According to Statista, almost 7 million Americans regularly buy a glass of wine at bars and nightclubs. Yep, wine might not sound like an impressive source of income, but these 7 million people, ready to unwind and mingle, describe how much potential an average bar has. But anyway let’s talk exact numbers: the bar industry generates about $25 billion in revenues annually, which means that if you manage to get in and take even a teensy 1% share of the market, it’s going to be absolutely real millions considering the long-term business flow. And thus there’s no question to whether this business model works or nor.
So, now you know that opening a bar of your own can be some lucrative adventure, let alone the simple fact that it’s incredibly fun. However, your interest and immense wish to take the plunge are not enough to open up something that will be able to financially justify itself: there are too many aspects and things you need to know before making a serious move. How to you open a bar then? Thankfully, we’ve prepared this comprehensive guide containing all the essential information on how to open a bar so that you could make the right and successful leap right by the end of it.
Stage 1: Preparation
Your first milestone on the way to starting a prosperous enterprise is to spend some time in preparation for the journey. Essentially, you’ll need to do three things: think of the type of your bar you open, hit on suitable premises and then frame an overall concept of your bar.
There are at least five specific kinds of bars that you can find on every city map. But how do you tell right from wrong, or, in other words, how do you know what type exactly is going to be a top pick? Well, there’s no unequivocal answer to this question because it depends on your goals, budget, location and a dozen of other important factors. General advice here would be like ‘keep balance’ and ‘don’t get overly creative’. To put it simply, some super fancy cocktail bar in a suburb won’t make a profit, while some cozy hangout in the center won’t become a banger either. You need balance.
In any case, we’re going to discuss these moments a little bit later, but for now let’s map out your possible choices for common types of bars. The table below introduces each one along with short description and a successfully operating example.
|Live Music Joints||Nighjar, London|
Music bars live off money of live music, concerts and karaoke nights and occasional serving food and drinks. You won’t have to create an elaborate menu here, but you’ll certainly have to spend lots of time to prepare the stage and find good musicians.
|Sports Bars||The Four’s, Boston|
Compared to music joints, sports bars count mainly on food – you need to keep customers full and pleased during matches. Additionally, you’ll have to invest in decent TV and audio systems as well as entertainment options such as video games. Keep in mind that sports bars are designed for eating and having a good time.
|Beer Bar||The Brew Dock, Dublin|
Beer is the drink of choice for 43% of Americans, with almost 27 gallons being made per year, USA Today reports. So opening a beer bar has heaps of advantages starting with high demand and ending with fewer efforts to obtain a license. As a rule, beer bars focus on an on-site brewery which means a certain amount of investment in equipment.
|Full Bars||Lost Lake, Chicago|
Full bars serve all the fixings: various wines, beers, liquor of all sorts, even soft drinks. Besides, there are different syrups and tonics to mix cocktails and an elaborate menu (usually fusion cuisine). To run a bar like that you’ll need a skilled bartender behind the counter.
|Neighborhood Dives||The Octopus Bar, Seattle|
This type doesn’t need any introduction, and there’s 100% change you’ve been to a bar like that at least once in your life. These are cozy and comfy venues where people come for a few drinks on Fridays. Compared to other establishments, neighborhood dives cost not so much to open – around $60,000 would suffice to get everything set and done.
How To Choose Commercial Premises
After you formed a general idea of your future bar, it’s time to move on to concrete aspects – identifying the structure. There’re not so many options to consider here: you can buy an existing establishment, purchase a franchise, buy an existing bar and remodel it or create a bar from the scratch. Each has its financial advantages, but some disadvantages, too.
- Buy an existing one. When you buy an operating venue, you get employees, facility, equipment, customers and inventory along. So, be insightful and scrutinize the place with the following questions: how much equipment the bar offers, what the employees are and what their qualification are, how much profit the bar makes annually.
- Buy a franchise. There are lots of chains offering franchise opportunities. You can seek out a listing of reputable franchises-for-sale to compare, contrast and choose the right one. Try Business For Sale, great website having loads of options.
- Buy and remodel. Quite a tricky way because every bar always builds a name that’s hard to erase. First off, you need to introduce something absolutely new for the place. Secondly, you have to carefully plan all the changes you want to make – draw a plan and include each tiny detail in it.
- Create a new bar. New establishments require a big deal of extra costs and expensive investments. If you plan to go off the beaten path, remember to budget financial details and make sure your resources will allow you to start a bar business.
Come Up With An Original And Creative Concept For Your Bar
Google Swiss HRGiger Bar and just realize how amazing the place looks like. In a word, this bar looks crazy, attractive, but most of all unique and somehow innovative. Amazingly, but HRGiger operates as an attraction site rather than a bar: tons of people come there to witness the magnitude and grandeur of the venue, rather than ordering a cup of green tea. And you know why? Because HRGiger follows a concept.
Why do you even need a concept? First off, it helps your bar become a word-of-mouth and generate more native buzz without advertising. Secondly, it helps you beat the competition – once your establishment defines a concept, you can rest assure than the local community will love to explore a fresh idea in their hood.
This is how you may come across the upright concept.
- Start with popular market killers. There are a few concepts that will guarantee you a roster of regulars. You can look into these ‘hitmen’ here.
- Keep tabs on new crop. Check out news, try to stay in tune with trends and competitors. To get started you can review these 15 freshmen.
- Find a source of inspiration. Sometimes we just need one picture to gather all the bits together. Maybe one pic can conjure up pics of your future bar. Try Pinterest, the best place to find inspiration to go.
Stage 2: Research
Market research is extremely vital when you start a bar business, so don’t even try to go any further without going down to the last detail connected to the market you’re going to enter. In order to successfully venture outside, you’ll need to get to know the competition, the customers, then find a perfect location to set up your bar and after that wrap it all up in a business plan.
Size Up Your Competition
There’s nothing better than a good competitive analysis, and luckily you don’t need an MBA to conduct research. The whole process can be taken down to the following steps:
- Perform A SWOT. Don’t get scared away by strange abbreviations. Actually, SWOT is an easy deal outlining competitor’s strengths, weaknesses and your opportunities and threats. You can find amazing info on SWOT analysis right here.
- Locate competitors. If you have no faintest idea who your competition is, then you’d better start off with finding them. There are many ways to identify major competitors in your market, and you can start digging at ReferenceUSA, Alexa or simply search Google using top keywords. Then don’t forget to check out social media presence of your competitors.
- Categorize them. Not every competitor you encounter might be a threat, so after you’ve created a list of ‘opponents’, separate one from another. Focus on primary competition – in other words, your strongest hindrances.
! This great guide to competitive analysis can help you get a more profound idea on how to perform a study on competition. Also, don’t forget to target your audience after reviewing competitors – this advanced guide will make you a guru at customers research overnight.
Consider A Location For Your Business
If you plan to open something small, you can consider finding a space within 1500 sq. ft. For larger establishments like a pub you might need around 2000 sq. ft. Music and sports bars need around 3000-5000 sq. ft. What location should be chosen in the long run depends on the following list of crucial factors: budget, type, target audience, concept.
Start with Craigslist to browse commercial premises. After you found a good spot, some neighborhood research would be your next logical step. Type the address into NeighborhoodScout to learn what makes the area unique. Review Walk Scoreto find out how easy your customers can get around by foot. And, of course, look through demographics reports of the area to get acquainted with people living there.
How To Write A Business Plan
Even though the initial purpose of any business plan is to lure investors in, this piece of paper can actually become your excellent guideline to starting a bar business smoothly. In a nutshell, your plan should outline financial operations and timelines, marketing plan, a fundamental summary of all your research and also it has to include how you’re going to set up the bar in general. The process is more than just intricate, so we’d recommend you not go in the woods alone and let professional do their job. However, if you feel like you can do it, drill Tim Berry’s Book On Business Planning.
Stage 3: Paperwork
Good news: things are getting serious right now if you make it through here, so you can move on to paperwork – this is where you’ll spend most of your time running around like a weasel. Basically, the problem is that an average bar needs proper licensing in order to operate, that’s why in comparison to say, a grocery store, you might need a couple of papers more. Consult the Small Business Administration to get full information on what permits are associated with opening a bar in your area.
Licenses And Permits You Need To Open A Bar
First, let’s map out licenses and permits. With specific regulations that vary from one state and municipality to another, there could be a few more permits you’ll need to obtain. Here we’re going to gather key papers so that you could understand where to start.
- Business permit. This is your very first certificate that grants permission to launch a bar business. Additionally, you’ll need to obtain an EIN for taxation and a certificate of occupancy that marks your place as a properly maintained building.
- Entertainment and music license. Legally speaking, it’s impossible to plug your notebook into the PA system and begin to entertain the crowds with good vibes. If you want some Lady Gaga or Ms. Swift pouring out of the speakers, you must acquire respective licenses from performance right organizations – BMI or SESAC. For live music bars there’s no exception even if bands perform their own music. Entertainment is included, too. For example, you might even need to obtain a pool table license in some states. So do your math and research.
- Liquor and food licenses. While business permits are necessary for any type of business, a fundamental license that is unique to your industry is the liquor license. And in fact, this one is going to be a tough nut to crack. To simplify the process write down what exactly you’re planning to serve as a beer bar may require a different certificate than a full-stock bar. Then visit Alcoholic Beverage Control and fill in an application form. It takes around two months to get approved. If you serve food, some extra legwork will be also required – visit your local health department and show them the menu plan you have. Food licenses are usually issued for a year.
How To Register A Business Entity
Once you come up with a brand name of your bar, you must register your place as a business entity for protection at the state level. Trademarks are essential – you don’t want some copycat opening a bar with the name just like yours. What’s more, you most likely need to obtain a DBA – a license allowing owners to operate their business under a different identity than theirs. For example, if your name is Jack Peters, your bar has to be named as ‘Jack Peter’s’ without a DBA.
Stage 4: Organization
Now you’re one step from finally getting it toward the grand opening, but anyway there’s much work ahead. When you nail paperwork and make sure your bar has every little legal piece to keep going, you can move on to organization – this is where you get down to designing the venue, planning entries in your menu, purchase equipment and necessary supplies and also set off to the labor market in order to find the best and the brightest to work for you.
Create The Right Bar Menu
When creating a food menu you should consider:
- Nutritional balance. Make sure you use a wide choice of ingredients, textures and seasonings, but don’t forget that each of those must agree with one another. Besides, add different cooking techniques – nobody really enjoys omnipresent microwaves, so why not add grilling and steaming to 100% satisfy your customers.
- Food Allergies. Remember that not everyone easts things like nuts or shellfish, not to mention vegetarians and vegans, lactose intolerant and GM and gluten haters. Scrutinize The Food Labelling to understand how to label dishes.
- Culinary trends. Diversity is a key to prosperity, so ensure your food menu covers both classics and new-wave tendencies. Menus full of nachos or French fries only can kill the element of attraction.
- Menu pricing. In short, you must carefully calculate prices according to ideal gross profit margin. It’s not that difficult as it sounds – here you can read the ultimate guide to wise pricing.
When creating a drink menu it’s all about the same yet a little bit different:
- Separate menus. The biggest mistake of all newbies to bar making is offering one-for-all menu. Having a separate menu for drinks and foods is actually a lot more practically because it shows that your stocks are full of products. But don’t go into giant volumes – this can put off customers.
- Work on cocktails and drinks. Don’t name drinks like ‘Italian Wine’ or ‘Awesome Beer’. According to a cocktail consultant Josh Harris, the drink name accounts for 60% of the reason why customers select a particular drink. So get creative. You might even make use of some jokes, punchlines, celebrity names, local folklore or culture references – cocktail named ‘James Bond’s Favorite’ sounds 1000 times more attractive than some boring ‘Beach Pleasure’.
! A good-looking menu can create a memorable event for your clients, so you surely need a beautiful template reflecting your bar’s voice and concept. Try examining ready-to-use templates here to showcase your products in a proper way.
Stock It All Up
To start with, look through this bar equipment checklist and tap every piece of equipment needed for your venue. There are four essential sorts you consider: basic bar equipment like shakers, stools and ice bins, bar glasses (this illustrated chartcan help you out), basic liquors and coolers. After the list is complied, purchase this equipment – you can search through eBay, retailers, bar suppliers and local stores. If you are not sure of drinks, welcome to great Dummies’ guide to bar inventory where you’ll find mountains of useful tips on running a bar properly.
Hire Good Employees
Finally, you can think of people who are going to work for and with you. Above all, here comes a professional bartender capable of everything and anything. And since this bit in your puzzle is the most hard-to-get, you should include a few more places for searching than classic Craigslist – visit a bartendering school and ask around on eligible candidates. As an alternative, you can hunt for bartenders at local bars: read reviews, go to bars, talk to barmen and maybe lady luck will smile at you. Aside from bartenders, your venue needs a good manager, a chef and line cooks, janitors, accountants, and PR agents.
Stage 5: Marketing
You’re almost there, after all this hard work. So, when you’re fully stocked, teamed, designed and papered, it’s time to prepare for the grand opening and the marketing stage. Here you need to develop a general marketing strategy – the way you’re going to promote the place – and also come up with promos to generate some buzz around your bar.
Draw Up A Promotion Strategy
Although you can google up hundreds of thousands various strategies, here’s a sorrowful secret: no one will be working on you. Why? Imagine the following situation: you’ve read about exquisite benefits of traditional advertising (which surely is), developed channels but you’ve got no people sitting by the counter. What’s the problem then? The deal is that bars require somewhat special approach to advertising because there are multiple services at once as well as different target audiences at once. So the best tactics to conquer the market is to utilize ‘the proportional mix’ – the proportional combination of common marketing techniques.
The elements of the mix are:
- E-Commerce. Starting a brand’s website would do good to any business, but lots of owners neglect creating even a landing page thinking that a social media page may cover the whole marketing. Don’t make these mistakes and outline your Net presence by launching a site.
- Social media. Then, after creating a website, you can use Twitter, Facebook, Instagram or YouTube to generate more buzz.
- Traditional advertising. And only when you’ve stepped into the realm of the Internet, you can use traditional marketing activities like partnership, giving away leaflets and advertising with billboards.
! It’s essential to add a business listing on Google My Business – when customers search for bars nearby, your listing can pop up among others and there’ll be good chance that people get engaged and notice you. Fill out all the information completely – add pictures, website, price ranges, address, working hours. Also, encourage your customers to leave reviews since it’s going to improve your search rankings.
Make An Offer Customers Can’t Refuse
Bar promotions can go far beyond traditional methods, and you may take advantage of that. For example, you can partner with liquor brands to create a special party, give away drinks, host festivities, start ‘happy hours’, run loyalty programs, make karaoke nights with free stuff, offer complimentary appetizers, organize theme nights – you name it. It’s all down to your imagination.
Keep Calm And Carry On
Congratulations! If you made it this far, you’ve got everything to open a bar. Next up you just need to make sure your venue has tables occupied all the time, so don’t stop carrying on. Always try something new and stay positive, and you’re going to be the rockstar of fooding and drinking.