Pubs

The word pub originated in the term Public House A traditional bar is equipped with prime drinks and offers an intimate atmosphere and soothing music. Appetizers are offered as well. A pub usually maintains a regular clientele; therefore, high importance is credited to the bartender’s personality and communication with customers. Usually the owner acts as bartender, or employs a regular bartender.

 

Market Characteristics

Pubs are a sub-industry in the restaurant industry, specializing in alcoholic beverage sales. Pubs are intended for recreation, and therefore operating hours begin in the afternoon and run through late hours of the night, in addition to weekends.

As it is a recreational facility, a pub is usually founded with the purpose of creating a unique atmosphere. The pub's nature may be expressed in design, the type of bands (if any), and type of music playing.

Pubs have very high turnover rates and few survive the market for extended periods. Pubs that survive for longer periods are well managed and founded on steady clientele.

 

Customers:Defining the Target Market and Its Size, Market Segmenting

Potential industry clientele includes people seeking recreation, segmented according to a number of parameters: Age and recreation preferences- pub goes usually prefer facilities with preferences similar to their own. Regular customers vs. occasional/random customers.

 

Competition

The industry is highly competitive. Competitors can be divided into two main groups:

  • Direct competitors- pubs appealing to the same target market and/or located in the same geographical vicinity. As these two parameters grow, so will competition.
  • Indirect competitors- other recreational businesses that combine dining and drinking- coffee shops, restaurants, deliveries, etc.

 

Vendors

Vendors are divided into two main groups:

 

Equipment vendors

Kitchen supplies and cutlery a yearly 5% wastage rate should be taken into account in regards to breakable equipment.

 

Food and drink vendors

There is a wide variety of food and drink vendors in Israel.Principle importance in choosing vendors, aside from price, is credibility and quality of supplied product.One should discern whether it is more profitable to work with one vendor as opposed to working with a number of vendors.Some vendors are willing to participate in financing establishment and initial inventory in exchange for exclusivity.In some cases, certain beverage vendors such as Guinness or Murphy’s beer condition product supply on minimum amounts (usually a minimum of kegs per week). In addition, there are cases in which vendors will sponsor refrigerators and other required equipment in exchange for exclusivity.

 

Marketing Resources

Marketing resources depend upon the pub’s nature and potential clientele, and therefore a single method cannot be specified.Notwithstanding, a number of marketing and advertising methods are listed below:

  • Establishing an international type pub which allows for franchise options, such as “Irish pub”.
  • Events- local bands or singers, sing along night, or karaoke nights.
  • Advertising in relevant media according to the pub’s potential clientele.
  • Press advertisement, signposts, and distribution of invitations at central locations (such as universities).
  • Public relations- engaging a pr agent to convey information to the press (mainly recreation and gossip columns), arrange events, parties etc.
  • High importance is credited to reputation and regular customers.
  • Use of an internet website and registration with index websites.

 

Entry Barriers

  • Investment in remodeling and designing the pub.
  • Investment in initial equipment and inventory.
  • Willingness to work irregular hours. Pub management usually requires working late nights to early mornings.
  • Local authority licensing process.

 

Human Resources

Establishing a new pub requires recruitment and employment of appropriate human resources 

Most duties required in managing and running a pub do not requires any training, and most knowledge can be acquired with practical experience. There are, however a number of training courses for bartenders and cooks at professional schools and other types of training (especially for bartenders).

 

Financing:

Industry Revenue and Profitability

An average bottle of alcohol contains 22-25 servings. Usually bottle cost is covered by the fourth serving, depending on beverage type.

When blending cocktails, if the customer does not specifically request otherwise, it is customary to use cheaper (locally produced) beverages. Therefore, cocktail profitability may reach 600-1,500%.

Alcoholic beverage profits may reach up to 1,000%.

Food profitability may reach up to 300%, as pubs usually only prepare relatively simple dishes.

Although profitability is very high on food sales, they are set off by the need in a large selection of beverages, and by the relatively long shelf life of some beverages.

 

Typical Terms of Payment:

Vendor credit-vendor credit terms vary according to buying and bargaining power of both parties.

Customer credit:customers pay in cash or by credit card.

 

Licenses and certifications:

In order to open a new pub a business license is required from local authorities, the police, and the ministry of health, after qualifying for such a permit.

 

Tips:

  • The establishment of a pub should be meticulously reviewed- business locality, physical locality, in addition to financial and marketing aspects. This review along with correct planning and aid of professionals will decrease the chances of failure.
  • Local authority regulations should be regarded as to operating hours in order to avoid fines.
  • One must remain regularly updated as to new regulations that may affect the pub’s activity and profitability. For example, illegalization of smoking in public places, club selection, etc.
  • Note that alcoholic beverages have a long shelf life, but an excessive inventory should not be stocked in order to decrease regular costs. Also, note that food has a short shelf life and high depreciation. It is important to avoid purchasing a large amount of inventory in order to prevent wastage.
  • A kashrus certificate is a major consideration and is important to many customers. The decision to open a kosher pub should be made only after issues of geographical area, competition, and potential clientele have been thoroughly examined according to the owner's beliefs.
  • Pubs that hold stage events must ensure the stage’s location provides accessibility to most of the audience. A house singer may be employed, or alternatively occasional shows can be booked.
  • Many pubs suffer losses by theft, partly due to the relatively high turnover rate of staff. Supervision and revision can prevent unwarranted expenses, but note that excessive supervision may cause disgruntlement among employees.
  • Each pub should implement the most appropriate way to deal with customers who have had too much to drink and are acting inappropriately.

It is recommended to consult with your local Business Development Center regarding business establishment and operations.

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