Pub Due Diligence UK: What to Check Before Taking On Any Tenancy

Last updated: 24 April 2026

Most pub tenants sign the lease without ever asking to see the actual profit and loss figures of the previous operator—and by month three, they’re staring at bills they didn’t know existed. You’re about to commit to a lease that might bind you for five, ten, or fifteen years, yet pub due diligence is routinely skipped in favour of speed and optimism. The truth is: due diligence separates the operators who make money from those who hit cash flow walls in their first year. When I took on Teal Farm Pub in Washington NE38 under a Marston’s CRP agreement three years ago on my birthday, I had already learned the hard way that pubcos will sell you the opportunity—but they won’t sell you the reality. This guide covers everything you need to verify before you sign, and the specific red flags that mean you should walk away.

Financial Due Diligence: The Numbers That Matter

Never take a pub offer based on what the pubco or selling agent tells you the business makes. The only numbers that matter are the ones you can verify. When you’re looking at a pub opportunity, your first step is to request the actual profit and loss statements from the previous operator—minimum three years. If the pubco or agent resists, that’s a red flag. Legitimate pubcos have these available; the refusal to share them is typically because the numbers don’t support the narrative they’re selling.

When reviewing the P&L, focus on net profit, not revenue. A pub generating £500,000 in revenue with £50,000 net profit is not the same as one generating £350,000 with £60,000 net profit. The second is the better business. Look at:

• Cost of goods sold (COGS) — typically 30–35% for tied pubs, higher if you’re buying away from tie
• Labour costs as a percentage of revenue — benchmark is 25–30%, though we’ve managed 15% at Teal Farm through structured scheduling and training
• Rent as a percentage of gross profit — should not exceed 50% of your gross profit margin
• Utilities, rates, insurance, and other fixed overheads — these don’t change if turnover drops

Use a pub profit margin calculator to model different scenarios. If the previous operator made £40,000 net profit, can you do better? Be honest. If you’re inexperienced, you’ll likely make less in year one, not more.

Request documentation of the source of those figures. Are they from the operator’s accountant? The pubco’s records? A bank statement? If the numbers are unverified estimates, they are worth nothing. Ask your accountant or a pub-focused bookkeeper to review them with you. The cost of that review—typically £300–500—is insurance against a £50,000+ loss in year one.

Lease Terms and Hidden Obligations

The lease is the legal document that will define your business for the next several years, and you must understand every clause before you sign. This is not something to skim. Hire a solicitor with pub tenancy experience. A standard property solicitor will cost you less but may miss critical pub-specific issues. The cost difference is usually £200–400; the protection is invaluable.

Key lease terms to verify in writing:

• Rent review mechanism — Is it a fixed increase, RPI-linked, or revalued based on Fair Maintainable Trade (FMT)? If FMT, how is it calculated? Can you challenge the valuation?
• Tie restrictions — What can you buy away from the pubco? Many tied agreements allow you to buy certain items freely; others are heavily restricted. Verify in the lease which beers, wines, spirits, and soft drinks you can source independently.
• Break clauses — Do you have an exit at year three or five, or are you locked in for the full term with no escape? Break clauses protect you if the business underperforms.
• Maintenance obligations — Who pays for repairs? Is the pub maintained by the pubco, or is that your responsibility? Get this in writing.
• Renewal terms — What happens when the lease expires? Do you have the right to renew, or does the pubco decide?
• Assignment restrictions — Can you sell your business to another operator, or does the pubco have veto power?

Many new operators are surprised to discover that tied pubs have wet tie (alcohol only) and dry tie (food and supplies) clauses that significantly limit where you can source. Before signing, calculate the cost difference between pubco pricing and independent suppliers. If you’re paying 20–30% more on key lines, that margin gap could cost you thousands annually.

Do not sign any lease until you’ve verified the rent calculation and tested it against the actual P&L figures. If the pubco claims Fair Maintainable Trade of £200,000 and the previous operator’s verified turnover was £140,000, something is wrong. Either the valuation is unrealistic, or the previous operator underperformed. Either way, you need to understand why.

Property Condition and Statutory Requirements

Many new licensees view the pub property as secondary to the business—it’s not. A building with structural issues, outdated electrics, failed gas safety, or pest infestation will cost you money and potentially close your doors mid-season. Always hire a qualified surveyor to inspect the property before committing to the tenancy. This is not optional, even if the pubco says the building was recently surveyed.

The surveyor should check for:

• Structural integrity—roof, walls, foundations, damp
• Electrical installation—is it up to current Building Regulations and safe for commercial use?
• Gas safety—boiler, heating system, ventilation
• Water and drainage—no blockages, adequate supply for commercial kitchen use
• Fire safety measures—alarms, extinguishers, emergency lighting, escape routes
• Evidence of pest control or infestation
• Kitchen equipment condition and hygiene standards

Once the survey is complete, get a quote for any remedial work. If repairs cost more than £5,000–10,000, factor that into your decision. The ingoing costs for a pub already include stock, fixtures, and fittings—unexpected repairs on day one will strain your cash flow badly.

Verify that the pub has current certification for:

• Gas Safety Certificate (CP12) — must be current and valid
• Fire Risk Assessment and up-to-date fire safety equipment
• Health and Safety at Work compliance
• Environmental Health Officer (EHO) inspection records — request the last two inspection reports and scores

When I took on Teal Farm, we passed our NSF audit in March 2026 and maintained a 5-star EHO rating by verifying every compliance document before handover. Don’t assume because the pub is operating that everything is in order. Confirm it yourself.

Pubco Support and Tie Restrictions

Pubcos market support packages heavily—free training, marketing help, financial advice, buying power discounts. Verify what is actually included and what is optional (paid) before signing. Some examples: Does “training” mean a one-day induction, or ongoing support? Is marketing support included, or is it an add-on service you pay for monthly?

Request a written schedule of all services the pubco provides and all optional services with their costs. Many new operators are charged for services they thought were included. At the point of signing the lease, you need clarity on:

• Who your Business Development Manager (BDM) is and what their actual responsibilities are—and how often you’ll hear from them
• What training is mandatory vs optional, and what training costs
• Whether the pubco provides EPOS systems, and if so, what are the hardware and support costs?
• What accounting or bookkeeping support is included?
• Are there membership fees for loyalty schemes, trade bodies, or other initiatives?

Tie restrictions deserve specific attention. Your Marston’s BDM or equivalent pubco contact should explain the tie in writing, not verbally. If you’re told “you can buy some soft drinks independently but we recommend using our range,” that’s not the same as “you are free to buy soft drinks elsewhere.” Get specifics in writing.

Calculate the cost impact of tie restrictions. If the pubco’s beer is 5p per pint more expensive than competitors, and you sell 200 pints a week, that’s £520 annually extra cost. Multiply that by all tied lines, and the tie cost might exceed £5,000–10,000 per year. That margin gap is real and must be factored into your profit projections.

The Due Diligence Checklist for Day One Preparation

Before you sign anything, work through this checklist. Print it, tick off each item, and keep the evidence in a folder. If you can’t tick every box, you don’t have enough information to sign safely.

Financial Verification

• ☐ Request three years of P&L statements from previous operator or pubco
• ☐ Have an accountant review the numbers for accuracy and realistic projections
• ☐ Use a pub profit margin calculator to model your own scenario
• ☐ Request a detailed breakdown of all ingoing costs in writing—stock valuation, fixtures, fittings, training, fees
• ☐ Verify all ingoing costs against the lease to confirm nothing is missing

Lease and Legal

• ☐ Hire a solicitor with pub tenancy experience to review the lease
• ☐ Confirm rent review mechanism and test it against actual turnover
• ☐ Request a schedule of tie restrictions in writing—what you can and cannot source independently
• ☐ Verify break clauses at years 3, 5, or 7, and confirm the process for exercising them
• ☐ Confirm maintenance responsibilities—who pays for repairs?
• ☐ Check assignment terms—can you sell the business, or does the pubco veto sales?

Property and Statutory

• ☐ Hire a qualified surveyor to inspect the property
• ☐ Request quotes for any remedial work identified
• ☐ Obtain copies of current Gas Safety Certificate, Fire Risk Assessment, and EHO inspection reports
• ☐ Verify EPOS system compatibility with your accounting software or future system upgrades
• ☐ Confirm all kitchen equipment is in working order and compliant with food safety standards

Pubco Support and Obligations

• ☐ Request written schedule of pubco services and optional services with costs
• ☐ Meet your Business Development Manager (or equivalent) and confirm support structure
• ☐ Request written confirmation of tie restrictions and buying power discounts
• ☐ Confirm EPOS hardware costs, software licences, and monthly support charges
• ☐ Verify training schedule and whether training is included or paid separately

Once you’ve completed this checklist and have answers to every question, you’re in a position to make a real decision. Not a hopeful decision, not an optimistic decision—a real one based on actual numbers and verified obligations.

Before you sign anything, know your numbers. Pub Command Centre gives you real-time financial visibility from day one, showing you labour %, VAT liability, and cash position—£97 once, no monthly fees. That clarity will tell you on week one whether the deal you signed is actually working, not six months later when it’s too late.

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