Ever have that daydream? The one where you walk into the bar and people smile and wave at you. One even stands up to give you a hug.
Everything you see is a reflection of your decisions: beautiful flooring, rich wall colors, the artwork, comfy chairs, fun signage for the restrooms, etc.
A few framed celebrity autographs hang in the hallway as mementos of the nights that made this tough job worthwhile.
The workplace is now a home away from home. A family roosts within these walls: your dedicated managers, your loyal bartenders, and your cherished guests who find comfort in the unique hangout you created.
Are these constant dreams giving you the urge to just go for it? You can get started on a plan today! Read on to learn all about how to open a bar.
Step 1: Decide What Type of Bar You Want
Variety keeps competition hot in the bar industry. Our mobile devices serve up a menu of spots to meet for a drink. Let’s go over the types of bars patrons have to choose from.
The most notable thing about sports bars is the collection of mounted large screen TVs, each one tuned to the most in-demand events. Games can go on for hours, so pitchers of beer and plenty of pub grub keep these fans happy.
Not the prettiest of bars, but many of them outlive the rest. The comfort is in the non-intimidating environment. The dress code is “come as you are.” A neighborhood bar attracts the barflies who often become loyal customers.
After spending all week studying in the library, this is the place to blow off steam after finals week. College kid habits create “Party School” status, so putting bars close to campus makes bank.
While some bars phone it in with a jukebox, others know that real parties have live music. The stage in the corner is a starmaker from karaoke crooners to aspiring musicians. Like sports bars, these offer an entertainment incentive for longer visits.
Such a convenient way to get a nightcap, a bar is an amenity that increases a hotel’s appeal. It serves the social needs of guests and offers additional comfort while away from home. Of course, this bar will need to match the caliber of the hotel’s style to meet clientele expectations.
Enthusiasts and connoisseurs flock to these niche establishments such as wine bars, brewpubs, cigar bars, hookah lounges, etc. If your goal is to create a community of people as passionate about a product as you are, this is the way to go.
Observe the area for redundancy in types of bars. For example, your lifelong dream is to open a sports bar, but there are already several of those. What could you do to stand out and entice patrons to try yours instead?
Step 2: Create a Bar Business Plan
Probably not the fun part, but drafting a bar business plan is absolutely fundamental for building a successful bar.
Five Reasons Why You Need a Bar Business Plan
- Preparedness – Opportunity to proactively address potential issues. Planning forces you to think through everything involved.
- Raising funds & attracting partners – If you want other people’s money, they will more than likely need to see a business blueprint. It shows you’re serious and responsible.
- Clarity and focus – Vision creates new businesses, but a nebulous dream must convert into a cohesive reality. Sticking to a plan paves a linear path.
- Understand your customer base – Market research and knowing your consumer is imperative in the service industry.
- Confidence – Once you’ve done all your homework, you’ll feel better about taking that leap. This plan is the map for your journey.
Bar Business Plan Components
● Executive Summary – A condensed version of the entire plan, it may include some enticement to raise interest in reading through.
● Company Overview – Details like the name, location, products, hours of operation, etc.
● Industry Analysis – Information about the market, trends, and a health status of the industry.
● Customer Analysis – Demographic and economic profile of area prospects.
● Competitive Analysis – Profiles of established bars with identification of their weak points.
● Marketing Plan – Promotion strategy: unique offerings, promotion ideas, and competitive pricing.
● Operations Plan – How responsibilities will be managed and a list of milestone targets.
● Management Team – Who is slated to manage the bar and what the hiring process will be.
● Financial Plan – How much capital needs to be raised and how it will be spent plus revenue and cost drivers.
This process takes substantial time and research to complete, but once it’s done you’ll be a real player in bar ownership.
Step 3: Choose Your Business Structure
When opening a bar not only do you need to choose a genre, you also need to commit to a category. Let’s go over the options.
● Sole proprietor: Single owner has personal liability and pays personal tax.
○ Pros: Easy to set up.
○ Cons: The owner’s personal assets are subject to liability.
● Partnership (LP or LLP): Owned by two or more persons who pay self-employment & personal tax.
○ Pros: Shared responsibility & liability options.
○ Cons: Additional taxes (self-employment).
● Limited Liability Company: Protects the owner’s personal assets from liability. Taxes include self-employment, personal or corporate tax.
○ Pros: Mitigates personal risk.
○ Cons: Self-employment tax, SS & Medicare contributions, & complicated organizational rules.
● Corporation: All members act as a single entity. Taxes depend on the type (e.g. corporate and/or personal).
○ Pros: The owner’s personal assets are not subject to liability.
○ Cons: Complex (subcategories) and regulated procedures.
● Cooperative (Co-op): Business owned by its members. Pays business taxes like property and sales tax.
○ Pros: Less taxes, liability reduction, and shared responsibility.
○ Cons: Any policy or action must be agreed to with a consensus.
Making this decision can be tricky, so don’t hesitate to ask for assistance from accountants (tax advice), lawyers (liability risks), and business organizations (free guidance from experts).
Step 4: Choose Your Location
Every step of opening a bar is strategic, including scouting the location.
● Target customers: Meet your customers where they are. Your location should be where your target demographic either resides or works.
○ For urban nightlife, being near public transit stops helps. For a major attraction area, patrons may be more willing to pay for a ride or pay for parking (metered or valet).
○ For suburban areas, it’s best to have a clean and well-lit parking lot with more than enough parking spaces.
○ Assess if the building is ADA compliant and how much it might cost to be brought up to code.
● Size: Is the space big enough for your plans? Can it be modified to adjust for increasing attendance like adding outdoor seating?
● City ordinances: Some cities are zoned, so you can’t put a bar just anywhere. For music venues, be aware of noise ordinances. If your ideal patrons are smokers or vapers, know where bans are in effect (or if there is talk of initiating a ban).
● Neighbors: For those who aren’t bound by zoning, be mindful of whom you’d be sharing a parking lot or even walls with. Depending on the kind of bar you have, childcare centers, churches, yoga studios, etc. may not be compatible with your culture.
● Visibility: High traffic areas get more business. If you’ll be tucked away are there signage opportunities that will make your presence known?
● Lease terms: Is the rent reasonable for the area? Does the rent meet your budget? Are the terms flexible?
Once you find the ideal spot, having a real space to work with you moves you forward with your vision.
Step 5: Calculate the Funds You Will Need
Imagine opening day. Itemize everything that went into it and what keeps it open for the next few months. Everything you see, including the staff, has a price tag.
Also consider the things you don’t see like license costs, marketing expenses, insurance, taxes, etc. List everything to the smallest detail and add up the grand total for your budget.
Question: How Much Money Do You Need to Open a Bar?
Investopedia estimates that taking over an already established bar can cost as little as $25,000. The cost to open a bar in a leased space can range from $110,000-$550,000. Expect costs of $175,000-$850,000 if the facility is mortgaged.
To estimate real estate costs, ask a local realtor for the average commercial property price per square foot (buying or selling). Establishment sizes range from a modest pub at 2,200 sq. ft. to a 10,000 sq. ft. dance club.
Multiply the total square feet with the realtor’s quote and see how the sticker price compares. This figure could be leverage to get a better price per square foot from a broker when you are trying to negotiate a lease.
What kind of product you’ll stock is also a factor. That brings us to a Pour Cost.
So, what is “Pour cost?”
Pour cost is the cost of ingredients in a drink divided by its sales price, which means the lower the pour cost, the higher the profits. Estimated pour costs for wine is 28%, 24% for beer, and spirits are the lowest at 15%.
This range is due to shelf life and yield. A bottle of vodka doesn’t spoil like wine does and you get several (often more than 20) iced-down drinks from it.
|Estimated Pour Cost||28%||24%||15%|
The cost of setting up a kitchen, purchasing food prep supplies, stocking food products and hiring staff adds up. But not having food service could cost you. Keep in mind that alcohol makes people hungry. If you don’t have food, they’ll likely close out their tab sooner to go find food. And, for sports bars that host game watching, food is a must.
How Can I Get a Loan to Open a Bar?
When thinking about funding, people typically think about bank loans. Because bars have a dubious success rate, many banks may decline an application outright – this can be especially true for the more favorable loans, like SBA loans, which tend to have some of the lowest rates. Showing you already have the capital to put toward the project, credit-worthy cosigners, and a convincing business plan may improve your chances.
Also, the application process for bank loans can be lengthy, so this may not work with your timeline.
The Small Business Administration (SBA) is a government agency that guarantees loans for businesses. Those with prior business experience may have a bit of an advantage. You can start your search by checking with your local bank to see if they offer SBA-backed loans (typically referred to as just “SBA loans”).
Angel investors and peer-to-peer lending networks are also an option. Some peer-to-peer lending is just like a dating app. You can seek out investor profiles as potential matches for your business needs. If you find an investor who loves bars, it may be easier to get a loan from that investor than a big bank.
Already having some of the capital can grease the wheels for fundraising. It shows you have your own skin in the game. Liquidating assets, cashing out home equity, tax refunds, or rolling profit over from a side business are a few ways to raise funds.
If your bar is opening in an underserved area and you can prove its tax benefits to the community, you may qualify for some grants.
If your options are quickly dwindling, seek out business incubators or bar/restaurant associations for scrappy solutions.
Step 6: Design Your Bar
Whether you’re building the bar from the ground up or buying a bar space that already has the bare essentials in place, it’s up to you how it looks. Oh, the possibilities!
What shall be the focus of your bar? For sports bars it’s all about the game, so the guest space is lined with mounted televisions. With most other bars, the bar area is the focal point with various seating arrangements orbiting it: bistro tables, booth tables, lounge areas, etc.
If a person walked in for the first time, would they encounter a welcoming environment, is the bar easy to find, and would the theme be obvious? The first impression is how you keep the promise of their expectations. The atmosphere is a blend of comfort, space, and personality.
Choose a Bar Layout
Think about your typical restaurant bar setup. It has everything needed to serve a variety of beverages from bottled beer to Long Island Ice Teas.
The geometrics of a bar vary from against-the-wall with a backdrop of cascading liquor bottles, to a generous staff area such as a square or U-shape bar.
Ergonomics can be a game-changer for your bar. In addition to optimizing the service of drink orders at a profitable pace, a well-planned bar space considers the physical needs of bartenders. Having a good bartender makes all the difference in quality of service, so help them out by following ergonomic design specs. Bar staff may spend up to 12 hours on their feet, so supply them with supportive floor mats.
Still not sure where to start? Test out a floor plan design software, schedule a consultation with an experienced bar designer or browse Pinterest for layout inspiration.
Select Your Bar Furniture and Glassware
For the bar itself, durability is key. Make sure your contractors are using quality materials for construction such as our solid reclaimed wood bar top.
For a bar height of 42”-45”, you’ll want bar furniture that tucks in comfortably beneath. An appropriate bar stool measures between 30” and a little over 40” tall.
Stools without backs are easy to get on top of, but ones with comfortable backs may provide the comfort that keeps prolongs a patron’s visit. If the stool is one of those that has a comfy back and is easy to get into, this is your happy medium. More importantly, are the stools durable?
How many stools do you need? Take the total length of the bar and subtract the server station area. Divide this number by 30” and this is approximately how many will fit for the length of the bar.
Having a variety of seating options for the rest of the space accommodates the preferences of your patrons. Some bars have an eclectic mix of standard tables, booths, and lounge furniture. Consult our table guide here.
For durable tables that match the beautiful bar, check out our selection of reclaimed wood table tops.
The Basics: Types of Glasses
Perfect pours call for a complete set of glassware.
● Beer: pint, pilsner, mug, snifters, etc.
● Wine: red, white, tumbler, dessert, sparkling (champagne), etc.
● Cocktails: highball, Tom Collins, martini, old fashioned, daiquiri, etc.
Consider adding novelty glassware. For your expensive signature cocktails, a fancy glass will boost its appeal. A specialty drink deserves a special glass that flatters it.
Some suppliers may be willing to give you a deal on glassware, especially those brands seeking more recognition. Shop around and see what kind of bulk order deals you can get glassware.
Plan Your Bar Menu
It’s your time to shine! Showcase your signature cocktails and highlight recommended drinks. People tend to order standard cocktails off-menu, so no need to list every recipe known to man.
If yours is a specialty bar like a brewpub or a wine bar, be sure to write sufficient detail about the selections such as the flavor profile, from what location, and the producer.
Craft beer menus include ABV (alcohol content) and IBUs (bitterness scale). Enthusiasts will appreciate seeing detailed descriptions to help them choose.
For bars who have kitchens, work with your cooks to come up with a food menu. Try to balance out categories of appetizers and entrees. People love to have options. “Pub grub” is typically comfort food. Keep in mind that it’s what people tend to crave when they’ve had a few drinks. Think tacos, soft pretzels, and so-on.
Some bars work will work with food trucks so patrons can grab a bite to eat without having to close out the tab.
Make a separate Happy Hour menu with your drink and food specials. If your guests are there outside the time window, this raises awareness that could lead to return visits.
Now for printing! An easy to read layout that also reflects your brand is important. You’ll want to make sure your menu is easy to read in low light. It’s not a bad idea to hire a freelance designer to create your menu. They will be able to make the menu attractive and easy to read/navigate.
Step 7: Obtain the Required Licenses
Keeping the doors open means keeping things legal. Make sure all is clear for launch day.
Here are some of the licenses you may need to open your bar:
● Alcohol: Serving spirits comes with rules, and the rules vary depending on where you are. The bar itself and those in charge of beverage service need licenses.
● Food: If you invested in setting up food provisions for your guests, you’ll need a food service permit for public health reasons. Your staff may also be required to have food handler’s certificates.
● Music: For parties at your house, playing commercial music is no problem. Playing it at a bar is another thing. Either pay ASCAP, BMI or SESAC directly or make it simple by enrolling in a music service that covers those obligations for you. With music events, check for permit requirements.
You may need additional registrations with the government such as a business name registry, a business license, zoning permissions, tax IDs, etc. If you need help, contact a local attorney.
Step 8: Set Up Accounting and Inventory
Tracking inventory keeps you on top of your service game and provides sales insights. Make sure you are keeping tabs on your supply, costs, and revenue.
4 Reasons Why Inventory Is Important
- Hospitality – Keeping enough supplies on hand prevents the awkward, “Sorry, we’re out.”
- Moneymakers – Running low on the ingredients for that Moscow Mule? Well, now you know where the demand is! Maybe introduce a few new Mule recipes (and keep the Ginger Beer supply chain flowing to your door).
- Loss prevention – Have a system in place so you’ll notice when things go missing or sale totals don’t match up with consumption. If employees don’t think you’re paying attention, they may take advantage.
- Budgeting – If reordering is cutting into your budget, it may be time to price shop.
Keep track of expenditures in all categories such as beverage supplies, glassware, cleaning, office, etc. Count perishable items like food and wine daily and all else weekly.
Check your counts against previous records to investigate anomalies and to generate reorders. Also, compare your inventory to your sales. This will give you revenue insights and might also uncover abuses (such as theft or excessive drink comps).
Quickbooks is the most popular accounting software and POS systems like UpServe will integrate with it in order to streamline your tracking process.
Popular Bar POS Systems
● Lightspeed Restaurant
Step 9: Perform Essential Bar Marketing
Getting your name out there starts with having a great name. Choose a name that is both easy to remember and is fitting with your theme/genre. Once you have a name, you can put together a brand package with logos, color schemes, slogans, etc. This kit helps you plan your must-have signage. Having plenty of markers around builds public awareness. And beyond this is advertising.
● Google: Is your business listed on Google? Don’t skip this step. Mobile search visibility is crucial for restaurants and bars. What’s more, you can start collecting those great Google reviews. Get on the map for free!
● Facebook: This is a great place to announce your happy hour specials and fun events. Facebook also allows you to list hours of operation and prompt questions from the public. Fill out your profile with care to impress your prospects. Encourage patron check-ins.
● Instagram: If your talented bartender makes the most beautiful cocktails, show them off with high-quality image posts. Use local hashtags and encourage patrons to use your own unique hashtags.
● Twitter: Also hashtag heavy, Twitter is a place to promote events and specials. Make sure happy hours, brunches and event announcements are being posted at strategic times.
● Yelp: This service isn’t always free, but it doesn’t hurt to add your presence there even if you choose not to opt into the paid service. Users add interest by adding their own photos along with reviews.
● Flyers: With permission, you can distribute flyers to heavy traffic areas like full parking lots. It may not bring in a customer on the same day, but it increases awareness.
● Broadcast & Print Media: Paid ads can add up so tread carefully.
Those in the industry will tell you that word of mouth is vital to the success of a bar. Encourage your personal network to visit your bar and invite their friends. Give your customers a great experience every time so they are likely to share positive experiences with others.
It’s also a best practice to monitor the competition. Study their websites, social media, events, specials, reviews, etc. This is how you keep pace and learn for them (both strengths and weaknesses).
Step 10: Build Your Dream Team
The time to start hiring is before you open. Put up “Help Wanted” signs, post ads, host a job fair, get into networking, etc.
For job posting, Craigslist, Facebook and student job boards are good places to start. You can also try out Indeed and LinkedIn if you’re looking for more experienced positions like administrators or lead bartenders. Initiating the hiring process well before the opening gives you plenty of time to vet the right candidates rather than filling spots out of desperation.
Here are the main positions you will need to hire to have an up and running bar:
❏ Bar Manager
❏ Kitchen Staff
Hiring the Manager first is how you recruit a helper to get things set up and to help with hiring. A bar manager should have a background in hospitality (bartending especially) and be dedicated to the profession (passion is a plus). They should also have strong management skills in both business and customer service as well as a proven ability to train employees.
Hiring the right bartenders is critical to the bar’s success. Some owners will even scout bars to lure talented ones away. While it’s a kind gesture to give a beginner a shot, it’s a risk when you’re trying to get your business off the ground. Hire an experienced bartender with proven performance.
Additionally, you’ll need barbacks, waitstaff, bussers, and kitchen staff (if applicable).
If you find yourself behind on paperwork and marketing tasks, hire an assistant. These tasks may be put on the backburner, but they are still very important, so pay someone to make sure they get done.
Take the time to do background checks. This includes verifying past employment and contacting references. Know exactly who you’re getting so you’ll have a solid staff for a strong beginning.
Keeping good people means paying them well, so use job sites like Glassdoor to research average earnings for your area, or ask your accountant to do an economic salary study. Make sure tips are distributed fairly and go to those who earned it.
Step 11: Open and Run Your Bar!
Let’s recap on how to open a bar. Here’s your checklist!
❏ What kind of bar? – The vision starts here. Choose your genre and determine what makes yours unique.
❏ What’s the plan? – The sales process starts before you even break ground. Get a complete, well-researched and convincing business plan together that will dazzle investors.
❏ What’s the category? – The proper way to do business is to run it according to the type that you’ve established. Understand how your type works.
❏ Where will you be? – When getting situated, don’t settle. Carefully select your spot.
❏ What will it cost? – Knowing how much everything costs will give you a comprehensive budget. The more accurate the budget, the better your planning will be.
❏ What will it look like? – Design a comfortable, well-equipped space that works for everyone and is prepared to stand the test of time.
❏ Where’s your permit? – Have all your documentation in order. The consequences of such an oversight could be very unfortunate.
❏ What’s left? – Keep track of your inventory and accounting. Staying on top of this keeps your business healthy.
❏ Where did you hear about us? – Awareness is how you extract customers from the public. Make sure you have a consistent marketing plan.
❏ Who’s there? – Assemble your All-Star team. Create a family that works together for success!
Knowing is half the battle and knocking out each step moves you closer to the Grand Opening.
Imagine your bar being a favorite hangout that fosters community: memories to be made, relationships to be nurtured, and victories to be celebrated.
The bar is a special gathering place for so many reasons. By trusting in your own talents, you could find yourself in the middle of creating a legacy.
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