A career as a bar owner is a great fit if you enjoy curating drink experiences, have organizational abilities, and want to be your own boss. Opening a bar requires planning, dedication to following regulations, and between $125,000 and $2 million. The more prepared you are when starting your bar, the better you’re able to […]
A career as a bar owner is a great fit if you enjoy curating drink experiences, have organizational abilities, and want to be your own boss. Opening a bar requires planning, dedication to following regulations, and between $125,000 and $2 million. The more prepared you are when starting your bar, the better you’re able to resolve challenges and drive profits.
We cover the 10 essential steps for opening your own bar. They are in a loose order; you’ll likely be working on a few at the same time. However, they address the most important parts of successfully opening a bar, plus tips for how to own a bar once you’ve opened.
A successful bar is more than a place that serves drinks. Bars have an atmosphere that attracts a particular type of customer. To begin determining your concept, ask yourself: How do I want people to feel when they walk into my bar?
What is a “bar concept?”
The term “bar concept” is an industry catch-all term for a bar’s overall price point, theme, and service style. A sports bar, a wine bar, and a craft cocktail bar are all examples of a bar concept.
It’s important to understand your potential patrons when developing your concept. College students have different expectations from an older, businessperson crowd. Similarly, if your town caters to tourists, they will want a different experience from the locals. Consider checking with your local Chamber of Commerce for demographics and see if there’s a customer base that isn’t being catered to.
You want some angle that helps you stand out from the competition while still meeting the needs of your audience. Here are some examples:
Once you have the concept determined, create a brand that reflects it. Start with the bar name and logo. You want it to be catchy and memorable. Your image should be simple, recognizable from the street or in a thumbnail on the screen, and reflect your concept. Check with your Secretary of State’s website to ensure that the name or logo is not taken, and then trademark your own logo. The federal government hosts a trademark tracking website for this.
A brand is more than a name and logo, however. They are reflected in your decor, your storefront sign, what your employees wear, and even who you hire. (Hooters is a good example of this.) Consider, too, creating a signature drink that you can brand as your own.
You may find yourself revisiting this step throughout the process of opening a bar. However, starting it early makes it easier to make decisions down the road.
In general, it costs between $125,000 to $600,000 upfront to start a bar if you are going to rent or lease a space and build to suit. The costs to purchase a bar space can vary even more widely, up to $2 million depending on your concept. Here are just a few items you will need to price out:
Look for ways to save money while still staying on brand by working with other businesses. For example, local artists may let you decorate with their work if they can sell it there; open mic nights can bring in local talent; local microbreweries might give you a discount if you promote them.
In general, bars make between $25,000 and $30,000 a year, on average, with a net profit ranging from 5% to 15%. Bar owners generally make between $40,000 to $74,000 per year.
It’s difficult to give a firm estimate because much depends on the type of bar you own, your markup, and your location. While our estimates are based on several sources, you’re better off consulting your local Chamber of Commerce or networking with other bar owners to get an idea of what you can earn locally.
Location can make or break any business, but especially so with a bar, where so much depends on getting the right walk-in customers. Find a business real estate agent to help you with this and be sure they understand your concept.
Here are some things to consider when you’re looking for the ideal location:
A major consideration in starting a bar is designing the space to match your brand and the atmosphere you want to present. This can mean a coat of paint or a whole new bartop, adding a landscaped patio that looks out to the river, or replacing the lighting to either make it more dim and private or more bright and friendly.
Design is not just the visual space, either. Be sure the music and even the staff support your brand. If you’re catering to a conservative, big-business crowd, loud top-40s music and a bell won’t set the right mood.
Regardless of the design, make it easy for patrons to enter, find a seat, order, and pay. This could mean having several registers or handheld registers for the waitstaff.
You may be starting this step even before searching for the location by securing your business license, but some steps will require having the location in hand. Here’s a (mostly) comprehensive list of what you need. Since each state has its own requirements, you should check to ensure you have everything you need:
The liquor industry is highly regulated. Be sure you do your research. Consult the Alcohol and Tobacco Tax and Trade Bureau for regulations and resources, as well as your state and local governments.
A business plan is a general roadmap for how to start a bar business from idea to success. It covers concept, value, location and team, legalities, and financial projections. You use it not just for how to start a bar but also for getting loans or investors. You can create a slide show from the information to use for multiple purposes.
Start with your mission statement: How will the bar serve the community and rise above the competition? Then you’ll start working on details of the market, location, and financial need. Check out our business plan template for the basic steps.
Most people haven’t got several hundred thousand dollars on hand to start a bar, but there are ways to get funding. Startup business loans, lines of credit, and business partners are the most common ways to secure funding.
More and more businesses are looking to crowdfunding for startup capital. You can offer rewards or equity to your investors. Of course, you can ask friends or family to pitch in. You may even use a combination of sources.
Consider getting a business credit card as well. This not only gives you some flexibility for unexpected small expenses but also provides a way to pay for subscription services (like point-of-sale (POS) software).
According to Bar and Restaurant, most bars fail because they are underfunded. It advises having at least six month’s rent as cash in your accounts. Keep this in mind when seeking funding.
You may have already found a few of these as you were determining the budget. At the very least, you should have a list of the items you will need on an ongoing basis. Ask bar and restaurant owners in your neighborhood for recommendations then be sure to ask questions before you sign a contract:
Before supplies come in, it’s a good idea to have your inventory processes set up. A bar POS system with strong inventory tools, or an inventory software that incorporates with a POS system, will help you keep on top of inventory, track what items sell, and give you insights into how to maximize your supply budget.
When hiring staff, you need to look beyond skills and consider personalities that match the culture and concept of your particular bar. It’s especially important in such a high-turnover business. Some of the positions you’ll need to fill include:
In this highly regulated industry, you’ll want to run background checks for managers and confirm references as well as ensure your staff has the appropriate training and certificates. Some courses your staff may need include:
Of course, you’ll also need to train them in the running of your bar in particular, including any specialty drinks or food preparation, using the equipment (like trading out kegs), procedures, even how to treat customers.
When considering how to open up a bar, you must consider marketing. Even though it’s an in-person business, you need to consider online as well as print and other avenues, like participating in local events. Invest in high-quality photos of your bar, location, and drinks to use for advertising, and be sure to include people!
Here are some common promotional avenues to consider:
Untappd is a community of beer drinkers 9 million strong. They collect badges made by bars and breweries, such as for trying a special brew or attending a special event. Learn more about Untappd and how to make an Untappd badge.
Starting a loyalty program can encourage repeat customers as well. This is easy to accomplish with good POS software.
You’re ready! You’ve found the perfect place, and it looks great. The bar is stocked! Your staff is trained and certified. Your marketing plan is building buzz. All that’s left is to have a grand opening with the press and influencers in attendance.
Or is it?
Before you throw open the doors to a big party, consider having a soft opening first. A soft opening lets you try everything out on a limited number of guests, usually family and friends, before opening to the public. A soft opening can give your employees a chance to practice without pressure and to work out any kinks you might not have uncovered—whether a mistake in a price or an actual kink in a hose.
When you’re ready for the grand opening, be sure to plan more than just a great party. Find a way to make it a memorable event. Some suggestions:
Owning your own bar is a great business option for extroverts who like an exciting and varied pace, and when run well and with the right location, can be highly profitable. However, you have to be ready to handle problems like the drunk and disorderly, and it can be demanding, especially when you are first starting out.
| pros | cons |
|---|---|
| Great for extroverts who like meeting a variety of people | Drunk or disorderly people can be a problem |
| Satisfaction of creating a great gathering place for people | You have to work evenings, weekends, and holidays. |
| High profit margins | Increased regulations (because you serve alcohol) |
| Every day is different—new people, new situations | Work can be mentally and physically demanding |
| Your bar will be an employer. You help develop your neighborhood, your town, and your local population |
These are the most common questions we hear about opening and running a bar. Expand the sections below for detailed answers.
It can take eight to 18 months to get your bar open. The time it takes you depends heavily on funding, renovations for your location, and the licensing process in your area. You’ll need several weeks to get all the licenses and inspections done, and in some competitive cities and states, may need to go through a lottery process to get a liquor license.
Most bars take several months before their owners start seeing a profit. Turning a profit in the first 12 months is excellent for any food and beverage business, so the fact that most bars begin seeing profit in the first year makes bars a compelling business proposition.
Yes! Depending on your state and county, there may be licenses for beer and wine (vs. spirits and cocktails), the ability to serve off-premise (like at events), food along with alcohol, or other specialties. Prices and approval processes can vary widely, so it’s important to know what’s required for your business type in your specific county.
Selling drinks and food is only the beginning of your bar’s revenue possibilities. Consider special events, entertainment, or contests. Create items for sale, like T-shirts or specialty glasses. Definitely teach your staff to upsell by mentioning different brands or specialty drinks.
Happy Hour is traditionally when drinks and appetizers are at a deep discount: 50% or more. Or you may offer a completely separate Happy Hour menu. They usually start around 4:00 or 5:00 p.m. and run for an hour or two. Some states and local governments have banned happy hour, so be sure to check the regulations with your local liquor control board before you advertise your happy hour.
If you cannot legally lower your drink prices for a happy hour in your location, you can likely still offer a happy hour food menu or complimentary appetizers to drive sales. Check your local laws, but discounting food is typically allowed in most places.
A well-run bar can be an asset to the community: a place to meet or make new friends or to unwind after a hard day. Many bar owners find great satisfaction in their business. If the idea of bar ownership appeals to you, do your research, plan well, secure more-than-adequate funding, and follow these 11 steps to build your dream. Cheers!
Mary King is a veteran restaurant manager with firsthand experience in all types of operations from coffee shops to Michelin-starred restaurants. Mary spent her entire hospitality career in independent restaurants, in markets from Chicago to Los Angeles. She has spent countless hours balancing tills, writing training manuals, analyzing reports and reconciling inventories. Mary has been featured in the NY Post amongst other publications, and in podcasts such as Culinary Now where she discussed starting your first restaurant, how to leverage your community and avoiding technology traps.
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