Previously on JQP
I’m going to try and chart what’s been happening with the attempt to buy a pub of our own, and it may come out a little disorganised. This, more or less, is what’s happened so far:
Myself and my two housemates found a pub being put up for lease in rural Lincolnshire and started idly throwing around ideas for what we’d do with it if we could afford it. We quite quickly realised that while it would take some time to build there was a genuine opportunity here, and that between us we had the skills to make it run. We then started talking about investment options and realised quite quickly that it was realistic to think we could afford the pub in question.
We started making specific inquiries, and discovered that someone else was already looking at that pub. Because it had become apparent that the idea of getting a pub somewhere might be realistic, we made a list of other pubs we might like. One of them very quickly attracted all our attention, a rural Yorkshire pub in a small farming village which had a big restaurant and rooms to let.
The three of us discussed the idea with some other parties, and hashed out a lot of quite detailed ideas of what could be done with the business, given its location and shape. We began to make specific inquiries and discovered a series of interesting things, in no particular order:
- The pub had been shut for a least two years after mismanagement, and there is no other pub in the village.
- The name had been changed by the crap managers, and the old name has an exceptionally good reputation.
- The restaurant business at its peak had been rather larger than we’d realised, suggesting enhanced potential.
- The people who’d made the pub a destination before retiring for health reasons were still local and we’d be able to talk to them.
- There was going to be a temporary manager put in to clean it up and get a little business going.
All of this looked like good news so we made an arrangement to go up and visit the pub, and expressed initial interest. Thus far we’ve dealt with an estate agent, a pub management company, and an asset management rep, none of whom work directly for the real-estate business which owns the freehold. The principals have a portfolio of around 800 properties but have outsourced the management.
19th December 2009
As reported briefly before, the four people who’d be moving in to the place if we got it drove up to visit.
The temporary manager, let’s call him Bill, is a real asset. He’s very good, and has done the vast majority of the work of cleaning out the evidence of previous tenants, and was getting some momentum in terms of people locally knowing the bar was opening again. He showed us around and the more we looked the more we liked it, and the feel of the village. The cellar is small and there’s work to be done in various places (most noticeably the accommodation block) but we could clearly see where and how to fix it.
We also had a productive conversation with the lady who had managed the pub at its best, and gathered a good deal of useful information about the area’s habits. It became apparent to us that the business would be mostly carried by the restaurant and we started thinking about chefs. Overall, we came away convinced we wanted the business, and that there were no showstoppers. Provided we could get the money: so on our return to London we informed the management cloud that we were seriously interested and that we’d submit an informal offer in the new year.
December 2009 – mid January 2010
Obviously there were a lot of distractions in this period, but we also did a lot of planning, talked to potential investors, and started putting together the more detailed financials and investment plan that we were going to need. We hashed through our work with more experienced people, and no holes appeared in the numbers, so we submitted our informal offer.
This was a bit strange. I didn’t know about these, nor did my boss who hasn’t had to deal with any pubcos so far. We couldn’t find much, if anything, online either. Apparently, one submits a document which is half way between a sketched business plan and a TV-serial pitch document. Some of it was about how much money we’d want to bring in, when we’d want the keys and other details like that; most was about what we would do, why we thought it would work, and whether we could make it work. I’ll be putting up a sanitised version of the offer we submitted a bit later.
21st January 2010
We tooled up to a motorway services near Doncaster, for a meeting with the area representative for the asset management company. He came into the meeting with a form, with a number of boxes he needed to fill; and thus far, polite as he has been, he’s resisted any attempts to get information out of him until his boxes are filled. This includes information on how best to help him fill the boxes, unfortunately. However, I can understand his wariness; anything he says now might in theory be something his principals could be held to later.
The meeting went pretty well; we were able to fill very nearly all of his boxes, and he was able to tell us that no-one else has approached them about the property (which is good; it gives them a motivation to get us in and trading). He also suggested that the offer we’d prepared was realistic enough for him to take forward, once his boxes were ticked. The main unfilled box said “You need to prove you have £foo available to you”, so we came back south on a mission to get the money in order.
Late Jan 2010
Around frantic work at the pub I currently run, the last couple of weeks have been about formalising our business plan, getting it to potential investors and making our preparations for incorporation. And as of last night:
Feb 2nd 2010
We got signatures on pledges for enough to fill the asset manager’s requirement. We’re still working on the rest of the capital our plan calls for, but we suspect that with two thirds of the funding secured, we’ll be able to get the last third even if we have to go to a bank for it. So the next few days are all about moving a form around southern England collecting signatures and details, and then submitting it; we think we’ll be signing a formal offer by the end of next week.
My personal hope-o-meter says we’re at about 80% probability this plan is going ahead. If nothing leaps out of the legal undergrowth to bite us in the ankles, we should be picking up the keys in mid-April and staging an opening event during the May Bank Holiday weekend. Which is slightly alarming given how much I have to do ‘twixt then and now.