Indo: Opportunities to buy pubs/hotels from receivers

Does anyone here know anything about the valuation of pubs?

At what point in the recession would it make sense to look at acquiring a pub?

If I were to move back to Ireland I have a idea that I would like to own or part-own a nice cash generative business. My gut tell me that valuations are still a long way from the bottom. I know there there are lots of reasons why you should not buy a pub or a restaurant, but surely there will come a time when even at much reduced turnover, the businees becomes an attractive proposition because you have bought it at knock-down price.

You would take the expected net profit you would make and divide it by the rate of return you aim to achieve on your capital. eg for a pub with a net profit of 100K, you might pay 1.25m and thus get an 8% return on your capital investment. Pubs need frequent redecoration so you would have to take depreciation into account and also your own wages if you plan to work there.

Something to watch is that traditionally pubs were used to launder money because banks do not regard publicans with bags of cash as suspicious. I know of one Irish bank that whitelists all publican customers and never reports any of their transactions. The result is that criminals are attracted to the business and their audited profits overstate the true profitability of the business. Another problem is that many Irish people dream of owning a pub - presumably for the social status of being the big man in the bar, this leads to higher than rational valuations. It’s easy for the bar staff to steal the profits of a pub, so bar owners end up spending long hours on site. It gets tiring looking at drunk people every night while you’re sober and knowing that a proportion of your customers are addicts spending the housekeeping.

It is much cheaper now to lease a pub premises than it was in the past. I know one person who obtained a dublin lease recently at a third of that paid by the previous, insolvent tenant. He is just breaking even now.

The advice is much appreciated.

I have a realtive in the industry with no capital. I have some money but not enough now to do anything. However, if prices keep falling then I may actually need less money than I think.

Renting a pub for a period was suggested to me by someone else too and it sounds like a less risky way to find out if I can actually make any money in this business or not.

I would not be in this for the social cachet by the way. I spend a lot of my time looking at company valuations so my only rational for looking at a pub is the income stream. My plan is to let my relative run the pub whilst I stick to my day job.

Had an idyllic evening and night here 10 years or so ago. The location is brilliant - our room quite literally opened onto this great beach, a bit windy for kiddies but a mecca for surfers. Window open all night, waves crashing maybe 50 metres away, great food and service in the hotel. Rather pricey though - we just happened across the place and decided to stay - would never have booked it in advance at the quoted prices. Needless to say all the surfers took off in their Splitties and never set foot nor spent any dosh in the hotel itself - probably why it’s gone out of business.

I’d love to own an ex-pub but turn it into a private club with special late serving hours. Spit, sawdust, bitter porter served at room temperature and dark interiors.

Membership would be through the authentic pub appreciation society. Proper Pogues kitsch, the whole bit.