How to Open a Bar. 13 steps to Start a Bar Business
August 25, 2020 • 24 minutes
Opening a bar is rewarding because bars are often profitable businesses that can thrive for years. With a well-thought-out plan in place, your bar can become the city’s favorite weekend hangout spot. In this article we’ll detail all the information you need to know about the industry, and most importantly, the step to open a bar that you’ll want to follow.
Starting a bar in a saturated market
Wondering how to open a bar when your city is likely crowded with them? Cities everywhere have a massive number of bars. Still you can beat your way through the competition and create a successful business.
Stats on the bar industry
The bar industry is an exceptionally stable part of the economy. There is a fair amount of high-quality data to help entrepreneurs learn more about the industry and plan for victory.
Bars, clubs, and taverns provide the U.S. with about 345,000 employment opportunities.
There are 62,600 bar establishments in the U.S.
The average bar employee’s hourly wage is $10.43.
70% of consumers frequent the same bar or the same type of bars when they go out.
Bars remain in-demand food service establishments in popular tourist destinations. For example, Mexico Foodservice Market is forecasted to grow at a CAGR of 5,9% during the period (2019-2024) and bar business gains the third largest market share after cafes and full-service restaurants. Knowing the bar industry stats is important at the planning stage. After you launch your bar business, you’ll have to shift your focus to your own business data.
Find out more about POS systems that allow tracking bar sales and inventory and provide powerful reports. Although many solutions would list statistics reports among their features, it’s best that you check interfaces to see if you are comfortable with the way the data is presented.
If your POS system shows data in a meaningful and easy-to-understand way, it will be easier to get actionable insights from your stats and make informed business decisions.
Choose a name for your bar
The name of your business will be one of the defining features of your bar and it might even attract a good number of customers if you really make it stand out. So start brainstorming, get feedback from friends and family, and make sure you settle on something memorable and catchy. And once you’re done, don’t forget to trademark the name of your bar.
Choosing a bar concept
One of the most fundamental things you need to open a bar is an idea of your own. Strive to set your bar apart from all the rest from the start. Differentiation is critical in a saturated market. Remember that what makes you different isn’t a gimmick.
Get inspired by our bar promotion ideas or consider building your USP around the following:
Being the lowest priced bar in town.
Offering the highest quality products.
Showcasing only specialty drinks or beer.
Offering unique entertainment, such as karaoke or open mic nights.
Types of bars
Wondering how to start a bar that will stay busy for years to come? The best way is to open a type of bar that fits well with your personality rather than choosing something that seems trendy or lucrative. So when starting a bar business, you can pick from one of the following topics, or maybe even create your own hybrid!
Neighborhood «Pub Style» Bar
Also known as taverns, this type of bar is the most popular throughout many countries. In the U.S. taverns makeup about 32% of all business within the bar industry. It’s an easy concept to duplicate if you want to open more than one location, and it can easily become a popular local favourite giving a sense of community and belonging to your clients.
Brewpub, Brewery, or Beer Bar
Based on gross revenue, beer is the most important alcoholic beverage in the U.S. Breweries are serving microbrews and craft beers. Some of the greatest advantages of beer bars are that you’ll save money on licensing and that you’ll simplify your inventory by focusing on this immensely popular drink. Throw in some snacks and appetizers into the menu, and you’ll be set to start raking in new customers.
From cigar bars to gastropubs, you can blend any two wonderful aspects of life with alcohol and develop a specialty bar. This type of venue will require much more research, or a lot more of your own knowledge of the product that you desire to sell. However, don’t forget that you need to offer a very attractive variety of the product in which you're specialising in order to keep your customers interested!
A good idea for entrepreneurs who want to promote a healthy lifestyle is to open a juice bar as a place where like-minded people can have an alcohol-free drink with their friends or take a to-go refresher. Juice bars serve nutritious juices and smoothies as well as breakfasts, bowls, and bites.
DJs and mixed drinks are part of the contained party of a nightclub. Nightclubs make up a substantial portion of bar industry revenue. Nightclubs charge for entry, as well as for drinks and offer VIP services. Nightclubs prosper by providing the feeling of a luxury experience.
Sports bars are known as the place to go and watch the game. Business owners love sports bars because they often have a huge group of regulars meaning regular income and predictable income patterns.
Catering to people as they get off work, a lounge will often focus their marketing on creating a networking center. They invite nearby offices in for meet-and-greet events or host a «grow your network nights.»
Focus on your design
There are two main features you’ll want to focus on when preparing the design for your business, and those are your layout and your menu. Primarily, you should focus on creating an atmosphere that matches and plays on your concept.
This also means that your layout should match the purpose of your concept: so that if you have a sports bar, make sure you have enough TVs for people to come in and watch their favorite games, or that if you have a nightclub, you have plenty of space for people to dance and have a good time.
Likewise, you want your menu to match the vibe of your venue. You might want a more folksy looking design for your craft beer pub, or a more formal look for your lounge.
Find the perfect location for your bar
When starting a bar, location is key. This is one of the highest ranking steps to opening a bar, and you should take into consideration a few different factors:
Who’s your demographic? Depending on whether your concept is more focused towards college students, families, or young professionals, you’ll want to find the perfect spot to draw the right crowd to your bar.
How much can you afford to pay? Look at how rent prices vary throughout your city and make sure to factor this in when making a decision.
Will people just wander into my bar by accident? This is a key factor. If possible, try to find a location near areas with a lot of foot traffic, the more passers-by who can discover your bar by accident, the better.
Bar business plan
A business plan for a bar should guide you through major decisions, help lay the groundwork for you and your partners to act consistently, and possibly secure a business loan. So your business plan for opening a bar should include:
An executive summary provides a simple version of your complete plan compacted onto a single page.
This is where you will identify your mission statement, values, and goals.
Close in on your competition, define what are they doing and whether your area is overrun with the same type of bar.
Look at your strengths and weaknesses objectively to plan for pitfalls.
Product Descriptions, Menu, and Pricing
Create a detailed layout of all your products and identify the pricing and cost out each item.
Determine how you will reach your consumers and how you will keep customers.
Determine who will make important decisions. Do you need to approve all orders or will a manager handle inventory and vendor relationships? Resolve any power questions before they become a power struggle.
Financial Plan and Projections
How much does it cost to open a bar in your area? Your financial planning should map out a realistic cash flow for the first year of business.
If you search online, you can find a bar business plan template that will help you expedite the creation of your business plan. A business plan template for a bar is an easy way to get started if you’ve never prepared a business plan before.
Get funding for you bar
Once you’ve finished preparing your business plan, you should have a pretty solid idea of what your startup costs are going to be. It’s important that you also make predictions for the following year and try to estimate how much your expenses and earnings are going to be. eWith this in mind, if you don’t have all of the necessary capital yet, you can start looking for extra funding.
Start first by discussing your project with family and friends who might be interested in collaborating with you, and once you’ve got all of your ducks in a row, start talking to banks in order to get a business loan.
Bar business registration
This varies slightly from one region of the world to another, but there are steps that are fairly consistent across the board.
Obtain a tax ID number for your business
Register the business as an entity or corporation
Notify the local government
Register with local authorities
In LatAm you will register with many different government branches such as the Social Security Institute, the Administration of Tax authorities and a Public Registry of Commerce.
In the U.S. you will obtain a Taxpayer Identification Number or EIN from the International Revenue Service. Then you will work with your local government to register your business name and obtain a license.
Managing legal risk can become a full-time job for a bar owner.
Every country comes with its own set of restrictions in every aspect of running a business. Aside from the legal troubles that can come with liquor licensing or permits, you have liability risks and employment laws.
Common legal hurdles bar businesses face
Health and safety issues
A health department or other entity may require regular inspection and failure of an inspection could result in shutting down your bar.
Businesses are a common target for slip-and-fall claims, as well as other liability legal attacks. To protect yourself, be sure to separate your personal assets from the business. In the U.S. and LatAm registering as a corporation would protect you in many of these cases.
Permits and licensure requirement changes
Not every country allows existing businesses to «grandfather in» from old licensure requirements. Many countries throughout Asia are undergoing alcohol law reform, which can impact your business immediately.
In the U.S., employment laws are strict and changing constantly. Some laws govern how long employees can work when they need breaks, and what safety precautions you must have in place.
Paying Business Taxes
Many business owners don’t realize how important it is to pay businesses taxes quarterly in the U.S. Failing to pay business tax or plan for an annual payment can financially and legally ruin your bar.
If you’re handling this for the first time, it is best to contact a notary or business attorney for assistance.
Obtain all necessary permits and licenses
You might be wondering what licenses do you need to open a bar. If you’re located in the USA, there are a series of permits that you’ll almost definitely need to start operating your bar. Requirements change slightly depending on your state, but besides your EIN, you should also try to get:
A liquor license: You’re legally required to have a liquor license to sell alcoholic beverages, and it will also determine what type of drinks you can get from your supplier. It can take a while to get this license sorted out, so you should get in touch with your state’s Alcoholic Beverage Control agency as soon as possible.
Registration with the Alcohol and Tobacco Tax and Trade Bureau: Also known as the TTB, they require that you keep a record of all the alcohol that you get from your suppliers. It’s important that you follow this procedure, as not doing so can cost you up to $10,000.
A food-service license: Whether or not you decide to get this license will depend on your business concept, but if you do, and want to meet food and safety regulations, it’s a necessity.
Some other permits you might need depending on where you’re located:
Certificate of Occupancy
Finding suppliers for your bar
Once you’ve finished deciding your menu and you know exactly how much of each product you’ll need for your first few weeks, you can start looking for suppliers.
Try to base your decision on the following factors:
How many of the brands that you need do they offer? Obviously, the more the better.
Do they have a minimum purchasing price?
What are their delivery costs, and how often can they deliver stock to your location?
Equipment and startup supplies for a bar
As you can see, you’ll have to spend from $43,000 to $212,000 in order to buy equipment and cover possible fixtures. The list of the equipment for your bar may include:
Glassware and serving tools
Knives and sanitary cutting boards
Mesh Tea Strainer
Carbonated Water Line
Many pieces of small equipment such as glassware, will need regular replacement as well as your furniture will need regular maintenance.
If you are curious about the cheapest concepts for bars in the world, consider that in Thailand, you can open a 'shoebox' where you run your bar among many other bars around you for about 500,000 baht or 15,000 USD.
The cost to open a bar varies wildly from city to city. Instead of relying on average numbers it’s best that you spend more time on research of the bar business in your area.
Hire all the necessary staff
The main roles that you want to fill in your bar are:
Security guards (who can also double as ID checkers)
If you have a dedicated kitchen, you might also want to have the following members of staff in your team:
A head chef
A sous chef
A line cook
And finally, you’ll want a restaurant manager and an assistant manager, and possibly a general manager to oversee everything if you’re not going to be directly involved in the operations of your restaurant. Take into account the traffic and volume of sales you expect to handle, and use this information to determine how many employees you’ll need for each position.
Share the good news through social media: You’ll want to establish a good presence on Instagram, Facebook, and possibly Twitter, and slowly begin to put the word out about your new restaurant. Consider creating an account with Yelp too ahead of your grand opening!
Register with Google My Business: Google My Business is an essential tool for bar owners, as it allows businesses to appear on Google Maps and to show detailed search results whenever you search for the name of the business. It’s free, and it will make it much easier for potential customers to find your bar!
Create your own website: You can funnel all of your traffic from social media and Google into your website! This is the final destination for anyone who’s searching for you online, where they’ll find everything they need to know about your menu, the history of your restaurant, and much more.
Invest in some traditional advertising: Start by printing some flyers and posters and handing them out and setting them up in areas with heavy foot traffic. On top of that, you can also post notices on the wall of your venue while you’re refurbishing and getting ready to up! That way anyone who walks by your location will already be in on the news.
Host your bar’s soft opening
When opening a bar, what do you need to make it a success from day one? Plan your opening night as a two-step process and schedule your soft opening and your «grand» opening.
A soft opening will help you test all of your systems before you open to the public. Invite in friends and family or professionals and partners who helped you open. Here you are only using word-of-mouth to get a controlled crowd. Soft opening will reveal poor staff coordination, struggles with unassigned duties, problems with the layout behind the bar and so on. Consider it a final rehearsal for your staff to become confident in greeting guests, using equipment, and clarifying their job duties.
Some bars offer a set amount of free drinks per person during their soft opening or serving a limited drink menu.
After you solved the problems that came to light during the soft opening, schedule your grand opening. Now you’ll need all the marketing channels to spread the word. A successful opening night will have a steady crowd with a consistent turnover and should reflect your ideal Saturday's night. Don’t feel shy about hiring event managers or partner with other businesses.
If you don’t serve food pair up with local food trucks to park near your bar, or ask neighboring restaurants to let you post fliers or place table tents.
The best way to get people talking about your grand opening is on social media. Go beyond posting on your personal or business page, and jump into the community pages, your city’s official Facebook page and your local groups as well. You should start feeding your social media well before your opening. Document the process of training your staff, designing your bar and more as a way to build anticipation. Event managers and models you hire for the opening night are likely to help out with a pre-promotion as they get their network excited about the event. Before posting on social media, make sure that you’re on the map. Add your bar to Google My Business to ensure anyone can get directions to your new place when it’s time.
Consider the idea of opening on a holiday that people love to celebrate in bars. It may boost your promotion campaign as people usually look for bars that host parties on St. Patrick's day and Halloween. If you plan on opening in February, think of hosting an event for the army of Super Bowl fans who usually struggle to find a place where to watch the game.
Your checklist on how to open a bar
If you ask any bar owner, «What does it take to open a bar?» and they will begin explaining a very long and complicated process. Your «Opening a bar checklist» can consist of the following 13 steps.
1. Create a business plan
Your business plan will answer big questions such as how much does it cost to start a bar and identify your customer profile. It will act as a guide through the decision making and be a vital part of your success.
2. Protect yourself and your brand
In any country, there is a way to protect yourself and your property as a business owner. In the United States, you can establish your business as an LLC or corporation and trademark the name of your business and logo to protect your brand.
3. Choose a bar concept and a name for your bar
Bar concept and name should represent your bar perfectly. Every detail of your bar should support your brand, from your service style to your decor.
4. Choose a location
The right location should be easy to access, not near any neighbors that may complain about noise levels or your patrons.
5. Obtain necessary licenses
You will need some type of license to operate as a bar. In the United States and Latin America, you need a liquor license. In some Asian countries, you need an alcohol circulation permit which requires frequent renewal. You will also need additional licenses or permits to operate as a business.
6. Design your bar
Designing your bar starts with the interior and physical design. Next, it must bleed into your website, creating a cohesive feeling that will ultimately become your brand.
7. Implement concrete accounting and inventory standards
Inventory impacts your accounting as much as your register does. Poor cash flow and inventory management cause many bars to fail. Use a bar POS system that works seamlessly with your accounting system.
8. Find suppliers and equipment for your bar
Build up the good relationships with your suppliers with a view to have extra valuable information about the market and choose the right equipment that will influence your bar’s profitability.
9. Schedule final inspections
Schedule your final inspections with any government authority including health, safety, and liquor regulating bodies.
10. Hire and train your staff
You need a small team of good bartenders, and maintenance staff, servers, and barbacks.
11. Reach your market and start advertising a bar
Reach your market to define your ideal customers, find out whether they live in the chosen area, estimate how much competition you should beat to get them and start advertising your bar through social media, search engines and traditional offline advertising.
12. Host a soft opening
Schedule a test run to see if your people are in the right positions and how you work as a team. Your goal is to recreate a busy night with needy guests to test how well you and your staff work under pressure.
13. Create some buzz and launch
Create some hype around your first official night and host a grand opening.
Following the steps in opening a bar detailed in this checklist on opening a bar will help you avoid the struggle that first-time entrepreneurs experience when they dive in without a plan.
Pitfalls of opening a bar
When learning how to start a bar business you should focus on the positive possibilities. However, be ready to assess the challenges ahead of you objectively and get aware of the reasons usually causing bars to fail.
Choosing the wrong location
In the United States, many laws on varying levels can impact where a bar can exist. Aside from fitting the style of your bar and being in an area that has your ideal customers, you need a location that is ADA compliant and meets zoning laws. The best location will be demographically sound, accessible, have a parking lot and meet local zoning restrictions.
Starting up with the wrong partners
Many people commit to opening a bar with their spouse or close friend. Before you decide to open a bar with any partners, consider what would happen in the worst case scenario. Can your marriage survive the failure of a business? Is it possible that your friends will lead to poor business decisions? If you’re confident that your relationship can survive the harsh waters of the bar business, then you have a good partner by your side.
Ergonomic efficiency is the lifeblood of a bar. Behind the bar, systems and procedures must seamlessly flow from one movement into another, saving the bartenders time and reducing the impact of a high-demand work environment.
Avoid this pitfall by focusing on bar design, and putting your bartenders in the positions that best suit them. Play to your strengths and rely on the intuitive placement of materials and equipment.
The whole food service industry is struggling with a labor shortage. However, it doesn’t mean you don’t have access to quality talent. Contact the nearest bartending academy and take an active role in the International Bartenders Association to build up a network of enthusiastic bartenders.