Have you ever dreamed of opening a bar but aren't sure where to begin? You've come to the right place.
Bars are good business—they're popular places to socialize, relax, and have a good time. Plus, according to business insider, they have a relatively high success rate - with 1/12 people succeeding on their first try and 1/3 succeeding on their second - however, opening a bar is, of course, a considerable investment in both time and effort.
So is opening a bar for you? Are you up for the challenge? In this guide, we aim to help you find out.
Our "how to open a bar" guide covers everything you need to know about opening a bar, from finding the right location to hiring staff and more. We aim to provide a framework to decide if opening a bar is right for you and how to do it. Let's dig in.
Opening a bar can be a costly endeavor. You need to consider a number of fixed costs, such as renting the space, filling it with furniture, obtaining a liquor license, and ongoing expenses, such as inventory, labor, and marketing.
With food-service-based businesses running with notoriously tight margins, it would be wise to bring on an accountant and bookkeeper early in the process to ensure you remain cashflow positive.
If you want to dig into this concept more - check out our recent webinar on the importance of financial reporting.
The cost of opening a bar varies depending on many factors, including the size and location, the type of bar, and the amenities and features you want to offer. On average, opening a bar can cost anywhere between $100,000 and $850,000.
There is so much to factor in when considering the cost - but a great way to break it down is to consider two different types of expenses. One time and ongoing. Ongoing costs would include operating labor and goods. One-time costs include setting up your bar, renovations, or hardware purchases.
Here are some other costs to consider.
Renting or buying commercial spaces in cities can be prohibitively expensive on multiple fronts. The cost of opening a bar may be lower in smaller towns or suburbs, but customer traffic may be significantly limited. Choose a central location that will generate enough revenue to cover all recurring expenses.
Before you can open your doors, you must order supplies, including glassware, bar tools, furniture, and other features to attract patrons. You need to stock your bar with liquor, wine, and beer. All these expenses will add up quickly, so keep a close eye on your budget.
Heads up - paying for labor typically accounts for 30% of service-based business operating costs. You will need to hire bartenders, servers, and other staff to keep your bar running smoothly. Staffing costs will vary depending on the number of personnel you need, their experience levels, and the location of your bar. Expect to spend thousands of dollars on employee-related expenses each month.
Your software-related expenses will include point-of-sale (POS) systems, online payment solutions, accounting, inventory management, workforce management solutions.
Consider investing in integrated solutions like Push for an all-in-one solution for hiring, onboarding, HR management, scheduling, and payroll to optimize your employee operations.
You will likely need to promote your bar to get people in the door, so making space for a marketing budget is paramount.
You might opt for print ads, social media posts, and even simple flyers or posters. In addition to getting people in the door, you will want to keep patrons coming back. You can do this through promotions like happy hour pricing, special discount days, or rewards.
Opening a bar can be costly, and you need a comprehensive business plan to control your spending and manage your resources. Also, consider working with an accountant, bookkeeper, or financial planner to ensure a healthy cash flow to keep your business going.
You can opt for bank financing, crowdfunding, or restaurant incubators. Or you can bring on business partners or solicit funds from investors. You can also begin business as a pop-up bar or food truck until you can build enough capital to open a bar.
You can partner with a local brewer or distiller to get started, as they may be able to provide you with some free or discounted supplies. Look for used equipment or furniture, or even repurpose items you already have.
You can take out a loan, seek investors, or use crowdfunding platforms to raise money. The best method depends on your specific circumstances—loans are great if you have good credit. If you have a unique idea for a bar, crowdfunding or angel investors can get you the capital you need.
Set up a business bank account to keep your bar-related finances separate from your personal transactions and to keep all your cash flow in order. You also need it to acquire a business license from the local government and set up your tax structure.
You also need to decide the type of business entity you will open. This will determine your business structure and how much tax you need to pay. Consult an accountant or a lawyer for the best option for your circumstances.
Understanding what it means to be a bar owner is important before deciding to take the plunge. You are responsible for everything in your bar, and you will be the final authority for all the business decisions that will be made. Be ready to own it, make some tough calls, and wear your business owner hat. Here are some things to consider when you are wearing it.
Most states require a business license to open a bar. This ensures you accomplish all the legal requirements for operating a business. You may also need a liquor license to serve alcohol in some states.
Check with your state's Alcoholic Beverage Control board for specific details.
You might also want to look into the different types of licenses you can acquire if you decide to be liquor primary or food primary. These come at different costs and with varying restrictions on how you sell liquor and food.
Choose a location in a safe and well-lit area, especially at night. Opening a bar close to restaurants and other food establishments is best to ensure heavy foot traffic throughout the afternoon and evening. Walk around and get a feel for the neighborhood before making your decision.
Leasing is the wiser option instead of buying. You will not tie up too much capital on the property; instead, you can spend money on furnishings, marketing, and operations. Discuss the terms of your lease with your landlord and come to an agreement that will benefit you both.
When choosing a location for a bar, consider the audience you want to attract. Do market research to determine where your target demographics spend their time and find a commercial space they can easily access. Consider the competition in the area, the amount of foot traffic, and the parking options.
Consider the size and layout of the space. Is it big enough to accommodate your needs? Does the layout make sense for your business?
Choosing the right location is crucial to the success of your business. By taking the time to do your research, you can increase your chances of attracting the right customers for long-term success.
You need to find the right resources and information to design and open a bar that suits your audience's demographics, location, and theme. As the bar owner, you will need to wear many different hats: an accountant, designer, liquor connoisseur, taste tester, HR manager, and many more.
First and foremost- you need grit and determination. Food-service or liquor are tough industries because they have a lot of moving parts, and involve people at the core. You should have a firm grasp of restaurant/bar management and technical knowledge about all the products you will sell. An understanding of the liquor industry, and how to make or oversee great drinks wouldn't help either.
In addition to relevant industry knowledge, you must have (or find someone to support you with) financial acumen. This will come in handy for setting prices, managing inventory, and tracking expenses.
Finally, it's essential to have people skills. After all, a big part of running a successful bar is creating a fun and inviting space for your customers.
No, you don't need experience to open a bar. However, it will be helpful to have some knowledge of restaurant or bar management before opening your own enterprise. This way, you'll know what to expect, and you'll be prepared for the challenges you'll face.
Even working in an establishment for a short amount of time to understand the restaurant or bar ecosystem can be a valuable investment of your time to succeed when you open a bar of your own.
It can take a few months to a year or longer to get everything in place and open your doors to the public. It largely depends on how bar-ready your location is and how many improvements or other physical adjustments you want to make.
You must have all the plans, permits, and licenses to show investors, banks, business partners, and your local government. You need all the liquor and glassware inventory to run a full bar for your first few weeks or months. You must also onboard your staff and set up shifts to cover your hours of operation.
It might also take some time to determine your bar concept, create and test a menu, and set up all the creative aspects of the business - speaking of creativity.
Now, we get to the fun part: deciding the overall vibe of your business. What's a bar without a theme? Choose a theme that will set you apart from the competition, attract your target audience, and generate continuous revenue for years to come.
You need a strong concept that will make your bar unique. Think about what kind of atmosphere you want to create. You can link your theme to the history of your location or select a service style and aesthetic that will make patrons want to keep coming back.
Some popular bar themes include sports, beach, and whiskey bars. You could be a bistro, a dive bar, or even a bar and grill. Be creative with the customer experience, as it will be your bar's most significant selling point.
Once you have decided on a theme and the atmosphere you want to create, you can determine the type of drinks you will serve. Building a bar menu requires planning and creativity—think about what drinks will pair well with your theme and what your customers will enjoy.
Consult with a professional mixologist or caterer to get some ideas. Test the food and drink combinations you're including in your menu and make sure they match well.
Finding the right staff is critical to the success of your store. When it comes to bars, the vibe is everything! Find great people to serve your customers and give them a reason to enjoy their experience and keep coming back.
Don't forget you will need more than just bartenders and kitchen staff; you also need a management team to wrangle all employees and maintain efficient operations.
The best way to find great people is by getting referrals from people you already like. These folks are already vetted. Other great ways to find a good team might be to post on online job portals or ask the great bartender around the corner if they are open to a new opportunity (shhhh)
You can also reach out to local colleges and ask if they have students looking for part-time work. Make sure they are of drinking age and suit the atmosphere of your bar.
When interviewing candidates, ask about their previous experience working in a bar or restaurant - you might even ask for a demo of their bartending skills to see if they are the right fit.
You need to fill a few key positions to successfully run your business and ensure that all of your plans come to fruition. You must hire a general manager, bar manager, bartenders, barbacks, waitstaff, busboys, cooks, and security. Here are short job descriptions for these critical employees:
The GM is responsible for the overall operations of the bar. They must have experience managing staff and running a business.
The BM is responsible for the day-to-day operations of the bar. They must have experience with bartending and managing a bar staff.
Hire experienced bartenders who are knowledgeable in mixology and can provide top-notch customer service.
Barbacks are responsible for stocking the bar and helping bartenders with their tasks.
Waitstaff take orders and deliver food and drinks to customers.
Bouncers and security personnel manage who enters your bar and ensures your enterprise remains a safe and fun place to be in.
They clean up after guests and ensure the bars and tables are ready for new customers.
The size and expertise of your kitchen staff depend on the food you plan to serve in your bar. If it's minimal, you don't need too many. But if you offer full meals, you need a chef and several cooks.
In the digital age, you cannot open any business without top-notch technology in place to ensure efficient operations. These hardware and software solutions will minimize or even eliminate manual processes so you can avoid human error and boost productivity on all fronts.
The types of technology you need to open a bar include inventory management software, a point-of-sale (POS) systems, people management systems, payroll and accounting, reservation software, a business website, and more. Here's a quick rundown of the tech stack you need to run your bar:
With a robust POS system, you can keep track of orders and inventory.
Your official website serves as a marketing and promotional arm of the business. You can include your menu, history, location, contact information, and other information to engage your target audience.
Allow customers to make their own bookings and make it easy for your staff to manage seating and scheduling in your bar.
Streamline and simplify your finances with integrated software that covers all of your needs, from inventory to payroll to business taxes.
Hiring, onboarding, training, scheduling, time tracking—you can do all these and more on one robust platform.
Opening a bar can be a great business venture, but it's essential to have a solid plan in place before you get started. Creating a business plan is essential for success and will help you secure funding, keep track of progress, and make changes as needed.
Your business plan must have an executive summary that outlines your business concept and key objectives. Detail your target customer base, including demographics, location, and marketing strategy. Outline your financial projections, timeline, and budget, including costs for renovation, leases, permits, and other expenses leading up to the opening date.
It's always best to prepare for the unexpected—it is part of learning how to open a bar. Protect your enterprise from these situations by purchasing business insurance and hiring a lawyer to cover all of your bases. The best way to succeed is to have contingencies in place.
Push Operations helps business owners and managers focus on running their enterprises and making them profitable. We provide software solutions that streamline all financial and people management processes, from managing staff, accounting and payroll, to taking care of your customers.
We can help you with everything from understanding how to open a bar to making sure that your bar is a success.
Book a demo with us today, so we can help you take your business to the next level!
“In the labor numbers, we were reporting about a $300 to $400 difference than what we were getting through Push!”
-Tara Hardie, ZZA Hospitality Group, 16 locations