Tuesday, 4 April 2017

Chequers Pub Redevelopment

Planning Application 170866

The Chequers Planning Application Bruce Bar Limited:
Operational Statement Introduction

Bruce Bar Limited is a small, pub based company, operating mainly in the London area. The company is an independent family run business, formed in 1986 with the acquisition of The Rose Public House in Bermondsey. The Rose is still owned by the company today and continues to successfully trade as a pub in a very competitive market. The ancillary accommodation above the pub was converted to five flats in 2011, to provide an additional stream of income for the business. The company has a history of purchasing and investing in freehold and leased premises in unfashionable locations. Over the years the pub portfolio has grown and a significant number of failing pubs have been saved. To date the company operates 25 different premises, of which roughly two thirds are freeholds. The company currently employs around 400 employees. The company is not ‘branded’ and each pub operates individually on its own merits. It has become increasingly common for the company to extend ownership opportunities in individual pubs to senior members of their management teams. A majority of the premises owned by the company also have junior partners.

This simple format provides greater incentive for those involved to make each premises work.

Difficulties and challenges
When the company started running pubs in the 1980s and 1990s it operated a vastly different business model to the one in existence today. Beers were generic, cheap to produce and cheap to buy. The average pub goer was less discerning and it was possible to offer a much narrower range of products with higher margins of profit. Gastro pubs had not been invented and pub food, when it was available, was generally cheap to buy and simple to produce, without the need for trained chefs. Pub culture has become more sophisticated over recent years and in order to have any chance of survival, a modern pub must offer a wider choice of quality products, purchased at premium prices. The requirement to offer a quality food service during operating hours means it is necessary to staff a kitchen even when there is no demand for food. This also applies to wet sales since the cultural change in day time drinking. Pubs remain open and staffed for a majority of the day when there is little demand for alcohol. Pub trade now relies on a limited number of peak hours in the evening with the majority of turnover coming on a Friday and Saturday night. However, the fundamentals to running a good pub have not changed;- ensure the customer enjoys the experience, maximise revenue and control your costs. Whilst this sounds easy enough, there are an increasing number of factors that make these basics very difficult. Taxation and regulation increasingly contribute to tighten profit margins; and competition from everything from coffee shops, casual dining and the internet, continue to reduce the number of pub goers. A social and cultural move away from pub culture in general, with the advent of instant communication, social media and home entertainment has also taken its toll. In addition, pubs face an increasing challenge from supermarkets. Supermarkets pay no VAT on food or alcohol whilst pubs pay 20%.

As a result, supermarkets now sell more alcohol than pubs and are often selling alcohol cheaper than a pub can buy it from the wholesaler. Supermarkets can even sometimes sell alcohol cheaper than bottled water, which shows their determination to sell alcohol as a loss leader. On top of this, business rates are forecast to rise 40% nationally in the review now taking place, with the majority of the rises in London and the south-east. Increases of 100% are therefore a probability rather than a possibility in the areas that Bruce Bar operate in.

The Chequers
What works in The Chequers favour is that it is a great building. When the company purchased the pub in 2013, it had a poor reputation and was on the police and fire department ‘watch list’. The pub at that point had an uncertain future. The business has worked hard to straighten out all kinds of historical operational issues, and to emphasise and promote new retail ideas, which include the outdoor area to the side and rear of the premises, the function room, the modern British food menu, and the right craft beer, ale and wine offerings. We’ve shown that it’s possible to reverse the trends and to entice the local community back to the great British local, so that the business can begin to move forward. Despite all of the above, the company is still trying to make the best of a pub that’s historically struggled. The pub alone however is not enough to sustain The Chequers as a viable business.

When purchasing The Chequers, one of the main considerations was the separate entrance/exit to the rear of the premises, and the size of the disused yard area at the rear. It was clear that this rear yard could yield some income to support the pub as an ongoing concern and eventually contribute to the business as a whole. Most importantly, we are not developers, but are operators of licensed premises who are trying to grow a pub business in an economic climate where pubs in general are in decline. We’ve already adapted the traditional wet-led pub business at The Chequers to include additional revenue streams such as hot food sales and soughtafter accommodation in the rooms above the pub. With these new revenue streams, along with the addition of five new units on the land to the rear of the premises, we stand a chance of properly refurbishing and restoring a fabulous historic building and turning a business in decline into a modern and viable version of its former glory. The rental income derived from the residential proposal (ie. the 5 units) is the minimum amount required (to supplement our main income from the pub sales), in order to safeguard the future viability of the pub. Any reduction in units would therefore have a serious economic impact on the business and there would be a real risk of jeopardising our ability to move forward with our plans.

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