THE GEORGE AND DRAGON WAS SAVED BY A VILLAGE CO OP
When researching how to save the village pub for Countryman, I ended up getting far too many comments to fit onto three pages. Here are the extra bits that wouldn’t fit onto the pages….
Despite almost universal agreement that community pubs provide a social focus with very few of the ‘binge drinking’ problems seen in city centres, these much loved pubs just keep closing. Why, and what can we do about it?
The British Pub and Beer Association publishes statistics on this. The most recent report I found, for 2008, reported that, of a total of 57,500 pubs, 31% are independent, 53% tenanted or leased, and 16% were managed by a brewery or Pub Company. This means that, in practice, 84% of pubs are run by independent, often family-based, businesses. Each of these businesses, mainly because of the jobs it creates, is estimated to be worth around £80,000 a year to the local economy.
Furthermore, total average beer consumption per person has declined by about a third over the last thirty years. But the bit that really hurts pubs is that thirty years ago, only a negligible proportion of beer sold was ‘off’ sales – bottles and cans to drink at home. Nowadays, almost half the beer sold is through ‘off’ sales – beer that is not drunk in pubs.
This is why John Longden, of Pub is the Hub, describes a ‘tidal wave’ of change affecting pubs. He is a practical man, clear about the fact that pubs close simply because costs exceed income, and that in some cases, traditional pubs simply are no longer viable.
However, many others are, and he says, “Pub is the Hub began with the concern that rural services were disappearing. Often the last remaining business was the pub, and could we encourage good licensees to provide other services?” Typically, these services attract more people, and he says, “Good licensees who do Pub is the Hub can increase turnover 30 or 40%.”
Pub is the Hub has also helped communities to take over their pub. He says, “It’s a hard slog: you have to identify if the pub is sustainable.”
And, he adds, “Running a pub is not like running a shop. Pub customers come in a great variety, and come in for different things. There are special skills involved in running a pub. You need to know how to do catering, how to purchase beer, how to do stocktaking, how to do rating (rates are complicated), insurance, gambling laws, employment laws, food hygiene, licensing laws, and so on and so on. That’s why we always advise getting a professional manager.”
For those determined on taking over their pub, he advises getting good advice, be sure the business is sustainable, get a good solid business plan, and consider how to promote more activity in the pub.
He also advises having a clear plan for what happens if, despite all the hope and hard work, the community pub fails. What happens to the assets, to shareholders’ money, and so on?
John says, “We offer impartial advice. We’re currently advising around 107 groups around the country. 50% of the time we have to say ‘nice idea, but we don’t think it’s viable’. But if it works, the rewards are there. It gives a sense of spirit in the community, and if people feel it is their pub, they will use it.
There are various business models he’s seen used, and describes them:
1. Try to purchase the pub as a co-operative. “We’ve helped 30 communities to take over their pubs, and we’re presently advising about 16 more. Things to look out for, he says, are to have a manager or tenant making the day to day decisions. “There’s nothing worse than a group agonising over the menu, so best to get a manager.” Also, you need to decide what will happen with dividends, what if the pub fails, and what if investors want their money back. Once a co-op has ownership of the pub, they can hire a manager to run it on their behalf, or rent or lease it to an operator.
2. A smaller group buys the pub. This, says John, has been a popular route. “Forty or more people come together to buy the pub. Typically, they will invest between £500 and £10.000.” John advises having a cap on investments, to keep the balance of power balanced. “The same caveats as for a co-op, especially for what if it fails, apply,” he says. He also describes how one group bought the pub, then sold a long lease to an operator, at a peppercorn rent. The sale of the lease enabled the shareholders to get their money back. “Then,” he says, “They pledged the freehold to the Parish Council, resulting in the Parish Council retaining control of the pub.”
This was useful when the main threat to village pubs was a change of use to housing.
3 The third way is ‘try before you buy’ – rent the pub. The big advantage is that communities need less capital to do this. Therefore, says John, “It’s what we’re recommending at the moment. We’ve been working with breweries and pub groups to enable communities to take on the pub for a trial, at a set rent for a fixed period, perhaps, say, three years. It depends on good terms for the lease/rent, and we have an advisor for this.”
One group, he said, did this. They raised money that wasn’t enough to buy the pub, but was enough for a much-needed refurbishment. He comments, “A lot of pubs close because they need refurbishing.”
Although pubs close, John points out that others open, and says, “Pub is the Hub tries to work with people to come up with solutions.”
Rural services that have added onto pubs include shops, post offices, playgrounds, allotments, libraries, internet access, school dinners and meeting rooms, and Pub is the Hub is now working to identify services that are needed, and matching them with a pub to provide them. John says, “There’s no fixed way, you’ve got to go with the priorities in an individual area.”
John has hopes for the future of pubs that are at the heart of life in their communities. But, he says, “It’s very, very hard work to run a pub. You realise what heroes licensees are. What we need to do is make it easier for them to make a living.”
At Hudswell, in North Yorkshire, villagers came together as a co-operative to buy their local pub. After the pub re-opened, the co-op began offering other services too: a library, allotments, and a village shop. Martin Booth, Secretary of Hudswell Community Pub Ltd, explains how they went about it:
“The pub shut in 2008. The owners had bought it at the height of the property boom, and had a big loan.” Martin says that there was a lot of sympathy for these people: they had worked hard and built up trade, but were victims of the credit crunch, and went bankrupt.
Thereafter, with the credit crunch in full swing, no-one else came forward to buy the pub. So, he says, “We looked at setting up a co-op. It took us a year from thinking of it to doing it.”
Crucially, having seen the figures from the previous owners, they thought the business was viable if they could only avoid big loan payments. “That’s the advantage of doing it this way,” he says, “We raised capital from shareholders. We had 200 investors, and raised £250,000.”
There are about 80 houses in the village, and Martin says, “Most of the rest of the membership is people within about 30 miles who like owning a share, and coming out here at the weekend.”
“We bought the pub for £210,000, and spent £60,000 doing it up.” They had to refit the pub as all the contents and fittings had been sold off by the receivers. They got some grant funding, which they used to improve the layout of the pub. Without the grants, says Martin, “We would probably still have done it, but we might not have afforded such a good refurbishment. There are some grants and loans available via the Plunkett Foundation and the Co-operative.”
Martin says, “Two things make it work. One is we own the asset and have no debt, and the other is that we charge a realistic rent.”
Martin explains that they could have hired a manager to run the pub on their behalf. The co-op could have participated in any potential profits this way. But, says Martin, it would have been harder work, with the co-op having to take a much closer interest in the running of the pub. This way, the tenants run the pub as their own business, releasing the co-op from worrying about day to day management. They tenants take both risk and reward, meaning that they are self-motivating.
The rent will pay a dividend to shareholders. But, says Martin “if the business were to struggle, we could lower the rent, and not pay a dividend.”
The tenants are Margaret and Jackie Stubbs, who run the pub as their own business. Martin says, “We’ve fixed the rent for three years, so they know where they are.” They are very experienced, and the landlords selected them from several applicants.
Setting up the co-operative, says Martin, “Took over my life. We were meeting every two or three weeks, launching the prospectus, selling shares, refurbishing the pub, and looking for a tenant. Now it’s up and running, we only meet once every 2 or 3 months.”
The co-op has also introduced ‘nice to have’ village services. Martin says, “last December, we converted one room into a shop. It’s a separate business, because we wanted Jackie and Margaret to concentrate on making the pub a success.”
In order to keep prices down, the shop is staffed by volunteers on two hour shifts. The aim is less for profit, than simply to provide a service and break even. Martin says, “We hope that it will eventually make enough to hire a manager. Volunteers enjoy their shifts, but stock control, ordering, accounts and so on are onerous for volunteers, and two of our directors currently do this.”
They worked with a well-known independent retailer, Campbell’s of Leyburn, who act as wholesaler and advised on what stock to take. Although the shop is staffed by volunteers, when the shop is shut and the pub open, Jackie and Margaret will serve customers with shop goods. Many come in for a pint of beer and a pint of milk, and Margaret says, “We’ve had quite a bit of after-hours shop business.”
The pub has also used its land to provide allotments, and has an arrangement with the County library for a bookcase housing a small village lending library. Martin doesn’t believe they contribute significantly to pub profits, but says, “We did them because we thought they were a good thing to do, and in a small way, they bring people in.”
Things have gone well, and Martin says, “The pub has built trade because we’ve had a lot of publicity for what we’ve done. People have come once out of curiosity, and, because Jackie and Margaret have done a good job, customers come back again.”
Martin’s advice to others, he says, is “it’s an ideal solution, except you need volunteers to get started.” When they started, with the pub closed, there was no-where to meet or put up a poster, and the group had to get out onto the street and leaflet every house to alert them to the project. Now, the pub is full of posters and information.
Martin adds that, having bought the building, if the pub did fail, shareholders would still have an asset to sell and recoup some money. “If we’d leased, we’d have nothing to sell if things went wrong,” he comments.
His other tip is to get a good manager. He says, “This has worked because Jackie and Margaret have been so good. We’ve been impressed with their enthusiasm and ideas. They have a Fijian chef, and Fijian additions to the menu add interest. And they had a Fijian summer festival, that went down very well.”
So what do Jackie and Margaret think of it all? They are mother and daughter, who between them, have clocked up an impressive number of years of experience in the pub trade. Jackie says, “This is exactly the type of pub we wanted – we wanted land for my Kune-Kune pigs. And the allotments use the land constructively, and we hope to use the produce in the kitchen and shop.”
They have ideas to bring in new people. Margaret says, “It’s the sort of pub where ladies can come in on their own, and get a friendly welcome. If we’d had room, we’d have liked a tea room, but we do coffee and cake in the dining room. We did a Hallowe’en festival, and we do the ‘Women of Hudswell’. We did a pumpkin carving session with an art teacher. There were 20-odd people in the dining room, all carving pumpkins.”
The children’s Hallowe’en party attracted more children than they had realised lived in the village, and Christmas Carol singing was popular too. They have a walks booklet, and are considering a challenge run for next summer.
The library shelf has spawned a book club, and the after hours shop gives people an excuse to stop off for a drink while picking up essential supplies. And, says Margaret, “When we had a musical theatre evening, we had someone stopping in the village who’d been a West End show. That raised £500 for charity.”
So, getting together enough shareholders to buy the pub, then renting at a rent to enable good tenants to make a living sounds a success. But what if you’re not blessed with enough spare cash in the village to buy the pub?
At Cherry Willingham in Lincolnshire, villagers took over their pub with much less capital, by leasing it. But if the last tenant couldn’t make a go of it, what’s different about a community group? Barbara Mawer, who is licensee and runs the pub, explains what happened: “The pub kept closing. New landlords would come, but after about six months, it would change hands again.”
Eventually, locals thought the pub would close, and, says Barbara, “Someone thought that if we could get enough people together, we could take it over.”
They formed a syndicate of 43 people, with four directors. Barbara, who under previous management was a barmaid, is one of the directors. She says, “We asked for pledges of £100 to £1,000, and raised £14,000, to take the lease for five years. We’ve been running it since May last year.”
“It’s a village pub,” explains Barbara, “with a restaurant that we also use for functions, for instance the drama group, bingo nights, and so on. We run parties, get the cricket and football teams in, and it’s going from strength to strength.”
Barbara believes that the syndicate is doing better than previous tenants because, she says, “The last few licensees weren’t interested in food. The restaurant wasn’t open a lot of the time. Food brings in lots of new custom, and the Sunday carvery is fully booked.”
The syndicate agreed to re-invest their dividend in the pub, and Barbara says, “It’s important to keep motivated. One of the syndicate does a business plan, but everyone has different jobs. It helps with ideas to move on. I took a course to become the licensee, and run it from day to day. Someone else does the cooking, and another syndicate member has improved the grounds. We have a committee of six members who do functions. It helps to bring in fresh ideas.”
As John advised, they have a ‘what if it fails’ clause, and Barbara says, “We had to put up a bond to get the lease, but if we have to pull out, we get a 60% cash refund. If we do make a profit, it gets shared. We have a five-year lease, and at the end of that, everything has to be re-negotiated.”
She says, “We have a good village. Our community is very close, and we all join in together.
Barbara’s tips to others thinking of doing a similar thing are to have a good business plan. And, she says, “It’s long hours, but well worth it.”
So, even though we have cuts and credit crunch, there are ways to take over the village pub. The key is to have the will, some cash, but most of all, the imagination to create extra reasons for customers to visit the pub.
And for those who’ve got cash but not time, Martin may be able to do the work for them.
To get further information and advice, see:
Plunkett Foundation. www.plunkett.co.uk, Tel 01993 810730
Plunkett have decades of experience helping groups to take over shops. They have now teamed with the Co-op to offer advice and financial assistance to those wishing to set up community pubs.
Co-operatives UK: www.cooperatives-uk.coop 0161 246 2900
Pub is the Hub, www.pubisthehub.org.uk, 01423 546165
Camra, www.camra.org.uk 01727 867 201
British Beer and Pub Association www.beerandpub.com
Featured Pubs:
The Old Crown, Hesket Newmarket, Cumbria, Tel 016974 78288
The George and Dragon, Hudswell, North Yorks, 01748 518373
The Cherry Tree Inn, Willingham, Lincs, Tel 01522 754244
Martin Booth: 01748 824204
