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Buying a beerbar


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#1 khunsanuk

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Posted 12 February 2007 - 12:42

The following article was forwarded to me by a friend who got it of a mailing list. It was written by camlix. I can not comment on whether or not it is accurate. Read it and decide for yourself.

Do you wanna buy or start your own beerbar? (this feature might make you think again)

The facts below may be hard to accept and it is fair to say that the majority of the star-struck potential bar-owners will totally ignore everything here, to the detriment of their financial and mental state. However here goes...

Firstly there are a few facts that must be born in mind:

  • As a farang you can't buy a Beerbar, at best it can be leased for period of about three years.
  • You will have to pay (in most cases) a large sum for key-money depending on the location, the size and the greed of the owner or agent. Thereafter you will be required to pay a monthly (ground) rent which depending upon your contract (for want of a better word) will be revised upward, normally every year.
  • At the end of your term of lease if you are lucky, an option to renew will be offered, the key money will be dependant upon the length of the option and on whether you have built up a "good busines" or not. There is also the possibility that the owner might want you out. In that case the key money might well double (or even treble) and so could the monthly ground rent. The chances are that "your bar" will need re-furbishing from top to bottom and whilst the fixtures and fittings may remain your "property in law" the owner can always find a flaw in the contract to lay claim to these.

You should also bear in mind that if you do anything through an agent you will be paying between 20%-30% over the odds, this includes leasing bars.

It would be worth doing a costing exercise to establish just how many bottles of beer heve to be sold every day to cover your overheads.

Here is a list of monthly overheads you will be faced with in addition to your key-money and monthly rent: (Remember, this is is not to make you a profit.... Just covering your costs...)
Here is an example of accounting/month&year (Baht)

Average key-money for 3 years Monthly=25,000 (900,000/3 Year)
Average ground-rent=15,000 (180,000)
Electricity(no girls living in)=2,000 (24,000)
Water (no girls living in)=500 (6,000)
Telephone (personal use only)=500 (6,000)
Television=450? (5,400)
Salaries=20,000 (based on 5 girls at Baht 4,000 per month each) (240,000)
Mamasan 15,000 (180,000)
Depreciation (Based on a average spending of 100,000 with selling price of 40% of the cost new after 3 years) 1,400

Total/month= 79,850(958,200/year)

Explanation:
If your Thai girlfriend or wife has never run a bar before (it does not count that she might have worked in a bar all of her working life) she will not be able to run one now. The running of your bar will be in the hands of your Mamasan.
Fact: You are not not allowed to work in your own bar, or anywhere else for that matter, at least not without a workpermit and you stand more chance of being struck by lightning than getting one of those in the beerbar business. Even sitting talking to the customer can (and has been) classed as working and such is liable to a fine between 20,000 and 100,000. A second offence and you will be packed off to your country of origin never to return, wife or no wife, family or no family, business or no business. This after a spell in the monkey-house (jail) whilst the funds for your plane-ticket are obtained either from you (via your bankaccount), your wife or girlfriend (very unlikely), your embassy (equally unlikely) or your family or friends in the country of origin. In some cases this could result in prolonged period of incarceration, an experience not to be relished as any short-stayer will tell you.
This all means that your mamasan will be running your business lock, stock and barrel, possibly, and most advisable, with the exception of the accounts. Do keep the accounts yourself, this does not mean you won't get cheated, you will by just about everybody including your mamasan, but it might limit the extent of the cheating a bit....
Good mamasans are very hard to come by and so by the law of supply and demand their salary is accordingly.

Ladies:
In '97 you could get all you need for between 1,000 and 1,200 Baht each per month, but there is a growing shortage of reasonably good looking and young ones in Pattaya, so the salary is now at least 1,800 Baht and their charge to their clients has gone up from 350 Baht to 500 Baht or higher.
Against these costs, the only return you likely to get is from sales of beer. So many bars sell food now that most only do it to attract customers to drink and do not make a profit on the food itself. The overall 100 Baht commission per girl/per client/per night barely covers the girl`s salary and is not worth considering.
So what are we left with?
With the costs of 19,850 even allowing for months with 31 days, this means your overheads are more then 2,000 Baht/day.
At the current buying and selling prices of bottled beer this means to say that you will have to sell 140 bottles of beer a day just to cover your overheads.

#2 Gadfly

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Posted 06 February 2010 - 05:02

One more downside.  If you directly own the bar, you are violating the Foreign Business Act (FBA).  Foreigners cannot own beer bars, except, maybe, Americans under the Amity Treaty (but I see problems with that too).  So unless you spend about US$10,000 setting up what are known as preference share structures (and still subject to debate by the Thai authorities), you will "own" the business through a Thai.  Two problems right away:

First, you need to trust your Thai front.  Seriously trust him or, more likely, her.  If things go awry, and they often do, you're screwed with no legal recourse.  Remember, you don't own the bar; your Thai front owns the bar.

Second, if you claim you do own the bar, you are confessing to a crime that carries, among other things, a three year prison sentence.  Using a Thai front or nominee to own the bar is illegal. From past posts here, we have seen the authorities make a big deal about enforcing the FBA.  It's the claim raised against Thaksin when he sold AIS, so the authorities have to seriously enforce this law.  There have been convictions now, but I don't think anyone has been sent to prison...yet.  But at least one business was liquidated.

To have the benefits of ownership - essentially a legal right to income from the bar and control over the bar, you will need a very complicated structure, and the cost of that structure will probably dwarf the cost of the bar itself.  The only place where I could see those type of costs justified is in the case of big expensive money generating go go.  Unless, of course, you "trust" your Thai front to always do the right thing???

#3 Pom Michael

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Posted 06 February 2010 - 11:28

Heard the old Price Leader (or was it Leader Price?) place on Sukhumvit at Soi 12 is being renovated into a Beer Bar.

Work has started already - can't imagine how they plan to turn an old grocery store into a Beer Bar, but we'll see.

Cheers!
My father was a drunk, a gambler and a womanizer. I worshiped him. Warrant Officer Paul Brenner, C.I.D. {The Generals Daughter}

#4 Ckrisg

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Posted 06 February 2010 - 20:31

Why then do so many Farangs own (or not""")run and make excellent money on beerbars.  If everything above is true (which I doubt as its full of the usual sterotypes)
Forgive and forget, bollocks in 2013 I'm going to fu....over the those who have tried to fuck me over........

#5 Gadfly

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Posted 07 February 2010 - 05:16

I wonder if that many Farangs make much money running bar beers.  You know the old joke about making money in Thailand: the best way to make a fortune in Thailand is to start with a larger fortune.

The legal aspects about working in and owning a bar are true and pretty easy to verify.  No stereotypes; simply an accurate description of the legal obstacles foreigners faces if they try to own or operate a bar.  

There are informal arrangements foreigners use to get around these obstacles (be interested to hear a local beer bar owner describe those arrangements), but if there is a dispute or the local party gets greedy, its quite easy and quite legal to simply cut the Farang out.  No need for violence or even anything illegal since the foreigner generally has no legal rights to the bar.  Maybe this is why it happens so often???

The bigger bars that generate substantial cash flows are another matter.  I don't have personal knowledge of the figures, but if the numbers you hear on the internet from credible sources are even half right, there is enough money there to not only justify but also insist upon a legal defensible preference share structure.

#6 Ckrisg

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Posted 07 February 2010 - 10:10

Gadfly

Good points but I know some beer bars owners who do make money maybe not a fortune but a living.  Sterotypes I was referring to the usual all thais will rip you off! yada yada yada.  :confused:  :p  
Forgive and forget, bollocks in 2013 I'm going to fu....over the those who have tried to fuck me over........

#7 Pom Michael

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Posted 10 February 2010 - 12:16

Quote

Heard the old Price Leader (or was it Leader Price?) place on Sukhumvit at Soi 12 is being renovated into a Beer Bar.

Now understand it will be a full on nightclub!  Just what we need there - no parking but a big nightclub open late.


My father was a drunk, a gambler and a womanizer. I worshiped him. Warrant Officer Paul Brenner, C.I.D. {The Generals Daughter}

#8 jack_schist

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Posted 10 February 2010 - 21:48

the new angles disco apparently




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