Buying a beer bar

[Lord Toad]

"Loard Toad! what kind of venue you were involved with in LOS? "

 

 

None: UK(mainly) + Turkey + Hungary

[Zorro]

T

 

You raised a lot good points.

 

People should know their limitations.

 

Not everyone is suited to running a bar and making it profitable.

 

I certainly would be an abject failure.

 

Horses for courses i suppose.

[torrenova]

You're right of course but many people buy a bar as a means of escapism. Something has fucked their life up and they think that buying a bar will sort them out financially and emotionally.

 

I think it harks back to the days when professional boxers and football players bought a pub after their playing career finished.

 

The relative low cost of starting a business also sucks people in. With some real shit bars going for around Bt250k and a whole lot more for less then Bt1,000,000, then it is no wonder so many people see it as low risk. It is low capital investment but it is high risk.

[Guest]

torrenova makes some very good points. Running a bar is very competitive and a lot of hard work. It requires constant attention and is not something easily delegated.

 

Anybody who is thinking about buying a bar should really do their homework and think the matter throuhg. This is definitely not a matter of "If you build it they will come."

[simon43]

I'll give you some 1st-hand experience/feedback about buying/running a bar.

 

I'm lucky enough to have money to lose (!), so I was happy to buy my Thai wife a beer-bar on Sukhumvit, about 5 months ago. I have my own software business, so if the bar went tits-up, I would not be jumping off the nearest high-rise...

 

But I also applied a bit of business-thinking prior to the purchase, and sounded out the existing customer levels, possible improvements to increase revenues etc.

 

And, like any new business, I assumed that we would not make a profit for at least one year....so I had to have the funds to 'carry' the business until it was profitable.

 

After purchasing the bar, we worked hard to make these improvements, and to build up loyal customers who would ensure repeat business, and would also recommend us to their friends.

 

It is still early days, but we are now profitable after only 5 months. The revenue potential will never be high, (the bar is not in NEP..), but it should provide a steady income for my wife, and business satisfaction as well.

 

One of the most important issues, (which most bar-owners will agree with), is that you cannot be an absentee-owner! You, (or someone who is competent and can be trusted), must attend and manage the bar every day. It seems that bar-staff have a memory-retention level of no more than 10 minutes I tell them that if they smile then that will get more customers into the bar and result in more ladydrinks for them = more money for them! So they smile for 10 minutes, but then the reason for smiling is forgotten and I have to start all over again!!

 

So I agree that beer-bars can certainly make money, but they are like any other business. You need to look after them like a new-born baby

[torrenova]

Another major consideration is the quality and length of your lease. If you get some 3+3+3 sort of lease then you will have key money after 3 years in order to renew. Sort of like a price to exercise an option. This key money amount may or may not be written into the lease.

 

So the price you pay for the abr is very dependent upon the lease and key money and not just location and potential profitability.

 

One thing many bar owners forget to do is to put money away for the key money. Thus, when they have established the business, they spend all they earn and when it comes time to pay up, they have to sell the bar or go into debt to pay.

 

If buying a bar, beware of any "new lease" considerations. It most likely means that key money was due and the current owner cannot pay. Bargain hard.

[Guest]

Hi torrenova,

 

And what about "Tea money", to be allowed to operate? I've heard is not that much, but only the rumor. Is exstortion from 'the entities that exist', a real concideration, to be yet another factor?

 

HT

[torrenova]

Tea or coffee money is more associated with the police or the mafia (underworld) and is paid for protection from a threat or to avoid threats being made.

 

Take Bangkok for example. NEP had a license until 1am but operated to 4am. There may have been cash payments made in order for certain establishments to remain open. Come 2am closing and then 1am closing then obviously these establishments can no longer pay the same amounts as previously. Correlate that with the sharp increase in farangs being stopped for minor offences such as dropping a cigarette butt or taxis with farangs inside being pulled over for "speeding" or whatever. Obvious, the cops are not getting what they were used to and are looking for it elsewhere.

 

I know go-gos in Pattaya which pay the police to open late and "show". They receive advance warning if there is to be a raid, usually by telephone. I am sure also that some landlords pay the police and factor that into the rent charged for each of their bars.

 

To answer your question, yes, tea/coffee money must be considered and if payable, you need to know what rate and the consequences of not paying now and in the medium to long term. I personally would not get involved with any business which required the payment of this underthe table money.

[Guest]

torronova is correct. Tea Money is regular payment made to whomever for doing or not doing whatever.

 

"Key" money is the money paid to somebody for the right to execute a lease agreement. Sort of like paying a large chunk of your rent up front. Some companies, Like 7-11, refuse to pay Key Money for their leases and consequently have to pass on some good deals.

 

Key Money in the bar business is quite common. A common number in an area where somebody has developed a bar area, built out and furnished the bars is 200,000 or 250,000 plus monthly rent of 20,000 - 25,000. This effectively makes the rent 7,000 per month higher for a 36 month lease, but this portion must be paid up front. When the original lease runs out and the bars are doing well you can bet there will be Key money to renew.

 

The bar beers on Sukhumvit soi 6 where supposed to close down in about a year because they were going to build a hotel on the space. However, construction was delayed and the bar owners, who pay about 25,000 per month rent, were given the good news that they could lease their bars for another 3 years. The bad news was they had to pay 300,000 Key money. The area is doing OK now so this was more than the 200,000 Key money they had to pay a couple years ago when the bars were opened for the first time and they were signing their first 36 month agreement.

 

Sometimes it really does seem like the landlords are the ones who really make the money in the bar business.

 

The terms key money and Tea money are often confused because they sound alike. But, they actually are two seperate things.

[Guest]

Just in case anyone is still thinking about buying a bar after reading all this incredibly helpful, useful advice there is one for sale in the small beer bar complex opposite the entrance to Washington Square. It is very small, has one pool table several stools and a small bar area. Two big steel shutters on the front. There is a note on the shutters with a phone number and the contact is Nat...cannot remember the phone number..

How do I know ?/ well we were drinking in the bar opposite it last night 'cos this bar had a lot of girls and the one for sale didn't.......and it closed at 12 midnite but the one we were in turned the lights off at 12 but stayed open till 1am.

 

AND NO I have no connection with the bar and have no idea who Nat is!!!! I just thought the post was relevant here.

 

uniformguy