying pub stock means less than £50,000 is profit – and this is kept back to spruce up the premises.
Plunkett’s Chris Cowcher says: ‘Ensuring you have a sound business model is key to success and more than nine out of ten of the pubs we have helped set up are still doing well. But to thrive, you must not just pull pints but consider extras such as coffee mornings and serving tea and cake on afternoons.’
A strong work ethic is also vital to succeed – and comes separate to the host of expenses.
George Gibson bought Dyke’s End pub in the Cambridgeshire village of Reach in 2011 for £370,000 and enjoyed running it for five years before selling it for the same price.
Gibson says: ‘It was a real labour of love. If you are in it to make money you are probably in the wrong game.
‘But owning a pub was a wonderful experience and a real privilege. You must love people and always be willing to put a smile on the face of customers if you are to succeed. There is certainly no room for moaning.’
He adds: ‘But working often seven days a week – starting at 7am and ending at 11.30pm – can take a toll.
‘Running a pub takes over your life. You often have to spend holiday periods working rather than jetting off on a relaxing vacation.’
Landlords agree balancing the books is certainly possible if you invest time and money wisely. But, they warn, Jeremy Clarkson is unlikely to get money back on his purchase price or renovation costs for many years – if ever.
Those inspired by the TV star to buy a pub, either as a community project or as an individual, need the continued support of customers to make it profitable.
And for such a worthy endeavour we should all be willing to raise a glass.
THREE LOCALS RIPE FOR A COMMUNITY TAKEOVER
Ramage’s Bar, Kilbirnie, Ayrshire£98,000
End-of-terrace public house with ground- floor bar and lounge. First-floor living accommodation of one bedroom, living room, bathroom and kitchen. (Shepherd.co.uk)
The Goat, Penygroes, Caernarfon£100,000
Double-fronted pub with ground-floor bar, lounge and function room on a tenth of acre plot. First-floor living accommodation of two bedrooms, bathroom and living room with dining area. (Savills.co.uk)
The Axe & Compasses, Braughing, Herts £450,000
Set in a pretty village with a ground-floor bar area and restaurant on a quarter-acre plot. First-floor living accommodation of three bedrooms, bathroom and living room. (Savills.co.uk)
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