Is it your dream to run your own bar or pub?
Have you always wanted to stand behind the bar, instead of sit in front of it?
Maybe your passion is food? Combine excellent cuisine with choice wines and craft beers. A bar franchise aimed at your ideal target demographic could be an enjoyable way of making a living for you too.
UK Bar and Pub Industry Overview and Outlook
Bars and pubs tend to focus their businesses towards their offering of beers, spirits, and wines – although, many also offer food as well. Several bars and pubs tailor their services around clearly defined themes: sports bars, wine bars, etc.
The UK bars and pubs market size, by revenue, is currently just under £15 billion. According to market reports, “Beer consumption in particular has fallen over much of the past five-year period. Nevertheless, alcohol consumption is expected to grow in 2021-22, as pubs are allowed to reopen, presenting an opportunity for industry operators.”
According to the Lumina Intelligence UK Pub & Bar Market Report 2021, a full recovery for the industry is expected by 2024.
According to Katherine Prowse, senior insight manager at Lumina Intelligence, “Despite a catastrophic last 18 months, the UK’s love affair with pubs remains intact and will see the market not only fully recover by 2024, but outpace value growth in the total eating out market.”
What will it take to reach full recovery in less than two years? Prowse says the key is to look at the changes prompted by COVID.
“The legacies of the pandemic present significant opportunities to operators and will remain key to recovery,” Prowse notes. “Delivery accounted for 50% of pub/bar occasions during lockdown and offers operators the chance to broaden [their] customer base.”
In addition, “The adoption of digital has resulted in a quicker, more seamless customer journey, which many customers are now used to and prefer. As well as offering a better experience, digital ordering and payment gives operators access to valuable data that allows them to understand their customers better.”
How and When Do Pubs Make Their Money?
As you can imagine, drinks-only patronage is the main way bars and pubs make their money. However, per data from Lumina Intelligence, it does not account for the majority of visits at 42%. Dinner is the next most prominent time for business with 24% of bar and pub visits. Lunch (22%) and breakfast (3%) round out the list.
So how can bar and pub owners make sure they are maximizing their profits for any of these occasions? Get creative with the deals and promotions. For instance, over the course of the pandemic, many UK bar and pub operators found success with “work-from-home lunch” deals.
Advantages of a Bar or Pub Franchise
If you're looking for a business opportunity but—perhaps—lack the experience of running a company from the ground up, you might find the prospect of a food franchise very attractive. When you invest in a franchise, you take on the methods of a business that (1) understands its established target market, and (2) has proven itself profitable and sustainable.
Independent companies that go into business without the support of an established partner often struggle to penetrate the market. They often misunderstand what their customers want and how to fulfill that desire. It can take a long time, along with trial and error, for an independent company to get their service offering right.
On the other hand, franchises tend to enjoy more immediate success because the parent company has done their market research. The franchisor has spent time developing their services and products to meet the standards expected by their customers.
When you invest in a bar or pub franchise, you inherit not only the immediately recognizable branding of the parent company but the tried-and-tested business model catering precisely to a client base who already know and love their products. You take on the parent company’s hard-earned reputation—and reputations are hard to build in the marketplace. Additionally, franchises often boast an existing supply chain and vendors that already know what the business needs.
Your franchise parent company usually provides an excellent training package for you and your employees to ensure that you can maintain their hard-earned reputation. In addition to training, many franchise partners offer a range of business support functions, including HR assistance and compliance with food, business and employment regulations.
Or, read it straight from someone who has been in your position:
“Being part of a franchise has been extremely valuable, especially the help and guidance we’ve had from [our franchisor] and an experienced franchisee nearby who was willing to share best practice with us,” Corinne Kingston, a franchisee with a popular UK pub brand said. “I think a new venture like this is a bit like learning to drive: the training is great and explains what you have to do but you do need to be actually doing it to know what it’s really like. I’ve had fantastic support from my new staff and that’s a very good start.”
Money Matters: Franchising vs. Independent
Bar and pub franchises require an initial investment, from around £20,000 upward to several hundreds of thousands of pounds. For this reason, most people need to apply for a source of funding to obtain their startup collateral.
Luckily, banks and moneylenders look at franchise businesses in a more favorable light because the business system of the franchise has already proven itself successful, profitable, and sustainable. This means that franchise businesses often achieve more reasonable interest rates than independent companies that open their companies without the support of an established partner.
Independent companies, on the other hand, often find it a challenge to obtain loans with sensible borrowing rates since they have very little to no evidence that their business will reach potential profitability. This comparative lack of faith from lenders has the potential to jeopardise their company from the start.
Having enough money before you start is important. Unfortunately, about half of all independent companies go bust within two years of starting up. However, 90% of franchise businesses report profitability within two years. Often, the biggest factor in the disparity in the success rate is the access to financial capital to begin.