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.
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 sales and inventory in your bar 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. Sign up here to check out Poster for free.
Differentiation and USP for a New Bar
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.
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.
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.
From cigar bars to gastropubs, you can blend any two wonderful aspects of life with alcohol and develop a specialty bar.
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.”
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 and meet local zoning restrictions.
Starting Up with The Wrong Partners
Many people open a business 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.
, 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.
Bar Business Plan
A bar business plan should guide you through major decisions, help lay the groundwork for you and your partners to act consistently, and possibly secure a business loan.
An executive summary provides a simple version of your complete plan compacted onto a single page.
This is where you will , 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.
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.
Cost to Open a Bar
How much do you need to open a bar? It’s a question that doesn’t have a simple answer. Most estimations reflect that it can cost as little as a $110,000 or as much as $850,000.
The projections here suggest approximate expenditures for opening bars that belong to two different business concepts. They serve as examples of low and high projections and are relevant to the U.S.
Bar Startup Cost
A Tavern (capacity of 100 people)
A Nightclub & a Full-Service Bar (capacity of 1,000 people)
Rent (security deposit and first month)
Building Renovation (heating/air conditioning, electrical, plumbing, painting, carpentry, sign, flooring, smoke detectors)
Grand opening marketing
Other expenses (appr. 10% of total)
Total Bar Startup Costs
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.
Opening Night for a Bar
What do you need to open a bar and 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 toto ensure anyone can get directions to your new place when it’s time.
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. Honestly, you can plan opening your own bar as the following 12 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 your logo to protect your brand.
3. Choose a Location
The right location should be easy to access, not near any neighbors that may complain about noise levels or your patrons.
4. 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 which requires frequent renewal. You will also need additional licenses or permits to operate as a business.
5. 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.
6. 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 POS system that works seamlessly with your accounting system.
7. Reach Your Market
Reach your market to define your ideal customers, find out whether they live in the chosen area and estimate how much competition you should bit to get them.
8. Find Your Point of Sale System
A POS system for bars will enable you to facilitate transactions, optimize your menu cost and pricing.
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.
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 this checklist on opening a bar will help you avoid the struggle that first-time entrepreneurs experience when they dive in without a plan.