WATCH any UK television series about Brits starting a new life in Spain and you’re bound to get a segment on expats battling to open a bar.
It’s not a cakewalk at the best of times, with pitfalls galore in trying to get to grips with all the numerous and complicated regulations here.
For many, including former Manchester United star Lee Sharpe who has just closed his Costa Blanca sports bar Sharpeys after only ten months, these exciting new ventures quickly go from being a Spanish dream to the bars of a prison from which to escape.
While Sharpe’s wife Lucy, diplomatically told the Olive Press last month Lee ‘just didn’t have the time to run the bar’, close friends revealed that the rent of over €3,000 a month, plus other overheads, were much more to blame.
The rapid closure of a new local is a sadly familiar story to expats who have lived in Spain for years, many of whom have seen a bewildering turnover in foreign establishments.
In the vast majority of cases, the new batch of landlords tend to be folk with little or no experience in the hospitality trade, let alone running a business.
On top of that rents are usually disproportionately high, which the green-round-the-ears new arrivals have no idea about (come on, you know we’ve all been there!).
And while the current economic crisis and its associated spiralling costs means there are plenty of opportunities out there, you really need to do your homework.
“Buyers have to do some thorough research and get everything legally watertight,” lawyer Manuel Sanchez told the Olive Press.
Taking over an existing business is done through a lease known as a ‘traspaso’, which has the advantage of not having to put in for licences as if you are starting from scratch.
“Find out why an owner wants to sell on the traspaso and check through all the financial records. If there’s any hesitation on those scores, then simply don’t bother,” Sanchez advised.
“You might not be told about any debts until you take over and get an unwanted surprise,” he warned.
He added that potential owners must take some good local financial advice and create a proper long-term business plan backed up by money in the bank that you’ll almost certainly need to create a successful business. There will always be nasty surprises, issues with the council and, of course, a need to do some marketing.
Owner of Benidorm’s Escape Bar, Andy Mansell, echoed the need to have plenty of capital in reserve. “You need back up funds for when things go wrong, which is bound to happen with equipment failing and the cost of repairs,” he told the Olive Press.
“Get a good gestoria to check on the licence because I had the wrong one and did not qualify for what pitiful pandemic aid was offered,” he added.
He also pointed out that the tax authorities in Spain have the right to dip into your bank accounts ‘whenever they feel the need’.
Most tellingly, he warned how vital it was to put away the ‘rose-tinted’ glasses as the stresses of running a bar could likely change your attitude to staying in Spain.
“Before taking the plunge, step back, look around and remember what you love about the country and consider whether it’s worth losing that connection,” he observed.
“The quality of life soon disappears running a hospitality business and you end up hating Spain for all of its red tape as well as siestas and bank holidays when nothing is open,” concluded Andy.
Either way, Olive Press research suggests the number of foreigners looking to take over a bar traspaso in Spain appears to be falling as costs have soared in the wake of Russia’s invasion of Ukraine.
In Murcia, Cartagena’s Hostecar association paints a gloomy picture for any potential newcomers. “Profits are down by 15% over the summer compared to 2019 and our members have tried to keep price rises low or else they would have to close with the rise in expenses,” said president, Juan Lopez. “Making things pay today is much harder.”
A Torrevieja bar owner, who wanted to remain anonymous, confirmed the drop in demand.
“I’ve been looking to retire, but there has been just one inquiry this year over the traspaso and that’s despite dropping the asking price,” said the female boss.
“I think Brits, in particular, are now very reluctant to take on a bar and are more aware of the time and effort needed to make a go of it.”
She added: “Restrictions on how many days a non-resident can stay due to Brexit have also significantly reduced our trade in the off-season. It is often cheaper to close for the day than open, and that’s what we are doing.”
In Andalucia, Irish pub owner Ray Curran said winter trade was ‘nearly as important’ as summer trade.
He launched The Quays Irish Bar in Puerto de la Duquesa in 2019 with his partner Lisa having to navigate through the global pandemic, and now the economic fallout of the war in Ukraine.
“I don’t think there was a single business owner that didn’t think about the possibility of having to close during the pandemic,” Curran told the Olive Press.
“Now with inflation, electricity is up 40%, from day to day you never know how much you’ll be charged for food … these are very challenging times.”
Fortunately for Curran he understood the hospitality trade having managed a bar in Naas, near Dublin, before he moved to Spain in 2018 and working in a local bar for a year on his arrival.
“A mistake many people make is that they come in July and August and the bars are packed, so they think to come back next year and buy a bar but then November hits and it’s a completely different story,” he said.
“You still have the same costs, the same wages to pay, the same rent. You need to research and know your location and clientele.”
As Duquesa is a very residential area with lots of expats he has tried to make his business appeal to the locals, instead of just tourists.
“If your bar relies solely on tourist trade, then you’ll experience the highs in summer, but you’ll hit real lows in the winter,” he insisted.
It is a warning and good advice too. So to conclude, take your time to do your research, find the best location, have the cash to pay your bills for a couple of years and get ready for long hours and hard work if you are to succeed.
Oh, and make sure you spend some money on marketing, preferably with your most popular local newspaper!