It can be much easier to open a bar than a restaurant. But it would be best if you had a plan. This is what you need to know about opening a bar.
This step by step guide will walk you through many issues before you start:
How Much Does it Cost to Open a Bar?
Building from scratch is the most costly option. It can cost anywhere from $175,000 to $850,000. A large sports bar or nightclub may cost several million dollars. The price of a new building can vary depending on where you are located. According to Investopedia, the average cost of a lease or remodel is between $110,000 and $550,000. However, buying an existing bar could be as low as $25,000. The median cost of opening a tavern/bar is $475,000.
Although a bar’s return on investment is often faster than a restaurant, it still costs a lot. You should consider the type of bar you choose, your target customers, and the theme you will use to attract them. Please read our Complete Guide for Opening a Restaurant.
What is the Average Cost of Opening a Bar?
The salary of bar owners varies depending on where they are located, how big the bar is, what kind of concept it is in and what market it is in. , the median national salary for bar managers is $67,390. The median salary for the top bar executives is $71,550.
A bar earns an average of $25,000 per month, which is a profit of $5,000 per month. It would take 25 months to repay your investors if your initial investment cost was $125,000. Then, you will be able to make a profit.
Research and Development
Do your research before you commit to any idea or location.
Do a market analysis.
To determine the size of the market and its demographics, you can use this information to help you decide the right clientele to target. The U.S. Census Bureau has many resources. The U.S. Census Bureau and your local chambers of commerce can provide resources. Next, take a look at the competition. What are their concepts? What are their ideas? What are their success rates?
Look into a Liquor License
Licenses for liquor vary from one state to the next, with some counties even having their laws. Check with your local liquor laws to see if there is a limit on how many licenses you can get or quotas.
Create the Concept
Once you have decided what kind of bar you want to open, you can start thinking about the concept. Are you looking to sell food? You may be required to sell food under some “liquor-only” or “tavern” licenses. Others allow you only to sell a certain percentage of your total sales. You may not want to add food to your business, as it will require you to use more service resources and commercial equipment. Consider your decor and theme. You can be different, but not so trendy or kitschy that it becomes outdated in a few years.
Create a brand
Name your bar. If it is unique, trademark it. Create your branding around the concept. This includes how bartenders or servers should greet guests and how you want them to treat them.
You’ve probably done enough research to be able to move your idea to the next stage of funding and finding a site.
Choose a business entity.
One-person business ownership is the most popular form of small business ownership. A general partnership with a partner is also a common option. These entities only require you to register your business with your state. You (and your partner) must pay taxes as individuals. However, you are also responsible for any events at your bar. An LLC is more complicated, but it separates you from your business. Therefore, you are not personally responsible.
Create a business plan
Potential investors will want to know how you plan on making money and repaying an investment. Even if investors are not required to fund your venture, a business plan will help you organize your thoughts and keep your business on the right track.
Include in your plan.
- Executive Summary
- Company Overview and Description
- Market Analysis
- Bar Operations
- Marketing Plan
- Financial Projections
Once you have your plan in place, create an elevator pitch for the concept and then go to potential investors.
Locate a location
Now is the best time to begin looking for a place. A team of experts can help you: a commercial realty agent specializing in bars and restaurants, an attorney negotiating terms for Lease or purchase, and a consultant/designer or equipment specialist to assess properties. (Read also To Lease, or Not?).
Rules and Regulations for How to Open a Bar
Bars and taverns in many states are the most closely regulated business. The list of requirements and tax structures can be complex.
Get Licenses and Permits
Once you have chosen a location, get this process underway as soon as possible. Normal circumstances will take three to six months for liquor licenses to be issued. However, it can take longer. Facilitators or expert advice are required in many cities. Depending on the concept, you will need many, if not all, of these licenses/permits.
- Employee identification number (EIN).
- Foodservice license
- Alcohol and Tobacco Tax and Trade Bureau
- Sign permit
- Music licensing
- Certificate of occupancy
- Pool table permit
- Permits for dumpster placement
Style and Stocking Your Bar
Your design team can help you design the bar design. Equipment specialists such as your CRP Product Advisor or manufacturer reps can help you determine the space requirements for refrigeration, storage and beverage dispensing equipment.
Purchase Equipment and Supplies
Your CRP Product Consultant will help you choose the right bar equipment for your space and concept, including under-counter sinks, speed rails, and ice bins. Glassware, pourers, paring knives, and muddling spoons are also required.
Locate Liquor, Beer, & Wine Suppliers
Only state-authorized suppliers are allowed to sell alcohol in control states. Elsewhere, you can choose the wholesalers/distributors to provide you with the brands you want to serve.
Opening a bar: The Final Preparations
You are now close to opening. These are your next steps:
Hiring the right staff
Experience is important for positions like bartenders or management. However, personality is crucial in the bar industry. Employees who interact directly with customers or serve them should be friendly, enthusiastic, and fit the culture that you are trying to establish.
While you can train barbacks, servers and other staff members, it is impossible to teach a positive attitude. You will need to create descriptions of staff positions, which outline the duties and expectations. You will need to fill the following positions:
- The bar manager manages inventory, ordering, opening/closing and marketing, quality control, staff supervision, and scheduling.
- Mixologist mixes cocktails, wine, and beer, interacts and makes recommendations to guests, stocks the bar, manages tabs, and rings up sales. Experience and pedigree, such as from bartending school, can make a huge difference in this area.
- Server: Seat guests, take food orders, clean and clear tables, and manage tabs.
- Barback: Prepare garnishes, refill ice bins and liquor wells. Change beer kegs. Help with glass washing.
- Doorman/Bouncer: Screen and greet guests, verify IDs, and provide security. While bouncers can be helpful to have on hand in the event of an emergency, their presence is often enough to keep guests orderly and respectful as they enjoy their drinks and hard-earned nights out.
Implement your Marketing Plan
Advertise your bar. Active social media accounts have become a necessity. It would be best if you promoted the bar by posting photos of your progress as well as your plans for opening. Send a press release to local media regarding your plans for opening.
Have a soft opening. Invite family members, investors, media, and friends to an open house party to test your systems and operations. Ask people for their opinions and suggestions.