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Sector Spotlight: Pubs

The craft beer revolution has taken South Africa by storm over the last few years.

More and more microbreweries have sprouted up in the cities, putting pressure on landlords to offer customers something different.

Facts and Figures

  • AB InBev – the world’s largest brewing company – is based in South Africa and controls roughly 90% of the local market
  • The Western Cape has the highest number of breweries and cideries, with 85 establishments
  • The country’s first microbrewery, Mitchell’s Brewery was launched in 1983
  • You can expect to pay around R10,000 for a liquor licence depending on what province you are located
  • Employee salaries in the food and beverages industry have increased 9% annually

From cider to craft

Whether you plan on owning a neighbourhood pub, sports bar or wine bar, it is important to keep abreast with current trends and developments within the sector.

Despite specialist wines outperforming beer sales in previous years, the expansion of microbreweries and the growing popularity of craft IPAs has put beer back on the menu.

South Africa’s city pubs are ripe for change; however, the traditional neighbourhood pub is still popular in the more rural parts of the country.

For entrepreneurs keen to break into the pub industry, location and your local demographic will play a vital part in determining what type of pub will be successful.

Diversification

South Africa is experiencing a microbrewery boom, with many small independent brewers opening up their own craft beer enterprise to offer customers a more unique drinking experience.

This is raising the stakes for pub and bar owners who operate in the cities. So, for a landlord to survive in this industry, you have to diversify.

As the saying goes, if you can’t beat them, join them!

Perhaps you don’t have the time, resources or passion to develop your own in-house brand of beers. Instead, consider contacting local hobby brewers in your area and discuss the potential of stocking their craft beers in your pub.

Just ensure a supplier’s brewing operation complies with the regional liquor laws and regulatory guidelines.

More pubs and bars within South Africa are offering food to capitalise on the country’s increase in food sales and generate a larger revenue for their business.

Strive to become renowned for a certain dish or type of cuisine to attract customers through recommendation.

Essential skills

Be sociable: To own and run a pub successfully you should have strong interpersonal skills and be keen to interact with your customers.

Management and leadership: Weekend or late-night shifts and low salaries is unappealing for many workers, making a high number of employees in the hospitality industry unreliable. You must learn how to manage and train your staff to create a dynamic workplace; have incentives in place to reward hard working employees and make your team feel valued.

Passion and determination: With entrepreneurialism reaching new heights in South Africa, it is not enough to merely get by. You should be passionate about new products in the beverages industry and keep abreast with developments in the sector.

Adaptable: Don’t be set in your ways or reluctant to change, try new local suppliers to see if their products sell, keep your business image fresh and current and consider avenues that perhaps you hadn’t thought of, such as adding a kitchen to your pub so you can serve food.

Support

The South African government is steadfast on increasing the number of SMEs to boost the country’s economic growth and development.

SEFA – the Small Enterprise Finance Agency – offers entrepreneurs business funding ranging from R60,000 to R5 million. It is also a good idea to research what government grants are in place in your province and whether you qualify for one.

Buying an existing pub

If you’re looking to buy an existing pub, there are certain attributes you should look out for.

Location, capacity and the revenue of the business proposition are all aspects you should scrutinise before putting in your offer.

Due diligence checks are vital to establish what the business is worth and what income you can expect to make after you purchase the business.

It is also important to consider the physical size of the business; if you plan to add other facets onto the business, such as a kitchen or beer garden, you need to make sure you have the capacity to do so.



Krystena Griffin

About the author

Krystena Griffin writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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