Bar owners who overspend on their bars are at high risk of losing it all. Bars that are under-spending could also be forced to close.
Startup costs for bars
Bar startup and operating costs are essential for any bar. There are many other factors you can consider as a business owner. These are some places you can start to plan for the future.
- Liquor license: This license is a vital first step in opening a bar. Although the process and cost of obtaining a liquor license vary from state to state, you must prepare an application detailing your bar’s type, hours, how you operate, and whether you allow customers to bring their alcohol. This process can take several weeks, and the license cost may range from a few hundred to tens of thousands of dollars, depending on where you live. You might have to wait until enough liquor licenses are available in certain areas.
- A business license is required by every state and certain cities to be able to operate. This license certifies your establishment’s safety for the public. The cost of this license can range from $25 to several hundred. You can find a guide to state-by-state business licenses here.
- Food service licenses and live entertainment licenses Although not necessary for all bars, these tasks are important to start with if you plan to host food service or live entertainment in your bar. Costs and processes will vary depending on the state and city regulations.
Begin with the basics and move on to the more specific items to enhance your bar’s atmosphere and style.
- Refrigeration While the type of refrigeration you choose will depend on your location’s capacity, most industrial fridges used in bars and restaurants cost less than $1,000.
- Glassware Prices are up to you. You can buy large quantities of inexpensive glasses or partner with a local business to create custom-made glassware for your location.
- Furniture: Customers will likely need somewhere to sit or lean at their bar. This cost will vary depending on what type of bar you want. As you want to increase your staff, consider tables or high tops with codes so customers may order additional rounds.
Type of bar
You can choose the type of bar that you want to open. This will affect the space required and the cost of opening a bar. These are some bar options that you might consider:
A new bar: First, you need to decide whether you are starting a bar completely from scratch or if your bar is taking over an existing one. A new bar will likely have higher startup costs, but it will offer more flexibility to make the space your own.
An established bar: If your goal is to get up and running with low startup costs quickly, you might consider a previously owned and operated bar. There are many ways you can make it yours.
Dive Bar: This well-worn bar often skips the frills and is also known as a dive bar. This is where simplicity and authenticity are more important than fancy decor and expensive cocktails. A dive bar allows guests to relax and enjoy cheap drinks. Size and seating are the biggest expenses.
A sports bar is a great idea if you love large spaces with lots of TVs and tasty wings. These bars can be found in densely populated areas of cities and are a great place for large groups to meet up to watch a match or hang out. Sports bars serve beer as the main focus, although many offer liquor and wine. A sports bar often serves food. Owners of sports bars focus their spending on space, seating and entertainment factors such as TVs, dartboards, and pool tables. Food prep is another important cost driver since sports bars are often busy during games.
Wine bar: An elegant establishment that offers a selection of wines and light appetizers to a smaller group. Wine bars are usually centered around the bar, which has limited seating. Your staff can be a significant expense because you have to hire wine specialists and sommeliers.
Cocktail bar These bars are well-known for their unique environment and talented mixologists, making them wildly popular. A small bar with high-quality liquor is one of the elements of a cocktail bar. The intimate atmosphere created by the limited seating creates a feeling of exclusivity and intimacy. Cocktail bars only offer liquor, and some have a limited wine selection. Although renting a smaller space may be advantageous, it is important to consider the interior design and the ingredients when setting the mood at a bar.
Nightclub: An establishment that offers nighttime entertainment such as live music, DJs and dancing. A larger space should be available that can accommodate more people. Owners of nightclubs spend a lot of money on lighting and decor as well as the number of employees required to operate it. A nightclub is the most expensive to start up.
You might find your dream bar somewhere in between the two categories. That’s fine. It is important to identify your target market and understand the elements that will make your bar successful.
Bar costs will be affected by the number of employees you hire and what roles they fill.
The bar manager is the first thing you should think about. Bar owners often assume this role when they open their first bar. Some bar owners hire trusted staff to drive their success.
You want someone with experience in the restaurant business, especially in the type of bar that you are looking to open. This will ensure that the bar manager knows how to buy stock and manage bar inventories.
You will need bartenders that can legally serve alcohol. Barbacks are not responsible for actually serving customers drinks. They focus on maintaining the bar’s operations throughout the night, cleaning up the bar and replenishing the ingredients.
You must ensure that you have the right kitchen staff to prepare and serve food. The following are some of the essential kitchen staff for a bar:
Additional industry professionals may be needed for specialty bars like wine bars or cocktail bars.
How much you want to pay your employees should be decided in advance. Rates should also be consistent across roles. For roles that pay hourly, this may be easier. However, it is important to remember that salaried employees such as mixologists, sommeliers, chefs, or managers, are most likely to be in salaried positions.
Your bar’s location will impact the kind of clients you get and the vibe you create. It can also affect the cost per square foot.
A few factors affect the cost of your area:
- Real estate around your location
- The foot traffic
- The space’s size
- It already has all the amenities you need
- What date was the last time this site was renovated?
Technology and the POS system
The technology you use to open a bar will ultimately save time and help you create a seamless flow in your day.
Think about the time you waited at the bar to receive a payment. Customers can be frustrated by limited payment options, system glitches, or long processing times.
A fast-paced bar environment demands a payment system that is efficient and can keep up with customers. So that you don’t lose out on potential customers, look for a payment processor that can accept any payment. You should be able to accept both cash and magstripe cards, EMV chip cards, and mobile payments such as Apple Pay.
A reliable payment system is not enough. You also need an integrated point of sale system specifically tailored for your bar. The barPOS will help you organize your bar. It allows you to manage modifiers, open tabs and split bills.
Your bar won’t be able to attract customers without a solid marketing plan. However, it can be costly in the beginning. It is crucial to know which marketing channels you have- such as email, social media, and paid digital marketing- to create a strategy that meets your needs.
Focus on local marketing strategies when you first start. This will help to draw new customers to your bar. This can be done via social media or online review sites.
- Social media It’s important to use social media and create accounts that will help you build brand awareness. Paid advertisements can be placed on social media platforms to target specific audiences. Find out more about best practices on Instagram, Facebook and other social media outlets that could benefit your bar.
- Reviews Your bar’s online reviews are crucial to its success. Therefore, it is important to monitor Yelp and encourage regular customers to leave reviews.
How you allocate your money within these five categories will ultimately determine the cost of opening a bar. Before opening a bar, ensure you have an accurate budget and assess the costs involved. Your bar business plan should include your analysis and assessment. This will allow you to refer to your goals. Next, make sure that you stick to your budget.