Something for nothing …

... not often that you get to put this into practice, but after a recent visit by family members I’ve got a great little way to do this and get you out of the pub for a couple of hours.

It’s easy really, get in your car, head out of town and when you come across the first stretch of brambles go blackberry picking!

A 5 year old and I picked 2kg of blackberries in just over half an hour – and at 56.3p/100gms (Asda price at time of writing) this amounts to over £10 of free stock.

The down side? A few scratches and a couple of quid petrol money, the latter I would put down to stress therapy rather than food costs.

The upside? A break from the pub, some fresh air and enough blackberries to freeze (for later in the year) and some to make a blackberry and apple crumble for the pub that day.

(By the way blackberries will cost you as much as three times the current summer price when they are out of season – so this brief stint of foraging could potentially be worth £30!)

Here’s the recipe I use for making a perfect crumble that yields 8 portions:

For the fruit: 300gm blackberries, 900gm cooking apples (four decent sized Bramleys will do) the juice of two lemons & 175gm caster sugar.

For the crumble: 560gm self-raising flour, 280gm brown sugar and 280gm of cooking margarine.

To serve: 50ml of double cream or 100ml custard or 100ml of ice cream.

Total cost: Shop bought 54p a portion (68p when out of season) or 33p when you go blackberry picking

Selling at 70% GP gives you a sale price of £2.30 (shop bought) £1.40 (foraged); 80% GP gives you £3.45 and £2.10 respectively.

Method:

Chop apple in to small dice, combine with lemon juice and bring to boil in 200ml of water; simmer for 10 minutes, strain and reserve the apples.

Wash blackberries and ensure all stalks etc removed; place blackberries and reserved cooked apple in a bowl and gently combine with the caster sugar, being careful not to break the blackberries; place in an oven proof dish (or split between two if you don’t have a large enough one).

Now make the crumble by combining the flour, brown sugar and margarine in a bowl (I use my hands for this) until you create a crumble mix to your liking.

Cover the fruit mix with the crumble mix and place the dish in a pre-heated oven at 180°C (350°F/Gas Mark 4) – cook for 40 minutes.

Much better than any crumble supplied by any third party, home-made with provenance and a great return.

As the meerkats are want to say – simples!

The landlord giveth and the landlord taketh away ...

With ever decreasing sales and greater pressure on margin, all too often publicans will be advised to offer price reductions in the form of promotions ... BOGOFs, meal deals, happy hours etc.

But who pays? Certainly not the pubcos or suppliers so there has to be some balance in the system ... this is exactly what big business does ... and they do it through as mechanism called "Dynamic Pricing".

They sometimes squeeze as much as 25% extra margin out of their goods and services ... if you'd like to know more see the article on my website by following this link: How To Run A Pub - Dynamic Pricing

At which point does a groundswell become a tsunami?

The BISC inquiry into the pub trade has heard calls for a statutory control of the industry from the Independent Pub Confederation as the years of inaction by pubcos to put their own houses in order has resulted in the decimation of this vital social and economic institution … the great British pub.

Self regulation is like asking playground bullies to decide amongst themselves just how much lunch money they will extort from other children … it hasn’t worked in the press and it hasn’t worked in the pub industry.

No wonder Ms Simmonds of the BBPA (which as we all know really only represents brewers and pubcos not tenants or free-traders) would prefer that HMG “would concentrate on other things”. Let’s face it she and the BBPA would never bite the hands that feed them and her (and her organisation’s) entire raison d’etre is to spin and deflect attention away from the sharp practices of her paymasters.

With the professional bodies such as the BII and RICS prevaricating and vacillating for similar reasons as the BBPA it is no wonder that MPs are adopting a more strident tone with the likes of Enterprise and Punch.

It is becoming ever more apparent (even to Parliament) that the BBPA is a trade body for the brewers and the pubcos and that groups such as the Independent Pub Confederation are more likely to be the true representatives of publicans.

The outrageous behaviour of Peter Rachman (and his ilk) was curtailed by HMG in the 1965 Rent Act and legislation to control corporations that are causing as much, if not more, harm to its victims is long overdue.

It cannot just be about proscribing an effective code of practice though.

It must also enshrine elements of natural justice so that tenant and landlord share equally the risk and rewards of operating pubs. It must ensure the sustainability of tenant businesses (not to be confused with subsidising sub-standard operators) and end the indentured servitude of thousands of families in this country that would be deplored elsewhere in the world.

We all hate the Nanny State but at some point Nanny has to intervene when certain children resolutely refuse to play nicely.

Lies, damned lies and statistics ... Part 2

“Annual income twenty pounds, annual expenditure nineteen six, result happiness.

 
Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”

Charles Dickens, in his 1849 novel David Copperfield, provides us all with an apt Profit and Loss Statement, income and expenditure recorded and the result analysed.

Your pub business is like any other it will make a profit or a loss depending on two factors – income and expenditure.

I have provided many examples on this website on how to improve sales and control costs (and many others will provide similar information) but for many pub businesses knowing what targets you should aim for in cost control is less clear.

On July 4^th 2011 the Association of Licensed Multiple Retailers (ALMR) announced the publishing of its annual Benchmark Survey Report in which it details its findings on such things as sales, costs, capital expenditure etc amongst its members. The survey taken in October 2010 coincides quite nicely with a report from a well known licensed trade accountancy firm.

Between them they provide an insight into what pubs in certain sectors are achieving in terms of profitability based on the profit and loss information on a virtually identical number of sites so comparisons (whilst usually odious) should be valid.

The ALMR report suggests that the average cost of running a pub (out of the 699 pubs surveyed) is 47.1% of annual turnover in freeholds and 44.9% in tenancies and leasehold pubs (excluding rent and cost of sales). Add the 11.4% of turnover that represents rent and this means non-freehold pubs have to give over 55% of their turnover to running the pub (although this includes a figure of 7.2% for tenant’s drawings), which nets out to 47.8%.

The accountancy firm gives the following analysis of some 701 pubs (no detail is given of whether they are tied or free of tie) for three levels of trading, under £3,000 per week, £3,000 to £5,999 per week and those over £6,000 per week. Average cost of running these pubs is 46.8%, including rent at 9.22%.

Analysing their results using an average of all their averages (i.e. different levels of turnovers etc) the results would appear quite encouraging:

Detail	weekly		Annual		% of sales
Wet	£     4,219		£219,388		70.16%
Dry	£     1,319		£  68,605		21.94%
Accommodation	£        475		£  24,700		7.90%
Total	£     6,013		£312,693
Cost Wet Sales	£     1,715		£  89,162
Cost Dry Sales	£        535		£  27,812
Total Costs of Sales	£     2,249		£116,974
Gross Margin					Gross Margin %
GP Wet	£     2,504		£130,226		59.36%
GP Dry	£        784		£  40,794		59.46%
Total Margin	£     3,289		£171,019		59.38%
Gross Profit	£     3,764		£195,719		62.59%
Overheads					% of t/over
Rent	£        620		£  32,245		10.31%
Electric	£        123		£    6,420		2.05%
Gas	£         87		£    4,513		1.44%
Wages	£     1,051		£  54,667		17.48%
Other	£     1,219		£  63,404		20.28%
Total overhead	£     3,101		£161,248		51.57%
Profit/Loss	£        663		£  34,472		11.02%

Assuming that the draught/bottled beers represent 70% of wet sales and an average price per pint of £2.70 this would be a MAT (Moving Annualised Total) barrelage of approximately 197.5.

Making the same assumptions as above the cost to tenant of a barrel of beer would be £338.60 or £206.92 for an 11 gallon keg.

Does any of this sound realistic, in terms of tied tenancies and leases? Is it really possible to make over £34,000 profit from a 200 barrel pub?

The answer is yes if the divisible profit is equitably split – the landlord charging rent at 10% and selling beer to tenants at £338 a barrel. This would mean somewhere in the region of £100 per barrel discount earned by the landlord being passed on to the tenant.

Yes, that is, if you also accept the premise that the provision of accommodation is akin to “getting money in for changing some sheets”. If this income is treated as “cost free” in these accounts then it accounts for 72% of the net profit of the business. For those pubs not able to provide this service it means net profit would be reduced to £9,772.

Put in the real price of beer, as evinced by contributors to the Publican’s Morning Advertiser forum, that beer is nearer £256 for a 22 gallon, this means the averaqe of all average pubs from these samples of the trade universe are making a loss of £6,735 a year … I bet that rings true!

Whilst these “benchmarks” may be of use in setting targets or as comparitors for your business you must remember that your business is unique and the trick is to closely examine all areas of income (to maximise them) and all areas of expenditure (to minimise them) in order to make the greatest profit from your endeavour.

Lies, damned lies and statistics ... Part 1

Tied pubs not more likely to fail than free of tie pubs … Greg Mullholland reinterprets pubco figures and  proves them wrong ...

Parliament as an institution is no fool, its constituent members is a different matter, let's hope that the continual misinformation (and in some cases according to Parliamentary reports outright falsehoods) put out by the pubcos and those with vested interests in them will prompt some action to end the rapacious activities of these companies.

Let's face it these corporations are not like the banks (absolutely integral to the general economic well being of society) these companies are not too big to be allowed to fall over. The countervailing benefit to society of safe and well run public houses as part of the social infrastructure of this country must far outweigh the interests of a few hundred pubco executives and managers.

Their respective shareholders and bond-holders will find a way to protect their interests (even if the value of those interests takes a temporary hit - such is the nature of free markets) especially if they are seen to be the saviour of the great British pub by ending the questionable business practices of the corporations they are funding.

NOISE! ...can't live with it, can't live without it ...

Having been rudely awakened by the cacophony of the dawn chorus - in particular a pair of warring blackbirds (whose territorial dispute seems to be centred around my bedroom window) - and then the arrival of roofing contractors to next door (complete with petrol driven roof tile cutting machine) I thought this a good time to release a new article on my website ... follow the link. below

How To Run A Pub - Noise Pollution