How do you fund a pub?

In this financially focused episode, Michael and Leon pull back the curtain on the actual costs of acquiring the Pinnacle. Moving through their budget line-by-line, they explore the logic behind a $285,000 launch, covering everything from the $120,000 business purchase to the critical $55,000 financial buffer required for post-opening stability. Michael details his scrappy fit-out strategy, prioritising high-impact touchpoints like bar tops and glassware while avoiding unnecessary structural costs. The duo also challenges traditional hospitality secrecy, discussing why they are making their budget and forecast templates public.

Join us on this journey from idea to opening the doors to The Pinnacle.

Check out Michael's Pinnacle deck here. 

For more information on The Pinnacle, visit thepinnacle.melbourne

For more information on PAX, pax.melbourne 

Follow @pax.melbourne on social media.

Podcast produced by Posterboy Media.

PAX acknowledges the Wurundjeri Woi-wurrung people as the traditional custodians of the land on which we operate. We pay our respects to elders past, present and emerging and to all First Nations People.

Chapters

• 1:14 The logic of backwards budgeting
• 11:54 When to pay for goodwill
• 16:54 The necessity of financial padding
• 28:22 Budgeting for future build episodes
• 40:15 Pitching the "Productive Pints" initiative

Transcript

0:00 Leon: What’s up Paxs and Pinnicast crew? It’s Leon here and this is episode 7. Today we are talking financial planning. We step through the budget line by line, sharing the detail and logic behind every dollar that we are going to spend. We also discuss Monopoly at Macca’s. You’ll have to listen to the end to see how that ties in, but trust me, it does. We’re going to make the budget and forecast templates available to anyone who wants them. Heard it first here. Just email us for a slice: hello@paxs.melbourne. Alright, here’s episode 7. We’ll see you again tomorrow.
0:44 Leon: You wanna time?
0:45 Michael: Yeah, we’re on.
0:46 Leon: Yeah, should we pin these two out?
0:48 Michael: Yeah.
0:49 Leon: Can we start this episode by me asking you about how you put the budget together in the first place?
0:54 Michael: Sure.
0:55 Leon: Because I think that’s something people won’t know.
0:58 Michael: Yeah, how do you start with a number?
0:59 Leon: Like you know what, if you asked me to do it, I would probably have to Google it. Do you know what I mean? Like you’re good at that, right? Because you can go, "I reckon this fit-out is going to be about X." So do you start there and work backwards?
1:14 Michael: Two ways. First way is going in there originally like we spoke about on the podcast probably Ep 1. How did we decide to do this and going in there for the first time understanding what we want to do in there. Think about me going in there and going, "Oh, the bones are really good. Yes, it needs some love, but we don't need to do anything structural." So suddenly that's hundreds of thousands of dollars off. Then there's, "Oh, the floors are really good. We just need to give them a bit of a clean and a polish." So that's another X amount off. Paint. "Okay, for a place this size I reckon we'd be shooting for about 10 grand." That's the main thing we're doing. Waste removal. That only costs about X. So then you just start, for me the way I look at that, is just start piecing it together in my mind of the total, including the purchase of the business, should be about this much. That’s step one as to does that number even sound plausible, worth doing, before you actually do the work of doing the budget properly. If that number comes up and you’re like, "Oh, this could be doable," then I go to the next stage of looking at the forecast of the venue, how much it can make per month or how much we think it can make, and then how much per year do we think we will profit to pay off said fit-out?
2:50 Leon: So you’re working out the payback period?
2:52 Michael: Exactly. And if those two metrics align, then you’re like, "Okay, I’m based off two years of operation, or thereabouts, two to three years, we’ll make back all of the cost of this fit-out slash opening the business."
3:09 Leon: Wait, are you running that math—like have you got a spreadsheet with like net present value formulas and shit or are you just doing this in your head?
3:18 Michael: I’m doing it on a—it’s on a spreadsheet, but it’s not that crazy. It’s literally just going: forecast; there’s the number; we need to make 200—we’ll get into the numbers more—but we need to make 250 grand in profit in two years to pay back that investment. So when you look at those metrics, you go, "Okay, going to an investor, or even for our own peace of mind, is that plausible we'll make that much money in two years? Yes, if we do well. Is based off that, with how much of the business we're happy to give away and valuing the business for the amount of percentage investors will get for it, does—do those—putting those next to each other, do they make sense?"
3:56 Leon: See, I’d really struggle to do this.
3:59 Michael: Why?
4:00 Leon: Because if I went—if I did what you did, if you were like, "Man, I’m away, I can’t get there, you need to go and put this budget together," I don’t fucking know how much painting costs.
4:10 Michael: Oh sure, yeah, it helps with experience. But there’s different levels of experience—and I don’t mean in levels, but types. Because there’s the experience of "we’re just opening this brand new venue from scratch and a developer’s giving us half a mil incentive," so we’re just going to go to the best architect, we’re going to get them to do everything, and we’re going to go to a builder to manage all the trades. You don’t even manage the small trades, you actually appoint a project manager builder to do it for you, all these things that just cost an astronomical amount of money. So for us, we could do that and todavía say actually we only want this outcome in terms of the fit-out and it would cost an extra hundred thousand dollars in management cost and architect and blah blah blah. So for me, it’s the—my—what I like to sit in, even though I’ve had experience in both, is the idea of scrapping it together and just going, "You know what? What are the main things we need to change about this venue?" Paint, a bar top, a bench seat, ripping heaps of stuff out, all these little cosmetic things that don’t cost an arm and a leg and we get a venue that we want. Taking a big step back is like the reason for us putting this venue together and what we want this venue to be is a community-centric pub. If we had of done that vision work and said "this needs to be the fanciest pub in Melbourne" or "set the new standard for pubs in Australia or the world," it’s a different thing. So suddenly we’re going actually this needs to be the best fit-out imaginable and all our dreams of what a pub could be needs to happen here. But that’s not us.
6:07 Leon: No. But it’s—but what I feel like you’re describing is just classic risk-to-reward ratio shit, but at what frequency do you want that ratio to vibrate at?
6:21 Michael: It’s risk-to-reward ratio, but it’s also—I’m trying to put vision in there—vision-to-reward-to-risk ratio of like—
6:29 Leon: Well no, but what I mean by the frequency, right? So if you go okay the risk-to-reward ratio should always stack up, it's always got to be proportional, which is what you're doing by your net present value or by your payback period. But the—effectively the CAPEX is going to tell you how high up that graph you're vibrating, right? So if we're just like "hey we're going to scrap it and put it together and just you know make it kind of work really basically," it's like yeah awesome, your revenue will depict that. If you go "hey we're going to drop eight mil, we're going to build the best beer garden Australia's ever seen," then it's like okay your return, you know, won't be "oh we're expecting to do 50 grand a week in revenue," you're probably expecting to do 50 grand a day in revenue. So it just—it all is kind of proportional.
7:17 Michael: It changes.
7:18 Leon: Yeah, and I just think so it comes down to risk appetite, right? Because I’m with you, like the days of "build it and they will come" are like—no-go zone.
7:29 Michael: No. It's the best fit-out strategy.
7:31 Leon: Yeah, you gotta be really careful in this climate, which is what I love about this deal is that as far as doing a pub is concerned, it’s really safe on a lot of levels given its footprint and the amount of structure that it needs.
7:44 Michael: And the good thing about it is that if at any point before we get into the nitty gritty of the budget, if at any point we’re like "something happens and we can’t spend what we’ve set out in the budget," we could stop any of them, nearly any of the items and go "we’ll do it later" and still open the door on 18th of February like we're planning.
8:06 Leon: Because it’s a turnkey deal?
8:07 Michael: Don’t get me—and this is a thing I was sort of harping on about is we’re not opening a new venue, we’re taking over an existing one.
8:16 Leon: There’s a big difference in that distinction.
8:18 Michael: Exactly, and when you put that lens on there you’re like, "Ah, okay, you don’t need to do this massive fit-out." I’ve been saying to people it’s a two-and-a-half week shutdown, they’re like, "How? What? What are you doing?" It’s like we’re painting, man, cleaning the place. It’s a working business. There’s a few bits and pieces like we are putting a new bar top in, putting a bench seat in, but aside from that, it’s a lick of paint. Exactly. If the electrical comes a week after we open, which are like a few minor things, it’s fine. There’s lights already, guys.
8:54 Leon: Yeah, it’s funny. It’s more about like hard-out cleaning. What I love about the fact that we’re going to put this content out there is that it is such a good reality check for the majority of operators who get caught up in the romance, and there’s quite a lot of businesses that take over turnkey opportunities and then they also spend the money.
9:15 Michael: Yeah.
9:16 Leon: And it’s like crazy. Yeah. So this is good. Okay, today we’re going to basically go through the budget and we’re going to go through it line by line.
9:26 Michael: Yeah, every item, and it's only 30 items so it's not bad.
9:29 Leon: Yep. But we’re just—you’re just going to talk me through your thought process on why you want to spend that money on that thing, and I’m going to try and poke holes in it. And at some point, keeping in theme with the other episodes we’ve done this season, I’ve got to throw an idea at you.
9:44 Michael: Great.
9:45 Leon: I forgot about—
9:46 Michael: As long as it doesn’t mean more work for me I’m fine with it.
9:49 Leon: Probably doesn’t. I promise. It definitely does. It always does. It always does mean more work for you. Absolutely. What was my last one?
9:58 Michael: Christmas.
9:59 Leon: Okay, that’s not too much work for you. That’s going to be work for me and you. Me and you. You gotta be there. I'll be seen as the Grinch if I don't.
10:06 Michael: Grinch is kind of a little on brand for you I have to say.
10:10 Leon: It is. Vicky—Vicky my wife for anyone listening—always calls me the Grinch.
10:17 Michael: Yeah, there you go, because I'm like ready to—as soon as presents are unwrapped, I'm like the first one picking up the wrapping.
10:23 Leon: Yeah, you got the bag ready. I'm ready. Like as the kids are unwrapping, I'm putting it into a bag. Oh bro. I've gotten better. I have to say I've gotten better, but Vicky goes all out on Christmas, it's crazy. Anyway, getting off track. Alright, let’s go. Budget line one.
10:38 Michael: Line one: business purchase.
10:41 Leon: Okay.
10:42 Michael: Line one, 120,000.
10:44 Leon: Can't really—
10:45 Michael: I mean, you can negotiate it, but it's already settled on, right? Unless something catastrophic happens between now and settlement, that’s the price, right? It doesn't carry GST, FYI, because it's a going concern, so it's a business that will keep operating, so it's 120 on the nose, no GST.
11:05 Leon: So it’s just 120 to walk in, to just get the keys.
11:09 Michael: Just to walk in. Yeah, we've already paid the deposit obviously to secure the deal.
11:13 Leon: And I mean, effectively for—in other instances, right, what you’re paying that 120 for is you’re paying for goodwill and you’re paying for the existing functionality of the space.
11:26 Michael: Yeah, bits of equipment, you're paying for the lease.
11:30 Leon: Yeah. So in some instances, right, all the work that someone’s done to date to get that business functioning, you’re paying for that.
11:41 Michael: Yeah. And I've always been an advocate—this might sound really bad, but—there's instances where you definitely shouldn't be paying anything to go into some businesses.
11:51 Leon: What’s an instance that there is no goodwill?
11:54 Michael: Like if you’re completely changing the concept of a venue, what’s the goodwill? So that’s off the table. Then what you’re paying for then is just whatever fit-out you’re going to keep. But just as you said before, heaps of people go in and are just a whole new set anyway, so apart from maybe some bits of kitchen and bar equipment, a lot of it you don’t use. So goodwill is gone, fit-out functionality is gone, what are you left with?
12:21 Leon: You’re not saving anything.
12:22 Michael: Not a lot. So, and I’ve advised people in the past that have been ready to pay for a business that was going out of business, and they waited an extra four weeks and it went out of business. So they walked in for zero instead of 50 grand on their fit-out. So it's like they saved 50 grand on their fit-out.
12:44 Leon: Can I just say though, there is—there is a world where sometimes it can work to pay the opportunity cost and then also change the fit-out and change the concept.
12:56 Michael: Of course, I’ve done it with all the venues I’ve opened with—not every one, but a lot of them.
13:01 Leon: Which ones did you pay for?
13:04 Michael: Only Liberty and Capitano where we paid.
13:07 Leon: Oh you paid—oh righto.
13:10 Michael: Yeah, whereas the other ones started from scratch.
13:12 Leon: Started from scratch. Okay.
13:14 Michael: And that was more about the site and also the idea of just walking into a venue that was—
13:21 Leon: Well you don’t have to build a grease trap, you don’t have to put air lifts in, so many costly things.
13:26 Michael: Exactly, and I think for a pub in particular, like it's doubly so this idea that there is goodwill if you're going to open a pub again, which you will in a site like that, and fundamentally the functionality should remain pretty close to the same. Which brings me—it's a good segue—to the next line item, which—I had I think $15,000 in the capital expenditure to do kitchen upgrade equipment or whatever like that, anything like that, sorry.
14:02 Leon: Is that line 2, 15 grand?
14:04 Michael: It is in line 2, but I just—what we were talking about, it fit nicely was that, and speaking to Scott is like, "Let’s not do it. Let’s—it’s running now. There’s an oven, there’s a combi oven, it’s small but it’s a combi oven. It’s got deep fryers, it’s got a grill. Let’s max out what we need, let’s build the menu based on this, and all the other small bits of equipment are sound." So let's not spend that.
14:32 Leon: See, that’s why he’s such a weapon because what is so sage about that advice is that create the problem before you spend money on it. It’s kind of like, "Hey, either it’s all working fine and it will just be good, or you’re struggling to keep up, which means you’ve got the cash flow."
14:48 Michael: Totally, spend the money. The only thing he—which we're jumping around a little bit but—we're looking at we'll spend money on some nice plates. Not expensive plates, just clean, nice plates without scratches. Pretty simple. And we have the same mentality when we talk about glassware but we'll get to that in a bit. Other big-ticket item: the bank guarantee.
15:15 Leon: Ah, there’s no dodging this.
15:18 Michael: No. So, it’s $55,000, which is a big chunk of change, and there’s nothing we can do about it. Essentially that’s there if something happens and we need to exit, the landlord takes that security, right?
15:35 Leon: Yeah. Or the only way that you can offset that is if you use your house for security.
15:43 Michael: Which I’m about to sell—I’m going to sell my house. You’re going to have to use yours.
15:47 Leon: No. Not happening. Don’t do it, guys. Don’t do it. No mortgages either. Don’t get a mortgage. Let’s not have that conversation.
16:00 Michael: The next line item, also $55,000 I’ve put it at, is a buffer for when we open.
16:07 Leon: Okay, so a bit of—
16:08 Michael: It’s essentially rent back-up, something blows up and we need to fix it.
16:13 Leon: So just a bit of working capital?
16:15 Michael: Working capital.
16:16 Leon: Why did you choose 55?
16:18 Michael: Well, it’s stacked nicely against the bank guarantee number one because that’s like few months’ rent, but you can’t say well that’s rent back-up only because it’s like well things going badly you’ll be spending it on other things as well. So to me about 50 grand feels about right for that size business. So if you have a really poor week where it’s 40 degrees every day and in the sun like we’ve kind of just had, then you’ve got a bit of padding if we lose—
16:47 Leon: I mean, would you say that allocation that you’ve chosen to put in there is common?
16:53 Michael: No.
16:54 Leon: Yeah, most people go into it with nothing. Why?
16:58 Michael: Because they just don’t have the capital. Like they don't have the ability to have it. Or could you argue that they're overspending on fit-out? Yeah, totally. Or everyone does, it's not like an uncommon thing. And where we see businesses getting into trouble really early is the ones that don't have that padding. Spend everything on the fit-out and the opening cost and then they're like, "Oh, we didn't hit our forecast Month 1 or Month 2, now we're in—suddenly we're in zeros in the bank account, what do we do?" Whereas if you've allocated this amount of money for rent back-up or like expenses back-up, then you've got a bit of padding to get it right. And people will point to time of year of opening and getting that right, but it's impossible. Best operators don't open on time. So you know for us we're opening in February, it's a pretty good time to open. January sucks, Feb’s pretty good. Still warm weather, we’ve got a big decent sized beer garden, everyone’s gotten a couple of salaries back, post-Christmas and all of that. So yeah, having that really important, I stress to everyone you’re better off having that as buffer than spending that extra 50 grand on fancy tables.
18:14 Leon: Okay.
18:15 Michael: Bar refit. So the—it’s an old pub, so the guts of it are pretty good, like really nice slightly ornate timber structure on the base. We’re keeping one of the tops and instead of putting a new piece of timber on there which would cost quite a lot, is just taking it off, sanding it, and putting it back.
18:35 Leon: Oh cool.
18:36 Michael: It's fine. Like it’s beautiful. And then our bar is split into two pieces. The long one is what we’re just cleaning up and putting back. The shorter one has like a pretty—it’s been replaced later or built later and it doesn’t match the other one. So we’re taking that off. And it just doesn't look good, it's like Laminex-y granite-y. Not nice.
18:59 Leon: Which end are we talking?
19:01 Michael: The short end, as soon as you walk in, it's straight ahead.
19:05 Leon: Oh yeah, okay, gotcha. That bit sort of facing the dining area?
19:09 Michael: Exactly. And they've got a—
19:11 Leon: So you’re going to have no bar there?
19:13 Michael: No, no, we’re just putting a new top on.
19:15 Leon: Yeah, okay, got it.
19:16 Michael: But you said the—so the short part, if it’s an L, the short part is what we’re—is that Laminex shit, you’re going to replace it? Yeah, yeah, so we're going to replace it and currently they've got a table that butts up to it.
19:30 Leon: Ah yeah, true.
19:31 Michael: So we’re going to get rid of that table and make the bar an extra like 300 mil, make it a deep bar, so then we’ll be able to have three seats at the bar.
19:43 Leon: Nice. Like prime spot.
19:45 Michael: Whereas currently it’s a bit awkward and bulky. That’s where I’ll get my productivity temptation bundling people to sit.
19:54 Michael: Exactly. So that's seven grand total for that.
20:01 Leon: Hang on, seven grand to do that?
20:04 Michael: Yeah. Which is up there, but it’s a nice—it’s like spend money on a few key touchpoints that people are going to remember. What’s the one thing that everyone that comes into a pub walks into and touches?
20:17 Leon: The bar.
20:18 Michael: It's the bar. So make it nice.
20:20 Leon: Yeah, fair.
20:21 Michael: Bench seats. So bench seats are a big one, they are costly. But because we’re removing the stage, I think it’s really important to anchor that end of the room, otherwise it’s just going to be loose tables all the way up to the top and feel a bit awkward.
20:41 Leon: You don’t want to use that entrance again? The new entrance?
20:46 Michael: Yeah, so where that stage is, it's right in the corner, it actually blocks the first entrance to the building. Yeah, so we're going to reinstate the main entrance.
20:56 Leon: Oh you’re bringing it back? Love it.
20:58 Michael: Bench seats on the other side, got it, on the other wall basically so that anchors that. And it will be again a nice touchpoint, something people want to book, that sort of thing. So all up for the bar refit, bench seats, upholstery is basically our biggest spend at like 15 grand total.
21:18 Leon: Okay.
21:19 Michael: But worth it.
21:20 Leon: Yeah, it creates so much value.
21:22 Michael: Yeah, totally.
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22:45 Michael: Then there's some extra that I haven't spoken about—operational cost.
22:49 Leon: Yeah, I was about to ask you about that.
22:51 Michael: So, chef, head chef, aka Scott, to start with and then manager for three weeks leading up—or two-and-a-half weeks leading up, full-time basically just to come in and get everything set up, everything sorted, and that’s worth its weight in gold. So that pushes it to 264,000.
23:13 Leon: Okay, what about—where do you put things like WorkCover expenses and all that sort of jazz? Is that—
23:21 Michael: Well they’re not upfront. Yeah, so it’s down to operational cash flow. This is literally get to the 18th of February, unlock the door and start trading. It’s just to that day.
23:36 Leon: POS?
23:37 Michael: POS we’ve got a great partnership with Square that are sorting us out there, so really lucky in that partnership, but we’re also paying a subscription that’s just part of those subscription costs. Again, that subscription cost of $1,000 is a—to get us to open. Sure, so it includes like Deputy and monthly costs—
23:58 Michael: Yeah that—they’re included in the ongoing CAPEX. Righto.
24:02 Leon: What else, what else? I’m just trying to think of like what about pens?
24:06 Michael: It’s in the 5 grand. It’s in the slush, yeah.
24:09 Leon: Vacuum cleaner, what about cleaners? Do you have a cleaner or would you just do it yourself?
24:14 Michael: Well I had a deep clean cost in there a thousand bucks, but we're just going to do it ourselves. And again, hiring equipment—I want to hire a steam cleaner to steam wand the bar and all these little bits you just can't use a cloth on. But I think yeah it'll be 250, 500 bucks there.
24:34 Leon: Opening stock?
24:36 Michael: 10 grand. Gotta build a whole wine list, which we're getting done at the moment, they're going to need to buy food.
24:47 Leon: 10 grand light?
24:49 Michael: It’s light, yeah, but we’re going to be smart, like we’re going to order pretty low on the wine front. When we roll over that first few weeks, then as we get money trickling in, we’ll just build that. Got it.
25:03 Leon: Paint, as I said before, very important for what we’re doing, nine and a half grand. Which is a big job—it’s currently green, and we’re going a light color. So that means three fucking coats and sanding between each coat, which is kind of standard for what you do. On top of that, there’s a lot of corners and cornices and that stuff that are broken. So they do a day of prep, so they're going to come in and patch bits and pieces with plaster.
25:35 Leon: Who’s doing it?
25:36 Michael: Just through a friend I found—not I didn’t find, they recommended this company that—and it’s the first time I’ve done it, I’ve usually found independent painters. And this company, I’m just trying to bring it up so I don’t give everyone the wrong name, it’s called Prova Group, P-R-O-V-A Group. And from what I understand, what I know, they have their own teams of painters, not just in Vic, like quite a big company now. And then they subcontract as well. So they just come in and quote for you and then just allocate their teams. And because we’ve got such a short shutdown period, I had to be very explicit, I’ve given them our program and said on the 2nd of Feb is the prep day, 3rd, 4th, 5th, 6th is painting. And then you get—get out. You can’t bleed over that, and they’re just like, "Cool." Literally triple checked. Same with the fit-off of the joinery, same with electrical, like I’ve locked all that down this week actually.
26:40 Leon: Floor polish, doing ourselves. So we’re not sanding it, it’s just going to be like one of those buffers I’m going to get and do it ourselves. Just hire it, 500 bucks. Checked that price. Audio-visual, 1,000 bucks on a TV.
27:01 Leon: Because they’ve got TVs there already?
27:03 Michael: In the pool table room, I haven’t even been in that room, it’s got two TVs in it. So we could probably just move one. Is there one out the back? There's a big one out the back, yeah. So I’m going to keep it in there, but we might not need it, because we could just move one. If it’s all sound.
27:18 Leon: Because we think we want to put one in the dining room, right? Yeah.
27:22 Michael: Subscriptions etcetera to get started, things like the website I mentioned, a few other bits and pieces like Deputy upfront costs, like a thousand bucks. It’ll probably be a bit less than that. Licensing Council etcetera, a thousand bucks. I haven't spent anything so far, it might be a couple of hundred dollars so far. Electrical, stab in the dark, I’ve gone through with him what we want and there’s a few lamps that need to be reinstated at the front. And then he’s going to potentially decommission some stuff in the stage, but from what I can see so far, it’s just power boards and stuff. So that’s us just unplugging stuff. I’ve allocated five grand. He hasn’t even quoted it because it’s like it’s just going to be me coming in and it’ll be like a day or two’s work. So I think it’ll be in the scheme of two grand, but I’ve got a bit of fat in there just in case money, because there’s something that might pop up.
28:42 Leon: Plants and pots. So big one, we want to reinstate planter boxes on the windows like they originally had, as well as some other plants in the backyard—in the beer garden, 2,750 bucks.
28:57 Michael: Is that good for plants?
28:58 Leon: It’s low. I feel like it’s—
29:00 Michael: But we've got a nursery next door, so I'm going to strike up a bit of a relationship with them and see if they can sort us out. Or even look after them for us for a fee and we don't pay anything and they just charge us per month. It'd be great. Be pretty awesome. So you're not paying for that upfront. And then I feel like it’s a good opportunity for them to display some of their stuff.
29:19 Michael: Exactly. Legal, about five grand, shareholders agreement, pretty standard. Plates, we touched on, I put a thousand bucks in there, which is light on, but we’re only going to need a few different white plates, it's not crazy. Glassware’s a big one for us, we’re doing a branded pot and pint glass, and a branded wine glass. We need glasses anyway, to brand them actually isn’t much at all. It’s almost just the cost of the glass.
29:56 Leon: Why do we—is it because there’s not glasses there?
29:59 Michael: There is, but they’re pretty—they’re crappy. They’ve been used a lot. Got scratched, that sort of stuff, so. Just time to refresh. And we gotta get someone to sponsor them. True. And then the wine glasses, the ones they have I don't want to use. I want something new and fresh. So you think about that thinking I spoke about before, like spend money on a few things people touch, right? The bar top, people walk in, some decent cutlery, a decent nice white plate, a glass—a decent wine glass. I’m talking the wine glass stems are $6.50 a piece, $7 a piece. I’m not saying let’s get Zaltos.
30:43 Leon: What are you going to do with all the existing glassware that is there?
30:46 Michael: Oh, they’ll go to the op shop. They’re not worth anything. I’ll keep some of it, but there’s just—yeah, we need that changeover for sure. And then that’s it, and I’ve got one extra line which is essentially general repair slash items, which inevitably come up. It’s the hundred bucks here for that, the 200 bucks for that—
31:13 Leon: It’s just like a slush fund.
31:15 Michael: Bit of a slush, it’s 5 grand, 5 and a half grand, which I think is okay based off what I’ve accounted for already. But there will be a few bits and pieces that will come up, like menu covers—they don’t cost much, but they do cost something. We need new candles, whatever the fuck, it’s going to be all those little bits that you know I could spend time entering them individually, but let’s not waste time on it, allocate five grand and so be it. So all in we’re sitting at 254,000. Then there’s some extra that I haven’t spoken about, operational cost.
32:00 Leon: Yeah, I was about to ask you about that.
32:01 Michael: So chef, head chef, aka Scott, to start with and then manager for three weeks leading up—or two-and-a-half weeks leading up, full-time basically just to come in and get everything set up, everything sorted, and that’s worth its weight in gold. So that pushes it to 264,000.
32:25 Leon: Okay, what about—where do you put things like WorkCover expenses and all that sort of jazz? Is that—
32:32 Michael: Well they’re not upfront. Yeah, so it’s down to operational cash flow. This is literally get to the 18th of February, unlock the door and start trading. It’s just to that day.
32:47 Leon: POS?
32:48 Michael: POS we’ve got a great partnership with Square that are sorting us out there, so really lucky in that partnership, but we’re also paying a subscription that’s just part of those subscription costs. Again, that subscription cost of $1,000 is a—to get us to open.
33:09 Leon: Sure, so it includes like Deputy and monthly costs—
33:14 Michael: Yeah that—they’re included in the ongoing CAPEX.
33:18 Leon: Righto.
33:19 Michael: Yeah, sure, sure, sure.
33:22 Leon: What else, what else? I’m just trying to think of like what about pens?
33:27 Michael: In the five grand. It's in the slush, yeah.
33:30 Leon: Vacuum cleaner, what about cleaners? Do you have a cleaner or would you just do it yourself?
33:35 Michael: Well I had a deep clean cost in there a thousand bucks, but we're just going to do it ourselves. And again, ongoing cleaners—it’s in the current forecast to have.
33:48 Leon: Marketing?
33:49 Michael: Marketing, we're doing this podcast. And we're doing a release. We're actually getting paid to do the marketing. Yeah, thank you OpenTable, absolutely legend, absolutely legend. Like, I mean, talk about a super important thing to get open is your reservation system, which we're going to talk more deeply about in a marketing episode I'm sure. But in particular for us getting that set up now and understanding how that’s going to operate and using OpenTable, sweet as, super quick.
34:25 Leon: Uniforms?
34:26 Michael: No uniforms. Cool, we're a pub, mate.
34:29 Leon: Love it. Any other compliance stuff, like fire safety audits, things—
34:36 Michael: That stuff’s already—because again, we’re taking over—it’s running already, pest control is all there, it’s in the op cost—operational cost. Pretty covered I think. If I’ve missed something major, it’s too late to tell me, guys. We'll find out when it comes out. We’ll do it later.
35:01 Leon: Yeah, so when this has been recorded, we’re the 13th of Jan, so right now we’re just trying to get the last bits of the legal puzzles together, so the contract of sale, the license came through end of last year, so we’re good on the liquor license. We’re really close, so we’ve got essentially two and a bit weeks to sign off and pay the rest of that 120, and we’re in. Would you be willing to share this document with anyone listening?
35:36 Michael: Possibly, possibly. Just link it somewhere? Yeah we can link it in the show notes. Or maybe, no, let's do this: rather than linking in the show notes, yeah hit us up. If you want this template, just email us. If you want this template, and I know this wasn’t a forecast episode, forecasting episode, I’ll give you the forecast.
35:56 Leon: Phwoar, sheesh, that’s so valuable. Yeah. Okay, so that—so yeah if you want that hit us up at hello@paxs.melbourne. Nice. Idea?
36:11 Michael: Yeah, I forgot about that.
36:12 Leon: The weekly idea. Forgot about the weekly idea. I didn’t have one when we hit record, but when you started talking about branding I just tuned out. Tuned out and went to another world to come up with my own idea. So I’ve got this idea. I was actually just thinking about it when you were talking about the beer lines.
37:02 Michael: Oh no.
37:03 Leon: Okay, are you familiar with the concept—
37:06 Michael: Here we go.
37:07 Leon: —of temptation bundling? Have you heard of this concept before? You surely have. I surely have. Yeah. You have, right? So I’ll—I’ll just to explain what it is.
37:20 Michael: On the menu?
37:21 Leon: Here you go. It’s actually a—so temptation bundling is actually a productivity strategy. And how it works is it says that you take a task that you hate doing, or that you have to do but you don’t want to do, and you pair it with a task that you love doing. And you get it done more. So a good example you might—this real like James Clear shit of like—what’s his book called?
37:51 Michael: I don't know.
37:52 Leon: Oh, the Atomic Habits guy.
37:53 Michael: I didn’t read it.
37:54 Leon: So—
37:55 Michael: So if you think about it, it's like aged receivables and masturbating?
38:00 Leon: Not quite where I was going. The one—the classic one is think about like folding laundry. Someone might hate folding laundry but they love drinking whiskey. And it’s like cool, pour yourself a double, fold laundry, and you would do it all the time without question.
38:13 Michael: You wake up the next day it’s just all thrown in, thrown in your—thrown clothes, until you put the tunes on and start trashing the room.
38:21 Leon: So no, so it’s—so temptation bundling, it’s a thing, right? And it’s actually I don’t—look, you know, I don’t want to like discuss the merits of it. I just think it’s a nice idea.
38:32 Michael: Okay, but what is it? Put it through.
38:34 Leon: Okay, well, so where I’m going with this is if you think about the things that I hold true, okay? The tasks that I think are really important that you should do every week. The things that I do diligently and never abstain from.
38:53 Michael: Meditation.
38:54 Leon: Well no. Budgeting.
38:56 Michael: No.
38:57 Leon: I wish—I wish I budgeted every week. Riding a motorbike?
39:01 Michael: No.
39:02 Leon: It’s no, it’s productivity, it’s planning your week out. On a Sunday spending the time on your fucking laptop or with a piece of paper work out your to do's like I’ve got my four-step system all that shit right and you do it and you get it done and then you have a really, really productive week.
39:21 Michael: And a good sleep on Sunday night I have to add.
39:24 Leon: Exactly, because you get it all out of your head.
39:26 Michael: Because I do it as well and I’m like if I don’t do that because we’re out or doing whatever and I wake up—I have a shit sleep and I wake up Monday morning stressed.
39:35 Leon: Well I—I remember showing you this method when you left Attica. Yeah. And if there’s one person in my network that people would say is busier than me, it’s you.
39:48 Michael: Yeah, sure.
39:49 Leon: And so it’s like that system fucking works, right? And I’m constantly touting it in almost every conversation that I can, right? And I think that if more people spent time on a Sunday afternoon at the pub because we give them a free pint, you know, doing that work, we would have a more productive community. So how about we say to all the locals in the area if you come in and plan your week out on a Sunday avo we’ll give you a free pint? Productive pints.
40:26 Michael: Ooh, I like—that’s a good name.
40:29 Leon: Just because it’s a good name doesn’t mean it’s a good idea, guys.
40:33 Michael: Come on, this is a good idea.
40:35 Leon: This is like the pool table.
40:37 Michael: Why?
40:38 Leon: Right? If we have the space, we do productive pints. But if people are eating and drinking and having a merry time, I don’t want a bunch of bros on laptops.
40:51 Michael: Without me for like a couple of hours on a Sunday?
40:55 Michael: That’ll be like a couple of hours on a Sunday.
40:57 Leon: Wait a minute, so you’re saying that if what if I didn’t want to do the productive pint I just wanted to come in on my own and have a beer, there wouldn't be a place for me?
41:07 Michael: Oh you could do that.
41:08 Leon: So then what are you talking about?
41:09 Michael: No, because we’ve got to literally say "hey come use us as an office."
41:13 Leon: It’s not using it as an office.
41:15 Michael: I know, I know. I know. But it'll feel like that. Imagine if you walk in and there’s like five people just on laptops.
41:22 Michael: Do you have to submit what you're going to what you plan for the week is as you leave?
41:26 Leon: It’s an honesty system, right?
41:28 Michael: Okay.
41:29 Leon: It’s just like "hey I’m going to plan my week out, can I have a pint?" "Sure."
41:34 Michael: I okay. I love your brain, Leon. I really do.
41:39 Leon: It’s wild.
41:40 Michael: It’s just great. Alright, tell you what, even if you don’t get behind this idea, I’m just going to do it anyway. I actually think although it wouldn’t fit the Sunday afternoon week planning, I think doing something in that vein—yeah sure—like on a Monday or Tuesday night that you actually do.
42:01 Michael: Well it’s Run Club. That’s—that’s Run Club.
42:04 Leon: It’s the Run Club.
42:05 Michael: Is the version of—see I can do the Run Club.
42:08 Leon: Yeah, sure.
42:09 Michael: And you like right now I’m cooked, but um, yeah, we can do that.
42:12 Leon: Love that.
42:13 Michael: We could do like Excel workshops and Leon Kennedy, freak in the sheets. Also like encouraging people to warm up their cars before they—
42:27 Leon: For fuck's sake. Alright we’re at 40 minutes.
42:31 Michael: Nice one.
42:32 Leon: Thanks guys.
42:33 Michael: See you next week.
42:34 Leon: Thank you so much for listening to the Pinnicast. We’re super stoked to be bringing this series to you so we hope you found it informative. We would love to hear from you. We’d love some feedback, any thoughts you have around how we’re going about it would be really, really welcomed. So hit us up at hello@paxs.melbourne and we will definitely be all ears and we’ll respond. Lastly, just want to say a massive thanks again to Industry Kitchens, to Poster Boy Media. Without them none of this would be possible. So yeah, massive, massive shout-out. We’re really looking forward to bringing you more. Cheers.