1st Time Bar Buyer Advise Please

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This topic contains 17 replies, has 13 voices, and was last updated by Profile photo of Anonymous Anonymous 7 years, 6 months ago.

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  • #55037
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all,
    Im looking to move to Spain with my husband and 18 year old son. We want to try our hand at running a small bar and have some catering experience tho not owning experience. We thought the Malaga area because of the long seasons. I would welcome any help in deciding where to choose, the pitfuls, the cost of set up, that sort of thing. Any help would be really appreciated. Thankyou.

  • #92466
    Profile photo of Anonymous
    Anonymous
    Participant

    Get a clear idea of the paperwork. Our bars in Mojácar (the foreign ones anyway) are suddenly being chased for new opening licences which, with an architect’s inspection, come in at 2000 euros. Also watch for new rules from ‘sanidad’ – wheelchair-access loos and so on.
    Don’t drink behind the bar! (it’ll kill you in the end)
    Good luck.

  • #92467
    Profile photo of Inez
    Inez
    Participant

    Do your research very thoroughly, a classic one is the old owner gets rent a crowd in when you are looking, so either go before or after your actual appointment to see what its really like. Try to find one thats not just touristy but has regulars in too.

    Its very hard work but can work if you put the time and effort in. A pleasant sunny personality is vital, good food if you are doing food and be prepared for it to take a year to build so ensure you have enough money for that. Allow plenty of money for any improvements you may need to do and either buy freehold so you can rent it out if need to or check the lease has enough years on it if you need to sell it on.

    Check the lease contract very carefully as sometimes the owner has so many rights you cant breathe! Have fun and good luck.

  • #92469
    Profile photo of Anonymous
    Anonymous
    Participant

    Think very very carefully before making such a step.

    The Spanish economy is in the doldrums. In the areas of the CDS that I know there are too many bars chasing too few customers. Many are closing. Take a look at the second post on this page by vbtutor. Whilst is describes a different area of the coast the problems are similar up and down it:
    http://www.spanishpropertyinsight.com/forums/viewtopic.php?t=4200&start=60

    I´m not saying ´Don´t do it´. Only that if you do you should go in with your eyes open and with enough cash reserves to see you through what will invariably be a very tough start-up period. You should also try living there for a while and learning the language before putting your money into anything.

  • #92472
    Profile photo of Anonymous
    Anonymous
    Participant

    Friend of mine had every problem under the sun with a premise in Puerto Banus. Most of the problems came from the town hall inventing petty new rules to do with things like terrace licences and rubbish collection, mainly just to collect fines and invent jobs for town hall bureaucrats. They also had problems with a stubborn landlord who would rather have the place empty the reduce the rent. Be very careful. If possible, get a job in a bar for 6 months to learn the ropes before you put your own capital on the line. I know you will be excited about your plans, but don’t let that cloud your judgement. Good luck.

    Mark

  • #92474
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Dardie

    I know of a few people locally who have opened bars and restaurants and they are not going well. This is for a couple of reasons and I would suggest you take heed to some basic things.

    1. Timing. In one case the owners bought the lease of a bar in the mountains in November. There is no way on this earth that a bar that far away is going to make any kind of profit in the poorest months of the year. I was going to buy a bar in UK and it would only have been worthwhile if we could have gotten iin before a certain date (in our case early december) because unless we got the Xmas rush (which you do not get here) then the finances didnt add up. We could not get the licence hearing in time so we dropped it. Same applies here. You need to tme your entry to give a couple of months get to know you before the season starts, so now is too late.

    2. In it for the long term

    Assume you will have no customers for a year – can you still keep going. if not dont even think about it. (I am not saying you wont have customers but always plan for the worse case scenario)

    3. Be different. Established bars are having difficulty surviving the recession (as mentioned in a previous post 5 local cafes that have been here since well before I came here (8 years ago first time) are now closed, these are Spanish bars run by Spanish people. Mainly they were leased and the owners decided to put the rents up

    I work with a local bar playing live music. Some ideas I have had for the owner which seem to be working is to have various theme nights (Black Tie do, masked ball, Indian night etc) these do work eventually but takes time to get known about.

    Also one thing he has started doing which gets people in the door is a free barrel once a week on a Saturday. I think it costs him about €40 for a 40 Litre barrel, but the marketing is pure word of mouth and every Saturday is building up. You cannot spend a better €40 in any advertisement. Once the barrel runs out (usually within an hour, all those people are having a great time and they buy many more beers – and not everyone drinks beer, so your not losing out completely.

    If you do put on live music (as a musician I would obviously highly recommend it) be aware the cost of a musician or and is not cheap. A Solo artist starts at around €100 whereas a band can be anything from €300 to €500. Think how many beers you would have to sell at 50% margin to make that back.

    How I work (and there may be others around who do this) is I take a percentage of the bar. So if you sell nothing I dont get paid. It also means I have a vested interest in bringing a crowd of drinkers, because the more they drink the more I get paid.

    If you are buying a bar near or on the beach, then why not go out on the beach with a cool box (permission permitting of course) and offer refreshments to people sunbathing. No one does it here (well not until now I may do it myself in Summer) and when they buy a refreshment give them a ticket with a 2 for 1 offer so they come to your bar when they come off the beach. This does two things

    1. Increases your revenues to a market you may not have just now
    2. Increases exposure to that same market of your bar

    For your first night opening, invite everyone you know and DO NOT CHARGE A PENNY. invite local dignitaries, local press, everyone who can put in a favourable word for you, and entertain them make them feel important, make it the biggest event in the area – once they are in your door they will come back if they like it. Dont under estimate the value of FREE – it is hugely powerful

    Keep drunks out of your bar. Once they start appearing you will not get decent folk coming in because nothing is more of a turn off than drunks. If someone is drunk (whether unruly or not) ask them to leave. Excercise your right to refusal and be a responsible bar owner

    Look around at all the other bars in the area. Are they full? if so why?Also be prepared for very long hours with little reward

    Anyway I apologise for the long post but hopefully you can take something from this.

    My advice though would be to sit tight for a while. get to know the area before you plunge into a bar. I have been here 6 years and thinking of opening a bar, but right now the timing is not right (well here it isnt anyway)-

  • #92475
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @dardie wrote:

    Hi all,
    Im looking to move to Spain with my husband and 18 year old son. We want to try our hand at running a small bar and have some catering experience tho not owning experience. We thought the Malaga area because of the long seasons. I would welcome any help in deciding where to choose, the pitfuls, the cost of set up, that sort of thing. Any help would be really appreciated. Thankyou.

    some things to watch out for.
    You will have to decide whether you want to go for a leasehold or a rental. Leaseholds will generally include a ‘fixed price’ plus monthly rent payment. The advantage is, if the leasehold is done properly, you will have the option to sell on the business in the future. Normal periods 5+5 year or a straight 10 years. Make sure it is renewable.

    Make sure you know what licences are in place. If you are looking at playing music, make sure there is already a licence. Many new businesses are finding it harder now to get music licences due to the tightening of laws. If in a built up area, unlikely to get licenses, etc…

    You need to make sure you know all your monthly costs, terrace tax, community fees, etc… Can be easy not to mention this until the last moment!

    other points were covered by brianc, vbtudor, etc….

  • #92476
    Profile photo of Anonymous
    Anonymous
    Participant

    All very useful and in depth information. One thing you have to ask yourself as to why you want to be in Spain.

    Running a bar takes very long hours so if sunshine is your goal forget it as you will not see much of the sunlight.

  • #92477
    Profile photo of Anonymous
    Anonymous
    Participant

    In Spain, the most common way of securing business premises is on a leasehold basis. You make a one-off payment to buy a lease, which includes fixtures and fittings as well as goodwill if it’s an existing business. You then continue to pay the landlord rent for the premises, but you can sell on the lease if you wish.
    A lease in Spain has until recently been known as a traspaso (literally a transfer, as a lease is transferred from one person to another) but is now called a cesión. However, many people (including Spanish landlords) are unaware that the law has changed and that a traspaso no longer has any legal validity. You may therefore be offered a trapaso. Whether you’re offered a traspaso or a cesión, make sure you obtain legal advice on the terms of your lease and ensure that these are specified in as much detail as possible in the contract.
    The rules governing a cesión are far more relaxed than those for a traspaso, which means that there’s more freedom for negotiation between the parties – but also more room for misunderstanding. Your lawyer should check that you aren’t simply being offered a rental agreement masquerading as a lease, which will mean that you won’t have any rights to sell the lease on to someone else. If you have a legal cesión, you’re free to sell it on, provided you give your landlord first refusal. He will normally take between 10 and 20 per cent commission on the sale.
    When buying a lease, make sure (or ensure that your lawyer checks) that the seller has the right to sell it. This may sound unnecessary, but there are cases of people selling leases they don’t own.
    In addition to paying an agreed amount for the lease, you must pay a monthly rent to the landlord for your use of the building. The contract should state clearly how much longer the lease has to run. Lease terms are normally between 5 and 20 years, but it’s advisable to ensure that your lawyer negotiates the longest possible term. This is because during the term of a lease the landlord can raise your rent only in line with the official rate of inflation (as published by the Spanish government). When your lease runs out, you can usually renew it automatically, but this gives your landlord the opportunity to impose a considerable rent increase, sometimes as much as 20 or 30 per cent.

    Hope this is of some use to you.
    Good luck

    JLR

  • #92482
    Profile photo of katy
    katy
    Spectator

    I will be frank and say DO NOT DO IT! Even in the boom years most buyers only lasted one season. When you are here all the time it’s easy to see and hear the disasters. There are too many bars and less tourists. Even some bars that look busy never make enough profit, rents too high etc. Run the figures past a good accountant first. The forums are full of horror stories.

  • #92486
    Profile photo of Anonymous
    Anonymous
    Participant

    A Big thanks all, this has certainly giving us some food for thought! My Mum lives in Murcia so we know that the local councils can be a pain. We were toying with the idea of living in our chosen region first, and, i think that you have confirmed this to be a good idea.

  • #92487
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    Dardie, just make sure to plan properly.

    Katie is right, alot of businesses in the past have failed. Of course there are a range of reasons.

    What has always suprised me is how little research people (mainly brits) put into setting up a business. There are many differences here, both cultural and economic. tourist and residential areas both bring different clientele/spending power/etc…

    Best of luck with whatever decision you take

  • #92491
    Profile photo of Anonymous
    Anonymous
    Participant

    I fully agree with KATY, dont do it. However did not wanted to sound be negative about it.

  • #92493
    Profile photo of Anonymous
    Anonymous
    Participant

    I’ve had lunch and dinner out today (marbella area) and everywhere is packed !! ……. it’s a great time to open a business – IF – you have expertise and capital (ample capital) otherwise stay away – local bars are heaving !!

  • #92494
    Profile photo of Anonymous
    Anonymous
    Participant

    @UBEDA wrote:

    I’ve had lunch and dinner out today

    Perhaps a little too much imbibing UBEDA!! 😉

  • #92496
    Profile photo of katy
    katy
    Spectator

    I don’t know which part of Marbella you were in but we had dinner there last night after arriving back from the UK. The 4 of us all remarked how quiet it was. A lot of places on the paseo advertising drinks 1 euro, tapas 1 euro and some had only 2 or 4 people in! Must be financial suicide.

  • #92498
    Profile photo of Anonymous
    Anonymous
    Participant

    Im actually looking more at a long term investment. I think now may be the time to buy as some people seem to be “giving” the leases away. I appreciate that the main reason they are is because they are not making money! As for seeing the sunshine – I kinda dont expect to see much but the inside of the kitchen for many many months.

    I know that the catering industry, in general, is hard work for little reward, but Im hoping that after time there will be a reward, and that those rewards are mine, not somoeone elses. Is this realistic?

    As Ive said before, my Mum lives in Spain (Los Alcazares). She eats out most days in some form or other, and even in a small town like hers there are some bars full, others empty.

    The other option I have is buying a tea shop or the like in the UK, but that, at the moment at least, would be a huge mistake.

    Its definately a time for reflexion I think….

  • #92502
    Profile photo of Anonymous
    Anonymous
    Participant

    check your p.m.s dardie

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