Owning a Bar: Everything You Need to Know
, 24 January 2019
Owning a bar is one of those unique life experiences; you have no idea what it will be like until you actually go for it. And while it can be enjoyable, rewarding, and, yes—even profitable, it also requires long hours and hard work. Here's what you need to know about owning a bar to prepare as well as you can:
Pros:
- Profit margins are high, especially on alcohol. Expect to make anywhere between 200 to 400% on drinks
- There are superb networking opportunities to meet people for both business and pleasure
- You’re your own boss and can live and work on your terms
Cons:
- High startup costs to pay for licensing, a location, and even equipment
- Running a bar is expensive and includes rent, salaries, and various unforeseen expenses
- Long working hours are common. You’ll have late nights and have to work on weekends and public holidays
- The market is saturated with loads of competition. You’re not only competing against many other bars but establishments offering entertainment, food, and drink.
How Much it Costs to Open and Run a Bar
Startup Costs of Opening a Bar
High startup costs are a significant hurdle of owning a bar and vary depending on several factors:
- The type of bar. Buying an existing neighborhood bar will cost less than purchasing a brewpub which requires expensive equipment
- The size. Larger bars are generally more expensive as you need more staff and equipment
- Location. Buying and renting property is more expensive in certain areas.
- Business and liquor license costs. These costs vary widely by state. The cost of a liquor license in Alabama, for example, will be anywhere from $300 to $1,000, whereas in Wyoming expect to pay $1,5000 to $10,500
Below is a cost range for opening a bar depending on whether you’re renting or leasing, creating a bar from scratch (buying a location and paying a mortgage), or purchasing an existing bar.
- Renting or leasing: $110,000 to $550,000
- Creating a bar from scratch: $175,000 to $850,000
- Purchasing an existing bar: $25,000
- The Operating Costs of Running a Bar
Expect to pay a minimum of $20,000/month for running an average sized bar. These costs will include your monthly alcohol and food purchases (roughly $6,000/month), salaries and wages ($13,000/month), rent, and various miscellaneous expenses.
