Scottish and Newcastle Mortgage

Any of you out there thought about owning a pub via a brewery mortgage, or borrowing money from a brewery to support a licensed premises? Don`t go to these guys, heres why.

This is a little complicated so Ill simplify the figures, and explain as we go.
Lets say, the pub is on the market for say, £300,000. You would expect repayments to be around £3300 to £3700 per month, depending on the mortgage and the interest rates, Lets work on monthly payments of £3500.

You see, when you have a mortgage from them, you have a trading agreement which forces you to buy all your stock from them. Scottish and Newcastle are expensive for this.

Because of this and depending on competitive forces, you would expect a gross retail margin of around 33%. That is 33% more through the tills then what is paid for stock, so it also accounts for things like waste.

To raise £3500 pm on a 33% margin, would mean you would have to take about £11,000 per month through the tills. In fact to pay all the expensives you would need a minimum of £15,000 turnover per month. This would mean spending £10,000 per month on stock. But Scottish and Newcastle charge about %40 more on their prices then the open market. So you would save around £2800 per month by being able to by from the open market, and this £2800 almost doubles the cost of the mortgage and sends the interest rate through the roof.

Also take into consideration the poor customer services, unreliable deliveries and the obvious desire by the organisation to grab the premises rather then negotiate with the owner, and you are left with a rather dishonest, shady looking organisation.