In July, we looked at the issues that can arise when looking at pub conversions to residential use. Despite a brief break last month, when we digressed to consider some of the new changes to permitted development rights (none involving pubs, I hasten to add), we now move back this month to consider the subject of pub conversions, looking in particular at a recent case study.
Last orders for the business
Our client had entered into a deal with a publican and his wife in respect of a pub in Ramsgate, Kent.
The public house business had suffered over a number of years from increasing preference for the younger generation towards bars, clubs or restaurants to consume alcohol and as places outside the home to socialise, as well as changes over time in the Licensing laws and consumption of alcohol at home, often with takeaways, with friends. Then the pandemic hit and a succession of lock-downs was very much the final straw for the business.
Alternative Provision & Competition
The premises operated in a very competitive environment. There were 13 other licensed public houses operating within a 1 mile radius of the premises; the radius we looked at was specifically dictated in this case by the Council’s local plan policy.
This was clearly shown in the pub’s business accounts. We went back five years, and the profit and loss account showed a slow and steady decline in the business. Sales went from £87,000 in 2017 down to £18,726 in 2021 – a drop of over three quarters of the 2017 revenue. Although much of this was down to the impact of COVID in the fifth year, it was already falling on an annual basis.
This was clearly not down to the management of the business. The present owner of the business was very experienced and had strong local connections. It is very unlikely that it would somehow completely turnaround as a business and start turning a significant profit again if a new owner with new ideas was ‘parachuted’ into the business overnight.