A sorry tale from a genuine Pub Co TAW/Lease.

Good Evening,

I’m sure you receive 100’s (if not 1000’s) of these e-mails. So I apologies in advance for posing the same dilemma as many others.

Where to start, other than say we have made a catalogue of mistakes (honest mistakes), in thinking we could change the fortunes of a local pub. Myself, my wife, a friend and his wife, bought into a tenancy from xxxx Inn last year. (TAW from May 2018, and substantial agreement from August 2019).

We very foolishly decided to invest money into the pub, and refurb the majority of the property. We did this through a business loan, which we are now seeking legal advice for as believe we were mis-sold from a company called xxxxxxxxxx.

We all have business backgrounds, with myself operating 2 multi million pound hotels in Cambridge, both of which operate high volume bars and restaurants. This was my thought process behind thinking I had experience in the industry, I have since found my ability to make a pub profitable (or even break even) from the top line sales, rent price and drinks ties is nigh of impossible.

We have had many months now trading at a deficit, and have got into a debt of approximately £20k with xxxx (with an £11k deposit, so real terms around £9k debt).
We gave our notice on Jan 2nd, which will come up to July 2nd. However we are in a position where we do not believe we can get through the next month as have completely run out of personal money. We have in total got about £80k worth of debt from numerous business and personal loans just to keep the pub operating. We understand we have made mistakes, but also the pub is trading nowhere near the recommended barrel age numbers provided by xxxx initially (more fool us).
The question I have is, what genuine pitfalls are there with just closing the doors. Will the brewery be forced to get in a management company if so. We do not have the funds (without absolutely crippling ourselves and remortgaging) to continue to operate and build up higher debt. Do you have any advice to be able to just cut ties and get out. We will pay what we owe (approx £9k currently). We just don’t want to stay for another 4 months and build another £25k worth of debt in that time. We do not want anything for free, and we are honest people who tried to make things better for the pub, it just hasn’t worked. Pressure and stress have really put strain on personal relationships and we just need to find a way to get out. We have floated the idea of closing, to be told we could be taken to court and have numerous fines placed on us if done so.

Any advice will be much appreciated.

Many Thanks

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We are definitely on a tied tenancy now. It is a 5 year tenancy, with a 6 month notice period – which we are now just over 2 months in to.

As mentioned previously, we are honest people, and that works both ways. We are not looking as such to avoid paying what we owe. We admit we looked at barrel-age numbers they provided, and based a business plan on these numbers. We also saw and agreed to both the rent amount, and the drinks tariff as well.

We really just want to find a way to exit the business as swiftly as possible, without fear of some kind of retribution from . We are to the point of already having numerous personal loans, on top of a business loan. We believe we will get to the end of this month and be approximately £5-£7k short of what we need to pay our wage cost, rent and order. That’s money we physically do not have, therefore the option we’ve got is to close. However xxxx have threatened if we were to do this we would be in breach of contract and could face heavy fines or further action. We are between a rock and a hard place, and do not know what to do now that’s not going to involve seriously damaging us for the rest of our lives.

It is clear the pubs top line sales are no where near that of the expected Barrel-age figures provided (no where near in fact). We saw the last 5 years numbers from the previous tenants, all of which were well short of their expectation, and they told us that’s because they were operating it poorly and their numbers were a sensible guide to what a ‘good operator’ would do. Well we have poured money into a refurb, tried to change the approach and demographic of the pub and we are worse off than they were previous.

We have also since met up with a local company who manage several pubs under a an umbrella company. They have 15 or so pubs under various Pub Co’s and they have said the rent we are paying is astronomical and probably £15k higher than were is should be, and our drinks prices are almost the highest banding, where as there pubs (which are within a 10mile radius of us) are on a significant discount scheme.

Again, we understand we looked at these numbers, and we aren’t in the business of trying to ‘get out’ of paying what we owe when we are the ones to mistakenly think we could achieve this venture. But, we also took xxxx’s views and numbers of being sensible and appropriate, which they clearly are not.

I am happy for this to be published if you want to use it, in hindsight we truly wish we’d never taken the opportunity. We have been in for 10 months, and are currently sat with £80k worth of debt to pay off over the coming years between us. – what we are desperate to avoid it having to stay in the pub for a further 3.5months and exit with £100k of debt. We just want to get out now, we are certain they could find someone to come in and manage the pub short term, but feel they are allowing us to continue because we are paying a significant rent and drinks terms.

Any help, guidance or advice would be greatly appreciated.

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