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The Millhouses pub

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35 minutes ago, jamesogt said:

Its real issue is being on a lease that is not sustainable. It can't compete on price, the base of any business!

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/millhouses-sheffield.aspx

 

They have removed the Rent amount and the "Potential Turnover" as they are usually laughable! But I had already used a while ago.....
 

Potential turnover: £378,000.00 per annum

Introductory Rent: £20,000.00 per annum

Estimated Capital start-up: £25,250.00 (excl VAT)

 

Note the word potential! £1600 a month in rent, plus business rates and utilities. And there is a note that they plan to increase it "This pub needs personal investment of time, effort and skills to realise its potential. Our vision for this pub is a business capable of sustaining a rent of £33,000.00 per annum." So they will want almost 3k a month if you start doing well. On a tied lease, so your GP will be circa 50% at best. (Most bars run nearer 80%).

 

378k is 7.3k a week, well there is not a prayer that business is taking a grand a day. 1000 a day at an average £3.50 a pint 285 drinks a day. I reckon it would do well to do 5k a week in its location. Maybe 260k a year, minus VAT leaves 208k. Half is profit. 104k. minus rent (at the lower rate) and utilities 36k ish leaves 68k. And you haven't paid any staff yet or taken a wage yourself! You can now afford to pay 4 people on NMW.

 

Sorry but as with a lot of enterprise leases the numbers won't add up.

 

Look at the Ranmoor also currently available. A pub with a much better reputation in a better area....

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/ranmoor-inn-sheffield.aspx

 

Potential turnover: £395,000.00 per annum

Guide Rent: £30,000.00 per annum

Estimated Capital start-up: £14,500.00 (excl VAT)

 

They also want you to sign up to this (please allow 3 hours for a full read!) Which basically means you run the pub for them and are liable for a myriad of things. If that was the case and it made money it would be part of the managed wing and they would pay you 25k+ to do it. SEction 5 for those that get that far!

https://www.eipublicanpartnerships.com/Documents/sample-5-year-rpt.pdf

 

Maintenance Service Charge: £798.00 (Seven Hundred and Ninety Eight Pounds) per annum plus VAT Cellar Cooling Only: £309.00 (Three Hundred and Nine Pounds) per annum plus VAT Heating and Boiler Only: £489.00 (Four Hundred and Eighty Nine Pounds) per annum plus VAT Health and Safety Compliance Service Charge: £1,177.00 (One Thousand One Hundred and Seventy Seven Pounds) per annum plus VAT

5.4 Insurance Rent You must pay Us the cost that We spend in insuring the Property described in clause 37 (Our Insurance Obligations). 5.5 Deposit Your deposit will be £[XXXXX] (AMOUNT IN WORDS) and We may ask You to increase this sum under the terms of clause 5 (Deposit). You must pay Us the deposit when You enter into this tenancy. 5.6 Decoration Fund You must pay £[XXXXX] (AMOUNT IN WORDS) plus VAT per annum to be put towards Your decorating obligations and this will be applied.

You need to adjust for the fact the pub is also your house, so the tenant avoids the cost of rent/mortgage etc (do they pay council tax for the residential element as well as business rates??) That has to be worth a few thousand a year

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2 hours ago, lil-minx92 said:

You need to adjust for the fact the pub is also your house, so the tenant avoids the cost of rent/mortgage etc (do they pay council tax for the residential element as well as business rates??) That has to be worth a few thousand a year

You are still liable for council tax, on top of business rates. They also won't collect bins from business premises, thats another £600+ a year......The numbers still leave enough for 4 staff including yourselves....

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8 hours ago, jamesogt said:

Its real issue is being on a lease that is not sustainable. It can't compete on price, the base of any business!

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/millhouses-sheffield.aspx

 

They have removed the Rent amount and the "Potential Turnover" as they are usually laughable! But I had already used a while ago.....
 

Potential turnover: £378,000.00 per annum

Introductory Rent: £20,000.00 per annum

Estimated Capital start-up: £25,250.00 (excl VAT)

 

Note the word potential! £1600 a month in rent, plus business rates and utilities. And there is a note that they plan to increase it "This pub needs personal investment of time, effort and skills to realise its potential. Our vision for this pub is a business capable of sustaining a rent of £33,000.00 per annum." So they will want almost 3k a month if you start doing well. On a tied lease, so your GP will be circa 50% at best. (Most bars run nearer 80%).

 

378k is 7.3k a week, well there is not a prayer that business is taking a grand a day. 1000 a day at an average £3.50 a pint 285 drinks a day. I reckon it would do well to do 5k a week in its location. Maybe 260k a year, minus VAT leaves 208k. Half is profit. 104k. minus rent (at the lower rate) and utilities 36k ish leaves 68k. And you haven't paid any staff yet or taken a wage yourself! You can now afford to pay 4 people on NMW.

 

Sorry but as with a lot of enterprise leases the numbers won't add up.

 

Look at the Ranmoor also currently available. A pub with a much better reputation in a better area....

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/ranmoor-inn-sheffield.aspx

 

Potential turnover: £395,000.00 per annum

Guide Rent: £30,000.00 per annum

Estimated Capital start-up: £14,500.00 (excl VAT)

 

They also want you to sign up to this (please allow 3 hours for a full read!) Which basically means you run the pub for them and are liable for a myriad of things. If that was the case and it made money it would be part of the managed wing and they would pay you 25k+ to do it. SEction 5 for those that get that far!

https://www.eipublicanpartnerships.com/Documents/sample-5-year-rpt.pdf

 

Maintenance Service Charge: £798.00 (Seven Hundred and Ninety Eight Pounds) per annum plus VAT Cellar Cooling Only: £309.00 (Three Hundred and Nine Pounds) per annum plus VAT Heating and Boiler Only: £489.00 (Four Hundred and Eighty Nine Pounds) per annum plus VAT Health and Safety Compliance Service Charge: £1,177.00 (One Thousand One Hundred and Seventy Seven Pounds) per annum plus VAT

5.4 Insurance Rent You must pay Us the cost that We spend in insuring the Property described in clause 37 (Our Insurance Obligations). 5.5 Deposit Your deposit will be £[XXXXX] (AMOUNT IN WORDS) and We may ask You to increase this sum under the terms of clause 5 (Deposit). You must pay Us the deposit when You enter into this tenancy. 5.6 Decoration Fund You must pay £[XXXXX] (AMOUNT IN WORDS) plus VAT per annum to be put towards Your decorating obligations and this will be applied.

Wow they really have loaded the dice in their favour haven't they would take a very brave (being kind) person to take on with those terms.Personally I agree highly unlikely to  take those sort of figures and the Ranmoor inn has always been a far more popular pub in my experience.

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12 hours ago, Fudbeer said:

Wow they really have loaded the dice in their favour haven't they would take a very brave (being kind) person to take on with those terms.Personally I agree highly unlikely to  take those sort of figures and the Ranmoor inn has always been a far more popular pub in my experience.

Maybe they deliberately make the terms unattractive here as part of a strategy to ultimately sell the site for development?

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Thanks for the really interesting post, James.

 

The pub suffers from being next to the park but having no connection to it. There had been a proposal to rent the neighbouring bit of park to the pub. The city would still own the land and get a rental income. The pub would get business in the summer months from people wanting to enjoy a beer garden by the park, including families.

 

Friends of Millhouses Park fought a successful campaign against this. I wonder whether they will come to regret that.

 

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1 hour ago, Flexo said:

Thanks for the really interesting post, James.

 

The pub suffers from being next to the park but having no connection to it. There had been a proposal to rent the neighbouring bit of park to the pub. The city would still own the land and get a rental income. The pub would get business in the summer months from people wanting to enjoy a beer garden by the park, including families.

 

Friends of Millhouses Park fought a successful campaign against this. I wonder whether they will come to regret that. 

 

Was that not the Waggon and Horses?

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2 hours ago, siwid said:

Was that not the Waggon and Horses?

Yes it was.

 

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Yes I am getting my pubs muddled up. Thx.

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What I find odd is the pub is really nice inside having had a recent refit which did not look cheap to me so is all ready to go and would I am sure make money over the Christmas period you would think they would have put a relief manager in even if it was just for that time?

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On 12/20/2018 at 1:29 PM, jamesogt said:

Its real issue is being on a lease that is not sustainable. It can't compete on price, the base of any business!

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/millhouses-sheffield.aspx

 

They have removed the Rent amount and the "Potential Turnover" as they are usually laughable! But I had already used a while ago.....
 

Potential turnover: £378,000.00 per annum

Introductory Rent: £20,000.00 per annum

Estimated Capital start-up: £25,250.00 (excl VAT)

 

Note the word potential! £1600 a month in rent, plus business rates and utilities. And there is a note that they plan to increase it "This pub needs personal investment of time, effort and skills to realise its potential. Our vision for this pub is a business capable of sustaining a rent of £33,000.00 per annum." So they will want almost 3k a month if you start doing well. On a tied lease, so your GP will be circa 50% at best. (Most bars run nearer 80%).

 

378k is 7.3k a week, well there is not a prayer that business is taking a grand a day. 1000 a day at an average £3.50 a pint 285 drinks a day. I reckon it would do well to do 5k a week in its location. Maybe 260k a year, minus VAT leaves 208k. Half is profit. 104k. minus rent (at the lower rate) and utilities 36k ish leaves 68k. And you haven't paid any staff yet or taken a wage yourself! You can now afford to pay 4 people on NMW.

 

Sorry but as with a lot of enterprise leases the numbers won't add up.

 

Look at the Ranmoor also currently available. A pub with a much better reputation in a better area....

https://www.eipublicanpartnerships.com/run-a-pub/pubs/pages/ranmoor-inn-sheffield.aspx

 

Potential turnover: £395,000.00 per annum

Guide Rent: £30,000.00 per annum

Estimated Capital start-up: £14,500.00 (excl VAT)

 

They also want you to sign up to this (please allow 3 hours for a full read!) Which basically means you run the pub for them and are liable for a myriad of things. If that was the case and it made money it would be part of the managed wing and they would pay you 25k+ to do it. SEction 5 for those that get that far!

https://www.eipublicanpartnerships.com/Documents/sample-5-year-rpt.pdf

 

Maintenance Service Charge: £798.00 (Seven Hundred and Ninety Eight Pounds) per annum plus VAT Cellar Cooling Only: £309.00 (Three Hundred and Nine Pounds) per annum plus VAT Heating and Boiler Only: £489.00 (Four Hundred and Eighty Nine Pounds) per annum plus VAT Health and Safety Compliance Service Charge: £1,177.00 (One Thousand One Hundred and Seventy Seven Pounds) per annum plus VAT

5.4 Insurance Rent You must pay Us the cost that We spend in insuring the Property described in clause 37 (Our Insurance Obligations). 5.5 Deposit Your deposit will be £[XXXXX] (AMOUNT IN WORDS) and We may ask You to increase this sum under the terms of clause 5 (Deposit). You must pay Us the deposit when You enter into this tenancy. 5.6 Decoration Fund You must pay £[XXXXX] (AMOUNT IN WORDS) plus VAT per annum to be put towards Your decorating obligations and this will be applied.

I agree with every word you've written.  

 

What you've done there is to lay bare the reasons why the pub trade in general is in decline.  Greedy ownership demanding too much rent.   

 

I was responding to a slightly different point - and that is the point about how a pub can differentiate itself from local competition.  I believe that's entirely possible.  However,  it does require a sound financial basis on which to operate in the first place - so your point is well taken.

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Just look at the differences between the Ranmoor and the Millhouses.

 

The Ranmoor has spent many years building its trade and is now an established successful  pub with a solid following of regulars in the area.

 

The Millhouses has for years had an erratic history with many well known issues including being closed for long periods  , can not remember the last time it had a sustained period of success and has tried and failed no doubt costing those involved a lot of money, many times.

 

Yet they estimate potential turnover is similar.

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Having lived in the area since the early 90s we had many great nights in the Millhouses over the years, but over the last ten years it lost its way.

 

The final straw for me was in the last year. We walked down the hill to Millhouses for a bite to eat. We went in Millhouses pub first and there were clearly free tables. The person that greeted us shouted over to the manageress in front of the whole bar  ‘we’ve got a couple of walk-ins, can they have a table?’. Manageress shouted back that we’d have to wait 90 minutes. Multiple issues there. We went somewhere else.

 

I think in areas like Millhouses where there’s a strong possibility people will be from the locality it’s best to try and at least be nice. Obviously the place has potential as a place for locals, not just a completely up its own backside gastropub

Edited by I1L2T3

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