Process Story II: Informalities

Whisky Tango …

The idea of an informal offer was a bit new to us, as mentioned yesterday. My current employer operates five pubs, of which two are owned freehold by a brewery, and three are leased from largely uninvolved freeholders. None came from pubcos or from the kind of large propery business that I was talking about here. The new venture’s freehold is owned by exactly that kind of enterprise, a firm who seem to exist to own (but not manage) some 800 pubs around the country. The advantage to us is that they’re offering a new lease free of tie.

So, as is the way of our generation, we turned to Google and answer came there none. There didn’t seem to be any instances of these things on-line, or anyone blogging about writing one for a new purchase, so we sort of made it up as we went along. Given, however, that we’re unlikely to be unique in this situation, I thought I’d publish a sanitised version of ours so that future entrepreneurs will have better luck with their search engine of choice. Names have been changed or ommited to protect the guilty.

Informal Offer for [ the pub ]

Management Team

John Q. Publican first worked in pubs in Southampton, in the mid-nineties. Starting as a bouncer and barman, he later co-managed a cocktail and bottled-beer bar serving mostly students, with considerable experience of event management including live music, fireworks displays and dance events. After 10 years as a telco/BGP network engineer he returned to the hospitality trade at [ my current pub ] in [ London ], managing the pub on behalf of [ my employer ] since February 2008. The pub is primarily a Real Ale showcase pub with a strong kitchen, cider business and a good range of continental beers. During his management term the pub has approximately doubled its revenue, and received several awards from CAMRA and SPBW including area Pub of the Year twice.

[ Mr. M ] has worked in several businesses, including in the Financial Services industry, and has for the last three years managed a small direct mail and secretarial services firm in the City of London, dealing predominantly with individual and small business clients. He was also instrumental in setting up a new business as a licensed postal operator arising out of the original firm, and has been solely responsible for compliance and relations with the government regulator, Postcomm. His experience in business complements JQP’s knowledge of managing a busy pub. Mr. M is also a keen cook, and has contacts within the catering trade through which we hope to place a good head chef for the pub. He will qualify in basic catering skills and will be able to deputise for the chefs in emergencies.

[ Captain Spanner ] is currently studying for qualification as a Green Domestic Engineer. By the end of the course he will be qualified as a plumbing, electrical and heating engineer capable of maintaining the pub’s infrastructure entirely in-house to certifiable levels, and producing enough of a reduction in the building’s energy footprint to make a noticeable difference to the business overheads. He has also been employed on a part-time basis at [ JQP’s pub ] and will eventually work part-time for the pub business whilst operating as a contract engineer providing domestic services to the local community.

Both Capt. Spanner and JQP have extensive IT experience, and will be able to manage the telecommunications infrastructure necessary for the hotel business in-house. Between us, the three members of the management team can cover the skills required comfortably. We can also distribute the day-to-day workload of the enterprise between us more easily than a typical Manager/Assistant Manager pairing. This will provide us with a considerable amount of flexibility, and spare capacity to allow the business to grow.

Business Overview

A large part of our attraction to the pub lies in its social situation. We, as the management team, have defined our ideal of running a village pub which operates as a community resource; in [ this instance ] we found a village who want their pub back, because they have missed its communal influence. To this end we have planned the business around locality, seasonality and good food. We believe these qualities will also attract a good level of passing and destination trade from the main road, plus tourists and other visitors to the area. Having spoken to the proprietor who built the pub into a thriving business (and having seen the old sign!) we will return the inn to its original name, and operate as [ $oldname ]. Not only is this what the village wants, but that name has 15 years of good reputation attached to it.

Menu

We will seek a chef of similar age and experience level to ourselves and develop, in consultation with them, a four seasons’ menu which allows us to source our ingredients from the immediate local economy wherever possible. We will serve quality food made on the premises from fresh, responsibly-farmed, British-grown produce. The menu will be split between seasonal staples, year round classics, and regularly changing specials. This will provide a good opportunity to exploit local, seasonal resources such as game shooting, and we will benefit from the relative nearness of Whitby and Scarborough for seafood.

We will price the food offering in the middle to upper middle range of the local market, with main courses from around £6 to £11. We will distinguish ourselves in the market-place through quality, without becoming seen as a “gastro pub” due to the type of fare. This, together with offering a wide range of child-size options, will allow us to reach a family market as well as providing repeat business from the local area and surrounding district. We will position ourselves as somewhere to go for good food without breaking the bank.

The option will exist to provide a premium function service, and the scale of both restaurant and kitchen provide the potential for a very considerable level of custom once we establish a good reputation. Local opinion states that word of mouth will carry news of a good meal as far as York. The event promotion schedule will help establish us as a destination pub over the first summer.

The Bar

JQP currently manages a 16-tap Real Ale bar, operating 21 stillage spaces and selling around 300 barrels a year including keg sales. In the new bar, with only 6 taps available the range will be smaller, reflecting the lower significance of the wet trade within the business as a whole. JQP will keep all the taps open, at least three guest ales, two regulars and one cider. As with the kitchen, we will serve well-conditioned local brews and a good range of quality wines, supplementing these with more unusual provisions.

We will provide and publicise a Designated Driver scheme, offering cheap or free soft drinks to customers driving for a group. We will make a feature of the Fentimans range of quality soft drinks, and a variety of good cordials, along with teas and coffees. We will maintain a small stock of Belgian and German craft beers, advertising them in part through taster menus coordinated with the kitchen. Guest real ciders, which rotate regularly, will also feature.

We will offer a range of meads as table wines, and during the winter we will promote JQP’s mulled mead, which has been a considerable success at his current pub.

Traditional bar games, such as darts, cribbage, dominoes and (we hope) Bar Billiards will be supplemented by some less typical, family board games such as Scrabble or Monopoly.

The Chalet

We will spend month 1 conducting a thorough renovation and redecoration of the accommodation block. We will design a coordinated interior decoration scheme and upgrade the quality of the furniture in keeping. Capt. Spanner will be primarily in charge of the physical process of refurbishment and repair, as he will with such interior modifications as we will carry out in the main pub. He will also be checking and repairing the electrics and plumbing in the residence, as well as lowering the energy footprint, and thus overheads, on a continuous basis.

We will offer rooms at £45 per night including a cooked or continental breakfast, and will market the Inn heavily to the rambler and re-enactment societies. As we are located on the Yorkshire Wolds Way, we expect walkers and holiday-makers to generate considerable business for the Inn during the summer months. As we are also close to historic York and the Jorvik model village, we suspect that re-enactors will provide us with regular custom.

The accommodation will also provide considerable assistance to the event management side of the business, as when we put on a music event or an ale festival, we can offer those who don’t want to drive home an alternative.

Music

The pub offers considerable opportunity to develop a music promotion and event business, and is already licensed for live and recorded music. We will be promoting blues, traditional folk, folk rock and acoustic music. We will introduce session nights, open-mic nights and, on a less frequent basis, larger gigs using mostly or entirely local professionals. During the summer, we will stage out-door events. Our opening plan is to seek permission to organise a village-green event on 1st May, featuring music, a range of real ales, a maypole and the risk of Morris.

Going forward we will, over the first two years, work for a strong enough reputation as event promoters to bring in at least three major and several minor events each summer, showcasing local real ale and the Yorkshire folk music tradition.

Destination Trade and Events

The success of our approach depends on two phases of custom we can exploit. In the village we have a number of potential walk-in customers. Our first and foremost priority is to convert these into regulars. These people will become the core of our pub community, and provide our access into the village life we hope to enhance through the business. To get their attention is a process of giving back to them what they have lost; a good, personal and friendly village pub with a quality kitchen.

The longer term business expansion will come through promoting the Inn as a destination venue for ramblers, diners, drinkers and music-lovers alike. We are told that the locals will travel for good food. Our choice of chef will be key to making the pub a food destination but the seasonal menu and approach to local sourcing will also draw attention. JQP is confident that he can, through CAMRA, swiftly gain a reputation for a good range of well-kept beers. We will use music and other events to make the venue visible to a wider catchment area. The location of the pub relative to local walks will make us a destination for ramblers and holiday-makers.

Miscellaneous

Conservation Ethics
– We will operate our business as an environmentally aware, low-footprint enterprise to the greatest degree possible. This is the principle behind our focus on local sourcing for beer and kitchen supplies, and our reason for including a Green Domestic Engineer in the management team. The medium term intent for the pub is to invest capital in converting the utilities and heating systems to renewable generation on-site, wherever technically possible. This will provide both on-going savings and a considerable marketing USP.
Parish Council
– The Parish Council are active and directly engaged in village life, and in particular, the management of the village green. We will take their guidance and advice in the initial planning and set up stages of the business to ensure we are providing what the local community needs and expects. By involving them we can identify the type of events that the local people would like to see and how often these should occur. They may also be able to introduce us to key people within the community and, importantly, raise our profile!

The Offer

Having examined premises, fixtures and fittings, we can make an offer for the pub on the basis of a ten year lease, setting the rent at £25,000 in year one, rising automatically to £32,500 in year two and to the guide price of £40,000 in year three, with rent increases thereafter limited to the RPI.

We are raising a capital fund allowing us to meet the estimated ingoing costs of £37,250 and invest considerable amounts in the accommodation block, bar, cellar and events. We will open with a working capital reserve of around £11,000 to £12,000. The business will be operated by a limited company whose directors will be JQP, Mr. M and Ms. C, a bank manager who will be providing a significant portion of the capital in addition to financial advice.

If the offer is accepted we will limit the closure for refitting between temporary management and our own opening date to two weeks at most, during which time we can re-orient and upgrade the cellar and bar, redecorate and refurbish the main pub and install a new IT system, including tills and phones. We will open as $oldname on May 1st 2010, with an outdoor afternoon event, pitched for family trade. We therefore propose to close the Inn from Monday 19th April, from which the lease would begin, and will require access to the premises prior to this date by arrangement with the temporary manager.

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8 Comments

Filed under Content, Signal

8 responses to “Process Story II: Informalities

  1. Charlie

    Wow, that is a heck of a plan, and sounds incredibly solid.

    I wish you all every bit of luck with it, and hope I can come and visit when you are up and running :)

    • johnqpublican

      Thank you :) I suspect we’re going to be running a geek refuge service (and similar for the various other sub-cultural circles we’re known in).

  2. Liz G

    Please tell me you used the phrase “the risk of Morris” in the actual proposal…

  3. johnqpublican

    No, in the actual proposal there was a named Morris group (who aren’t available, unfortunately); “a significant risk of Morris” was, however, used in the initial investor pitch :)

  4. I’m still giggling over “Captain Spanner”. I hope you realise he’s going to get called that from now on.

  5. Oh, this does all sound deeply promising and exceedingly well thought-out. Am v. much looking forward to being a customer, especially when there is folk stuff going on. (Excuse to visit the York area? Oh noes. :-)