Refurbish or perish – pub renovations can make all the difference

01 July 2011
Refurbish or perish – pub renovations can make all the difference

A pub refurbishment needn't cost the earth, but can have an exponential effect on turnover. Selwyn Parker reports on some real-life examples

The banks are slow to lend and business may be down. In short, two good excuses not to splash out on refurbishments. But the lesson of the recession is that landlords who keep investing, albeit carefully, will reap the rewards.

And for many, it may make the difference between success and failure as the revolution in Britain's pub-going habits works its way through the country and forces landlords to adapt or suffer the consequences.

Also, as the real-life examples below show, a refurbishment doesn't have to cost the earth even in the revival of a moribund business. Many landlords have transformed their pubs with budgets that scarcely reach double figures. The golden rule, say landlords, is to allocate capital carefully and to get deeply involved in the entire process.

landlords advice for affordable refurbishment

â- Turn all the real estate into revenue-earning areas, such as grassy areas which can be developed at little cost. One of the first spaces to be reclaimed at the Town in Dundee was the DJ's stage.

â- If buying, don't be deterred by grime and neglect. Most of the landlords we interviewed walked into premises that could have easily been shut down under health and safety rules.

â- A lot of capital can be consumed through the repair of infrastructure such as wiring, roofing and ventilation, among other things that don't produce revenue. If they're in reasonably working order, they should be left for another day. Also, local tradesmen can usually do the job a lot less expensively than those hired by pub estate companies.

â- Street aspect is vital - impressive entrances, clean windows, bright signage, stylish outdoor furniture and flower pots attract customers.

â- Comfort matters a lot but doesn't cost a lot. Stools, chairs, heating, lighting and décor: they're all part of the comfort equation. Oxford-based Pubstuff, a supplier of mainly reconstituted furnishings to pubs, has in less than a decade grown turnover to £2m a year by selling the kind of furniture you'd have in your own home.

â- Unglamorous as they are, toilets have to be bright, clean and fresh, preferably with tiled floors. "You can lose customers if the toilets aren't nice," reports Lisa Gosling about the Withy Trees before its makeover. "They'll just walk out."

â- In a major refurbishment allocate capital carefully to get the best bang for the buck. And set aside a regular amount for maintenance - the Town's Iain Clunie budgets £500 a month, roughly 2.5% of turnover.

The Withy Trees - a lesson in capital allocation

withy trees
withy trees
When the surveyor's reports started coming in on the Withy Trees, a 150-year-old pub in the village of Fulwood, Preston, in Lancashire, "it got quite scary", remembers Lisa Gosling, a nurse who was about to join her husband Andy in taking over the tenancy of the pub.

Not only was the pub in "a state of dilapidation", as she puts it, it seemed that much of the general infrastructure wasn't much better. The couple plunged in anyway and spent £200,000 on refurbishment with a loan from Punch Taverns.

Looking back, she'd do things a bit differently. Punch Taverns made the big decisions on how the capital should be allocated and, regrets Gosling, "a lot of money was spent on backroom refurbishment such as fire alarms, CCTV cameras, rewiring and general repairs", she explains. "Not enough was spent on the things the customer sees. Nothing really changed externally or internally. Next time I would get involved earlier in these decisions."

However, for relative novices - she had worked behind the bar to get some experience before she bought it - the couple got a lot of things right. Responsible for the allocation of about £50,000 of the £200,000, they invested enough in the kitchen to restore it to proper working order with a gas interlock system, new cooker, tiled floor and general spruce-up. The "absolutely appalling" toilets were cleaned up, given a fresh coat of paint and new lighting.

And she found money to reconfigure the interior, albeit without any structural work, by creating what are effectively two areas around the bar - a lounge area with L-shaped leather sofas and low coffee tables that's quite distinct from the television area. The bar was sanded and varnished.

The Withy Trees got its cask ale accreditation in January and has three guest ales on offer. To boot, it's up for best-cellar awards. Next up, the Goslings will develop a beer garden.

Although £200,000 is a lot of money and Punch Taverns hiked the rent because of its own increased investment, it's already paying off. In the six months since the refurbished Withy Trees opened, turnover has tripled across the board.

"We're still 88 per cent wet, 12 per cent food," adds Gosling.

The Northwick Arms - cut-price refurbishment

northwick arms
northwick arms
Andrew Haigh has been round the block in pub refurbishments. The Northwick Arms in Ketton in Rutland, East Midlands, is his fourth in over 30 years and the owner-operator has developed a highly economical philosophy. Even though the Northwick Arms was a "dump" in his own words, he embarked on its makeover with a total budget of £15,000. Here's what he achieved.

The pub got a proper front door with the replacement of an eyesore of a fire exit fronting the street. "Now it looks smart from the roadside," says Haigh.

In the kitchen the ventilation system was replaced, everything was stripped down and repainted, the cookers reconditioned - all for £1,000. A 72-seat conference/banqueting area got new furniture in place of the old fixed seating - "it looked like a working men's club".

The restaurant and bar areas were subtly divided with leather chairs and sea-grass carpeting on one side and the drinking area proper on the other. The open fireplace was given centre stage.

The toilets - "extremely important", in Haigh's opinion - were repainted, the quarried tiles in the men's were restored to a pristine state.

A smoking area was converted into a revenue-earner in the form of an 18-seat outdoor, covered restaurant. Exterior and interior brickwork was rendered handsome again, improving the street and indoor aspect which Haigh considers crucial in attracting business.

The bulk of the painting was done mainly by students who now work behind the bar. "One was an interior design student at Birmingham University and she did all the design work," explains Haigh. The tradesmen he knew from earlier refurbishments but, says Haigh, "over the years I've learned it's better to do as much as you can yourself."

The proof is in the pudding. When Haigh took over the pub last June, it was struggling to make £500 a week. Nine months later, revenue is knocking on £4,000 a week.

£75,000 or nothing for The Town

Town after
Town after
When Iain Clunie, a former Wetherspoon's area manager, and business partner, accountant Scott Sturrock, launched into a total makeover of a former sports pub in Dundee that was barely turning over £2,000 a week, they had a budget of exactly £75,000. That wasn't because they thought it was enough to do the job but because it was all the bank would lend them. And even that was secured on their homes.

The pub had been a serial loss-maker under three former tenants when the business partners, looking for a pub to lease, dropped in one Friday evening and found it almost empty. "Scott and I doubled the crowd," remembers Clunie.

The pub was part of the Retail & Licensed Properties' (R&L) estate, the pub management division that Scottish & Newcastle shared with Robert Tchenguiz. R&L was underwriting substantial losses and only too pleased to sign up promising new tenants who could see the potential of the Grade A-listed building, a former official residence of the Lord Provost converted into a bank. As Clunie points out, the partners signed up on the basis of an understanding that R&L would foot the refurbishment bill which it estimated at £241,000.

However, at the onset of the financial crisis in mid-2008, R&L pulled out, leaving the partners with a non-viable pub in its current condition. It had no heating of any kind, the sports format had run its course, and the infrastructure was tired. Yet they had faith that the business, located in Commercial Street in Dundee's business district, had a bright future and borrowed the £75,000 to convert it into a classy food-led pub.

With speed being of the essence, the tradesmen were given five weeks to get the job done. The installation of heating, rewiring and other essentials swallowed £10,000. A front-to-back paint job cost just £4,500 including the restoration of two floor-to-ceiling pillars. Laminated flooring was ripped up to reveal original, decorated tiling and wooden floors. The front bar was reconstituted and the back bar redeveloped.

Dundee's city council was not obliging in this project. Clunie's repeated requests to paint the cement heritage frontage in a sympathetic colour have been rejected . "The council can't see that we're helping them," he regrets. "For the last three years all we've had is a list of what we can't do."

However, what they were allowed to do has paid dividends. The Town has boosted turnover by nearly 17 times, up from £1,000 just before the refurbishment - "we got rid of half the trade we inherited", says Clunie - to £17,000 in a good week. "The business is heading towards a £1m turnover," he adds.

Heritage hassles

When Kingdom Hotels, owner of 37 tenanted pubs, decided to invest £1.5m in the much-needed refurbishment of the Links hotel, a pub with 26 bedrooms, in Edinburgh's conservation area of Bruntsfield, it might have been seen by Historic Scotland as a boon. After all, the establishment was "extremely run-down", according to managing director Dean Melville.

It didn't work out quite like that as the heritage body lodged one objection after another. Among other issues, Kingdom Hotels had lengthy and costly battles over the installation of a lift and the replacement of windows. "They delayed the project by six months", says Melville. "I had expected Historic Scotland to be more helpful."

However, the job was finished in early May and the regenerated hotel has just reopened. A veteran of refurbishments because it typically buys run-down pubs, Kingdom spent £650,000 on the major contractual work that refurbished 22 bedrooms and bathrooms, and provided easier access to the bar and restaurant areas while keeping them separate in what is becoming a standard ploy. "With these and the bedrooms, we have three sources of income", says Melville.

Along with the essential rewiring, plumbing and other infrastructural work, Kingdom hired a restoration expert to give new life to the traditional features. The restoration cost £70,000 but, says Melville, it was worth it to highlight the old girl's history.

Although the Links is only just back on its feet, trading has picked up so rapidly that Kingdom is aiming to double pre-refurbishment turnover by the end of July.

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