Pubs are a staple of Australian culture. Steak, Burgers, Wedges or a good old-fashioned drinking session with mates, Australians love their pubs!
Whether you’re looking to start your own business, wanting to buy a pub for sale or just want to find the perfect place for an evening with friends, buying a pub in Australia can be overwhelming.
We will provide 6 tips that will make searching for your new pub easier and more enjoyable.
1. Is it freehold or leasehold?
In most cases, pubs are on leasehold. It is important to ensure that the pub you buy has a long-term lease from the current owner; otherwise, when your lease ends they may find new tenants or sell the premises. You need to make sure you are paying for the business and a good lease term.
If leasehold, read the lease agreement carefully, if freehold ensures you get a building inspection.
2. How’s the Kitchen and Accommodation?
When you’re buying a pub or restaurant for sale, another thing to consider is the kitchen.
If it’s not in good shape or has some issues with it, then think about how much money and time will need to be put into fixing up that part of your new business.
Buying an existing business can get tricky if there are things like appliances that don’t work properly already built-in but do have the potential for further use.
A pub with accommodation is a good investment because it can provide a good option for clients and an extra income for the business. People often look at a pub or motel for sale with a liquor license.
Accommodation attached to a pub is more common in regional Australia. It was very popular during the 1970s and 1980s when the majority of pubs were built to include rooms for rent upstairs.
Ensuring good occupancy rates is important as it comes with its own unique set of expenses such as cleaning, replacing bed linen, laundry services, bathroom renovations, etc.
Is everything else in place? If not, then take the additional expenses into account.
3. Is it Profitable?
When buying a business, the biggest indicator whether it is a good investment is how financially stable it is. You will want to perform due diligence on the pub you are looking to buy and ask a series of questions such as:
- What is the net profit to the owner?
- How long will it take me to earn back my investment (ROI)?
- What is the year-on-year growth of the business?
- What is the profit to loss ratio?
- Will I have added expenses if I rebrand or do a fit-out?
- Does the pub have any outstanding debts?
Ensuring you have a professional to assist you during the due diligence is very important, especially when making a big investment and buying a pub.
Have a drink and a meal
One of the best ways to truly know if this is the right pub for you is to take a look behind the scenes. You need to find out how much work would be involved in running your own business and whether it’s worth all of that effort.
This means taking a good look around when you’re there as a patron. How are the staff? Are they happy? Is service efficient? Are there any key people who keep the pub running efficiently. Getting a well-informed picture of the business you are looking to buy is important .
Now that we’ve covered all the basics of pub buying in Australia, its important to remember that every business is different. You should always consult with professionals when buying a pub. These include a conveyancer, business broker, business advisor and accountant.
We hope you enjoyed reading our article on how to buy a pub with these 7 tips for success.