Do you need a business loan to buy a pub, or open a new one?
The idea of having a place where people come to relax, celebrate and make memories can be very appealing. But making that dream a reality requires serious financial planning. If you’re looking to get a business loan to buy a pub – let’s walk through the process together, including industry trends and practical tips to make your journey as easy as possible.
The Pub Market in Australia
Before we get into the details of getting a business loan, let’s look at the pub market in Australia. The hospitality industry, and pubs in particular, is a big part of the Australian economy. According to the Australian Bureau of Statistics (ABS) there were over 7,000 pubs, bars and nightclubs in Australia in 2024. That’s a big industry and has been a part of Australian life for decades.
The pub sector has been resilient even in tough times. A report by The Australian Hotels Association and IBISWorld showed the Australian pub industry turned over $20.3 billion annually between 2019 and 2024, despite global economic fluctuations. So there is a lot of demand for pubs in the market generally, however this can vary depending on location and competition.
Why a Business Loan?
Most people don’t have the cash to buy a pub business outright, and that’s where pub finance comes in.
If you need to raise finance – you have two options – find a private investor willing to give over the needed capital, or get a bank business loan to get the pub finance you need to buy the commercial property, as well as cover initial operational costs, refurbishments and marketing expenses until you reach a cash flow positive situation.
Pro tip – getting business loans for an existing business is usually easier that raising finance for a new business venture. That’s because an existing commercial property has history with respect to cash flow potential.
How to Get a Business Loan to Buy a Pub
The process of getting a commercial mortgage or pub finance can be a little tricky and complex. That’s why it’s usually a good idea to work with a Commercial Finance Broker with finance experts who can help you through each stage of the process (while often also getting you a better deal).
Book here if you’d like to speak to our team – we take the time and effort out of finding the best business loans.
To give you an overview of the process, here are the typical steps:
1. Assess Your Financial Position
The first step is to work with a business finance broker to valuate your current financial situation. Lenders will want to understand your financial history, credit score and existing debts. A solid financial foundation will increase your chances of getting a pub loan. Make sure your credit score is healthy as it can be as it can affect the interest rates and terms you are offered. You’ll also want to include any other business assets that form part of the potential deal.
2. Create a Detailed Business Plan
A pub business plan is essential. It should outline your vision, target market, competition analysis, marketing strategies and business cash flow. Lenders need to see you have a clear plan for making your pub successful. Your business plan should also include a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to show you understand the market.
3. Choose the Right Type of Loan
There are many types of business pub loans and choosing the right one is critical. Here are a few:
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Traditional Bank Business Loans: These are loans from banks and financial institutions. They offer lower interest rates but have strict qualification requirements.
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Regional and Specialist Lenders: These lenders offer faster approval and more flexible terms, but often have higher interest rates.
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Equipment Financing: If you need funds for kitchen equipment, a business vehicle, or other assets, equipment financing might also be an option. This allows you to borrow money for specific assets, using the equipment as collateral.
4. Prepare Your Documentation
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For most pub owners, you’ll need supporting documents such as a business plan, financial statements including ongoing costs, tax returns, bank statements, and any legal documents related to the purchase of the pub (or commercial mortgage). Lenders will need these documents to assess your creditworthiness as part of the application process. This is where a business finance broker can be invaluable, helping prepare the needed documents based on their knowledge of what bank lenders are looking for.
5. Location and Condition of the Pub
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The location and condition of the pub you’re buying will impact both the loan application and the pub’s profitability. Lenders will typically prefer to finance pubs in prime locations with high foot traffic and good demographics. Pubs that need renovations will require larger business loans which may impact your loan terms and repayment schedule.
6. Applying for the Pub Loan
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Once you have your documentation and chosen your loan type, it’s time to apply. Be prepared for the lender to do a thorough review including an appraisal of the pub’s value and assessment of your business plan. This is usually easier if it’s an existing property and there are no other factors such as zoning or licensing to consider.
7. Review the Loan Agreement
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If your pub loan is approved, carefully review the loan agreement. Pay attention to the interest rate, repayment schedule and any fees. Also understand the consequences of missing payments or defaulting on the loan on your credit history and retention of the business assets. Be sure you have sufficient working capital to see through the initial period of operation (a merchant cash advance can assist short term if it’s needed).
Business Loan Calculator for Buying a Pub
Can a Business Finance Broker Help?
The risk of only speaking to ‘your’ bank is that they can only ‘sell’ you their own products. That might mean your not getting the best rates and terms on the market (which could end up costing you many thousands of dollars).
By working with a Business Finance Broker like us, we help you save time, avoid headaches, while negotiation on your behalf from our marketplace of more than 60 lenders (including the big banks like CommBank, ANZ, Westpac and NAB, to regional and specialised niche lenders). We can also assist with commercial mortgages if that’s part of your business requirements. If you’d like expert advice from our team, book a meeting now and let’s see if we are a good fit for what you need.
Quick Tips to Run a Successful Pub
Now you’ve got your business loan and your pub, here are a few key areas our customers focus on once they are up and running:
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Create a Unique Experience
In a crowded market, differentiation is key. Whether it’s themed nights, live music, special events or a signature menu, create an experience that will attract and retain customers. Look for ways to drive mid-week trade which are usually quieter nights.
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Focus on Customer Service
Exceptional customer service is the foundation of any successful hospitality business. Train your staff to be friendly and attentive and create an atmosphere where customers feel valued and loved. Focus on driving advocacy and recommendations via Google Reviews and other review sites. Be sure to claim your Google business profile.
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Leverage Technology
Use technology to streamline operations and enhance the customer experience. A modern point-of-sale (POS) system, online reservations and social media marketing can help you run your pub more efficiently and reach a wider audience.
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Monitor Performance
Regularly review your financials to make sure your pub is profitable. Track key metrics like revenue, expenses and profit margins. Adjust your strategy as needed to keep the bottom line healthy.
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Engage with the Community
Building relationships with the local community will drive business to your pub. Get involved in community events, support local causes and create a loyal customer base that feels part of your success.
Some Frequently Asked Questions – Pub Purchase
Is it worth buying a pub?
Buying a pub can be a good investment if done right. Pubs in Australia have been resilient and profitable with a local customer base and multiple revenue streams – food, drinks and entertainment. But it all depends on location, management and understanding of the market. Before you buy a pub do your research and consider the competition and local demographics before you make a decision.
Do you make money owning a pub?
Owning a pub can be profitable in Australia with industry reports showing the average profit margin for pubs and bars is 10-15%. Successful pubs make money from alcohol sales, food service, gaming machines and event hosting. Profitability is affected by operational efficiency, customer service, marketing and having a point of difference. Financial management and cost control is key to maximising profit.
Can I run a pub with no personal experience?
Running a pub with no experience is tough but not impossible. You need to gain knowledge through training, hire experienced staff and possibly work in a pub before you buy one. In Australia there are many hospitality courses and certifications that can help you build the skills you need. Understanding the legal requirements, liquor licensing and health and safety regulations is also key. Many successful pub owners start with a solid business plan and seek advice from industry experts or consultants.
What are the costs?
The costs of running a pub in Australia include purchase or lease costs, renovation and fit out costs including new equipment, and ongoing operational costs such as staff wages, utilities, inventory, marketing and licensing fees. Insurance, maintenance and health and safety compliance add to the costs. A small to medium sized pub can cost anywhere from $500,000 to over $1 million to set up, and annual costs will vary greatly depending on the size and location of the pub.
What’s the gross profit of a pub?
A well run pub in Australia should aim for about 70-75% gross profit on beverages and 60-65% on food. Gross profit is calculated by taking total revenue and subtracting cost of goods sold (COGS) and is a key indicator of the pub’s health. High margins are achievable by managing supplier costs, pricing and waste. Consistent high margins comes from good inventory control, marketing and delivering a great customer experience.
What type of pub is most successful?
The most successful pub in Australia often has good food, a wide range of beverages, entertainment options and a welcoming atmosphere. Pubs that adapt to local tastes, offer unique experiences (craft beer, live music, themed events) and great customer service do well. Pubs that are modern and embrace trends like gastropubs which offer high end dining experiences alongside traditional bar services attract a diverse and loyal customer base.
How to Get Started
Getting a business loan to buy a pub can be a complex process. If you’d like help to make the process easier, while getting the best rates and terms at the same time, book an appointment with our team now to discuss your borrowing needs. We’ll simplify the documentation and application process for you, helping you get the finance you need from the best fit lender.
With the right approach and expert support, your pub can thrive and become an institution of the Australian hospitality scene.
