The author owns the Petrou Brothers , an award-winning fish and chip shop in Ely, Cambridgeshire
I thought it would be a good idea to explore what types of tenure and price range you should look into buying when getting into the fish and chip industry.
These are the ways you can get into the fish and chip trade:
- Buying a mobile fish & chip van
- Renting a business
- Buying a leasehold fish & chip shop
- Buying a freehold
- Taking part in a franchise scheme
I am sure you have already made your mind up about this but there are certain things you should know about each of the options above. One thing to learn straight away is that they are all options; never write any of them off because you will severely limit your chances of finding the 'right' business.
A lot of you reading this may think "ha ha, Stelios is having a 'giraffe'", but I assure you, these vans do offer an advantage my other choices do not: FLEXIBILITY! If your static shop does not go well for any reason, and you have exhausted every different avenue of taking the business higher, what do you do?
People already well established in the industry would probably not touch leasehold with a barge pole, but I do think every one of the tenure choices has its purpose
Whereas, with a mobile unit you can try out a certain location for a few months and if it doesn't do well, you can drive off into the sunset to a new location.
Another upside is you can service rural areas where they cannot usually get fish and chips because its not viable to have a permanent shop, which also means people will appreciate your product and price that little bit more. You can also do carnivals, fairs, car boot sales, markets, etc... the list is endless.
The downside is that you do not own a property and you're probably going to be tight for space.
Renting the business
If you want to get your foot in the door and you don't really have the budget to buy a freehold, this could be a short-term alternative to buying leasehold. Generally, though, this arrangement is becoming rare and you have to know the owner personally or have a personal introduction to build trust.
I am sure that if this is something you are interested in, you would need to talk to suppliers in the industry about which shops are for available for rent and ask them to make an introduction.
Again, people already well established in the industry would probably not touch leasehold with a barge pole, but I do think every one of the tenure choices has its purpose.
If you are looking for a smaller investment to get started in business I would say leasehold is the way forward, because you can started with a deposit and a strong business plan and a SWOT (Strengths, Weaknesses, Opportunities and Threats) plan.
You must build a stronger case to the lenders as there is no secured asset, and don't be shocked when the bank asks to secure the loan against your personal assets. Just tread carefully and make sure you go over your lease agreement with a fine toothcomb, because you don't want any surprises from your landlord.
And make sure you buy a long lease, it will make it easier for you to sell if you need to get out.
Some people swear by freehold property/ business but in today's world is it realistic of us all to have such high expectations of owning a freehold. If you're really desperate to own a business in a town centre or a shopping centre or any desirable location for that matter scrap your dream of owning a freehold and look at 'buying a leasehold'.
If your looking to buy a business and set aside a property for your pension in the future then a freehold is definitely the way to go, the banks will probably be a bit more relaxed about loaning you the money as they will have a fixed asset to charge security too but you will also have double the repayments if not more on a freehold than a leasehold. So it all depends on your situation, and only you can make that decision.
I hope I have made all the tenures nice and simple, at the moment there is no one in the industry doing a franchise model but when they do I will do some research and post about it.