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How Much Do Bars Make? 6 Profit Points

By
Sarah Ward
Table of Contents
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How Much Do Bars Make?

When you’re looking into opening a bar, there’s one question that is really high up there. That question is: are bars profitable? Or, how much do bars make? The answer: yes. An average bar revenue is $27,500 a month. This totals an annual revenue of $330,000. Of course, this doesn’t account for the cost of starting a bar, operating expenses, and fleshing out a bar equipment layout. However, it’s a good number to start with when asking yourself: how much do bars make?

The question that goes hand in hand with the question of profits is: do bars make a lot of money? The answer: it depends. Variables can include location, bar promotion ideas, prices, overall vibes, and more. Whether your bar makes a lot of money depends on how you fit into your niche and how well you market your bar. When you’re ready to get into the bar business, you’ll want to think about your business plan as much as the money you'll make. 

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Average Bar Revenue

The question of how much do bars make is more extensively answered when you look at the average profit margin of a bar. The average gross profit margin is between 70 and 80%. If those percentages sound huge, that’s because they are. When compared to general retail profit margins of around 25%, bars are making bank. The main reason for the impressive average bar profit is the profit margin on alcohol sales. 

If you can manage your liquor purchasing and price per pour, you can work the profit margin on alcohol sales vastly in your favor. While replenishing your liquor cost is a constant expense, if you buy wholesale and keep your inventory organized it can be affordable. If you can keep your liquor costs down, you’ll already be on your way to a good profit margin on alcohol sales. When you’re planning out your drink costs, keep in mind things like ingredients cost (including alcohol) and the number of drinks you sell. You can gain more knowledge and control over your profit margin on alcohol sales by understanding the liquor cost formula:

Liquor Cost = (Inventory Usage ÷ Total Sales) x 100

Using this formula will give you a good idea of how to manage your bar business

How Much Does a Small Bar Make a Night

If you’re still deciding what type of bar you want to open, a good place to start is looking into a small bar. In the future, you might want to look into franchising and moving into larger locations. However, a good place to start is with a small location that suits your needs without breaking the bank. In a small bar, your average bar profit is about the same as any other bar, as long as your marketing is on point. Your bar operating expenses may be substantially lower than they would be in a larger space, as you’ll have less to look after. 

The monetary answer to this question is about $900. This number could change depending on your costs, prices, and setup. It is, however, a good place to start.

How Much Do Bar Owners Make

Now, for the question that might be the one you’re most curious about: how much do bar owners make? To start at the beginning with this question, we’ll go back to what a bar makes. This averages around $330,000 annually or $27,500 a month. Now, out of that will come salaries for other employees, bar operating costs, licensing and fees, and everything else. The bar owner salary is what is left over. Owning a bar is a profitable business over time, but it won’t happen overnight. In fact, it may take a few years before you have operating costs down and can really start taking home a large salary.

An average bar owner salary is $3,300 a month. This is based on the monthly revenue of a bar with average costs of about $24,200.

While this may seem like a small amount for owning a bar, it makes sense when you look at owning a bar long term. You’ll have a thriving business for years to come after putting in several years of hard work for a smaller salary. 

How Much Do Bar Managers Make

Coming in under the bar owner salary is the average bar manager salary. A bar manager salary generally comes out to about $45,000 a year. This salary could dip closer to $40,000 or go up towards $50,000, but $45,000 is a good number to expect. For a bar manager salary this is a good number. The manager doesn’t have the responsibility of being the owner, but they do have a lot of responsibilities in running the bar. The bar manager job description can cover everything from managing employees to dealing with customer issues to making sure everything is running smoothly.

There is always room for raises as the bar becomes more profitable and as the manager’s responsibilities grow. However, $45,000 is a great start. 

How Much Can a Bartender Make

And for bartenders, the question of how much do bartenders make is paired with: can you make good money as a bartender? The best bars know that paying your bartenders well is the best way to keep good bartenders. 

The average salary for a bartender is $26,094, and that’s before tips. In the U.S., tipping is a big part of how bartenders make their money. So, the question of how much can a bartender make is answered by, how much can a bartender make in tips. With tips included in the average bartender salary, the number comes to $65,094 a year. Broken down, this comes out to about $150 in tips each day. That additional money adds up, and if a bartender has special certifications that number can be higher. Not to mention, there will be days when tips are much higher than $150. 

How Much Does it Cost to Open a Bar

As you’re looking at what you’ll make, it’s important to keep the numbers of what you’re going to have to pay in mind. The average cost to open a bar is $420,000. And, this number is just for opening up. When you add operating costs, just for the first year, this number jumps to about $710,400. Yes, this is a huge number. You will need people investing in a bar to make it work. And yes, it’ll be a few years before you see a huge profit. But don’t let the cost to open a bar dissuade you from opening your bar. Go down your bar opening checklist, get acquainted with the costs, and you’ll feel prepared to tackle each expense as it comes up. 

Bar Operating Expenses

As you’re factoring in how much it costs to open a bar, don’t forget about the yearly bar operating expenses. These will cover everything from license renewals to stocking your bar to paying your employees. All of this comes to around $24,200 a month. Considering how much of a profit you can turn, this number will be okay as long as you’re wise with your money. You can give that monthly number a boost if you manage inventory well and do some recipe costing.

If you want to open a bar, you’ll need a lot of financial planning. You might even want to hire an account. You can make a plan for accounting in your bar operations manual. As long as you understand your bar operating expenses in relation to your average bar revenue you’ll be off to a great start. 

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How Much Do Bars Make: In Conclusion

When it really comes down to it, the question of how much do bars make is answered by how much work you put in. Your profits are a direct reflection of the work you put in and how customers appreciate your bar.

As you're getting started on your journey as a bar owner, you might be quite daunted by the startup costs of a bar. Don't let those initial costs stop you. Once you get your bar opened up and going strong, the profits will start coming in. To bring the profits in more easily, you should always be looking for ways to streamline your business. The BinWise barcode scanner app for inventory is one way to do that.