The pandemic has hit the hospitality sector particularly hard with forced closures, ever-changing rules and public hesitancy. Pub numbers had already been dropping in recent decades, with 22% fewer in operation in 2019 than in 2000. In a tough, competitive landscape, landlords will be doing everything they can to balance great customer experiences with tight budgets.
Equipment is one key expenditure from which pub landlords need high performance at great value. New consumer drinking and experience trends combined with changing standards in terms of hygiene and safety mean the demands are higher than ever – but raising the funds to make said improvements isn’t easy.
Below we discuss the main options for pub landlords looking to finance key upgrades like kitchen and catering equipment, interior refurbs and new facilities.
Using your savings
In an ideal world, you’ll be able to fund any improvements using the money you’ve put away over the years from personal or business income. This might be more feasible for minor upgrades like refrigerators than large renovation projects, however.
Not every pub owner can afford to dip into their savings, of course. But if you can find the money to cover at least part of the total cost of the upgrades required, you’ll reduce the amount you need to borrow and repay.
Taking out a bank loan
Taking out a bank loan is the traditional method of obtaining business finance. You’ll typically borrow money in a lump sum then repay it in monthly instalments with interest on top.
Banks can be hesitant about lending to supposedly high-risk sectors, however, so the application process might be tricky if your credit history or performance is patchy. Alternative online providers can be less strict in this sense.
Whatever your chosen route, it’s important to shop around for a good deal as interest rates and fees vary. The hospitality industry currently has debts of more than £8 billion, so you’ll need to be confident you can afford the repayments.
Leasing the equipment you need
A more modern alternative is to lease the equipment you need directly from the supplier over a set period. Like leasing a car, you could renew the lease at the end of your agreement and retain the equipment, start a new deal on an upgrade, or purchase the equipment outright.
Equipment leasing is secured by the equipment being borrowed, which helps make this route more accessible than some traditional finance options. Not all suppliers will offer the same finance deals, however, so you may be more restricted in terms of brand and product.
Whichever finance method you end up using to fund your upgrades, it’s wise to protect your investment and cover yourself for any future breakdowns. Make sure to update or take out new pub insurance for peace of mind that all your equipment is protected.
The immediate future remains uncertain for the hospitality industry. Could any of these finance options help you make the improvements your pub needs to start 2022 on a strong footing?
