How to Open a Bar
Opening a bar takes a lot more than buying some beer and pretzels. This guide to how to open and manage a bar, however, makes it easier than you think. With information on costs to plans for happy hour, you'll find everything you need to learning about opening a bar.
You'll need to start with a restaurant business plan. The overall goal of a business plan is to help you prepare and show you where you'll need to work the hardest.
Your business plan for opening a bar will need to include:
- Your company and concept description
- An analysis of the market and your competitors
- Your service and product line
- A management structure and overall system
- Your financial analysis and projections
- Your executive summary
You'll also need to decide if you want an LLC, a partnership, or something else.
The specifics of your plan on opening a bar are:
- Figuring out liquor licensing costs
- Sourcing beverages and related supplies
- Evaluating the market to promote your bar
You'll need plans for worker and customer safety responsibilities with liquor. Plans for any scenarios of danger or issues that may occur are also important.
Opening a Bar Checklist
So, your checklist on how to open a bar stands as follows:
- Write up your business plan
- Choose your name and logo
- Get your licensing situated
- Choose your location
- Design your bar
- Purchase and organize your bar inventory
- Choose your point of sale system
- Hire employees and you'll be off!
The price to open a bar is high. The average cost to open a bar is $420,000. After that, first year operating costs bring the cost to around $710,400.
Additionally, there will be bar operating expenses of around $24,200 monthly. This may seem daunting, but this guide to opening a bar will make it more attainable.
A few prices to prepare for are:
- The building and all associated costs. This can be into the hundreds of thousands.
- Taxes and licensing. With taxes, you can expect to pay federal, state, and local taxes up into the tens of thousands. Payroll taxes for your employees are important as well. Additionally, sales and use taxes will creep up if you're not prepared for them.
There are states out there without state income taxes. If you live in one of those states, you'll have a little less to pay.
Liquor License Costs
Depending on your location, the cost of a liquor license could be anywhere from $25 a year to up into the hundreds of thousands. You'll most likely end up paying several thousand each year for your liquor license. That yearly renewal is something you need to add to your budget as well.
Outside of legal costs, you'll also need to budget for supplies. These can include:
- Beverage and food supplies
- Bar cleaning supplies and maintenance tools
- Startup tools and appliances
All together, these costs will get into the thousands, and many of them are things you have to budget for every month.
For liquor costs, a good place to start is the liquor cost calculator:
Liquor cost = (Inventory Usage ÷ Total Sales) x 100
Getting those initial budgets set up will help you be more prepared, and keep you from having too many surprise expenses. To help yourself even further, be sure to shop wholesale when possible, optimize where you can, and search for discounts in your area.
The question of how to get a liquor license has a different answer state by state. From the application process to the cost, you'll want to check out the rules in your location.
How to Get a Liquor License
To get a liquor license, you need to learn about:
- Application submission guidelines. This process starts with your local Department of Alcoholic Beverage Control (ABC). This office is your guide through the entire licensing process.
- The money you'll need to have prepared. This will vary from state to state, but preparing to pay into the thousands is a good plan.
- The process of getting your specific license.
- How to get a liquor license renewed. Renewal is generally on a yearly basis, and can cost up to as much as the initial licensing fee.
These answers may be vastly different depending on your location. However, this guide to opening a bar will support you no matter what your location is.
Types of Liquor Licenses
What you need will depend on your bar, but the general license types are:
- Beer and wine license (no spirits)
- Tavern liquor license (food sales, but more liquor revenue)
- Restaurant or liquor license (most common, covers everything)
- Brewpub liquor license (for places that manufacture their own)
- Server license (required for each server in some states)
How Long Will it Take to Get a Liquor License?
This will change depending on your state. It could be a few weeks, months, or much longer if your state has limited licenses. While you wait, you can start planning how you'll set up your bar once you've got a license.
An efficient bar setup is all about functionality meeting aesthetics. Your setup needs to work for your employees while being enjoyable for your guests. While the details are up to you, leaning into efficiency is the place to start. Having an eco-friendly restaurant or bar could help with efficiency if you plan well in advance.
Restaurant Bar Setup
Your restaurant bar setup should be designed around making your customers feel comfortable while making it easy for your employees to keep things moving.
Behind The Bar
Behind the bar, everything should be organized for visuals, but it also needs to be extremely efficient. Bar back organization and commercial bar setup plans will make things much easier on your workers.
A lot of this setup is focused on equipment and easy layouts to keep things moving for your workers. The under bar area can hold a lot of items, so everything above the bar can be kept open and accessible.
Commercial Bar Layout
Your commercial bar layout gives your bartenders a space of about 25 inches across to keep the drinks flowing. This area in particular should be kept as efficient as possible.
Pouring Station in a Bar
A truly vital part of your bar's success is a great pouring station. The pouring station is the place for beverage dispensing. It's also a great place for keeping the most used bottles and everything else your bartenders need close on hand.
Liquor Cabinet Organization
Your liquor cabinet organization is another area where form and function come together. Bar bottle display comes down to two things:
- Making customers want to buy your liquor options.
- Making it easy for your bartenders to get bottles as efficiently as possible.
If your liquor bottles are displayed well, you'll be selling top-shelf Scotch before you know it. Not to mention, a well-organized display makes everything easier for your bartenders. A good organization system for your liquor cabinet can be the backbone of your bar if you have a plan from the beginning.
Bar Counter Equipment Layout
Your bar equipment list layout is all about function. This is the place to make things aesthetically pleasing and easy on your workers. To get started you'll want to set up:
- An ice bin
- A speed rail
- A garnish station
- Bar and restaurant cleaning supplies
Keeping these items and everything else in your bar organized will make all the difference.
How to display liquor in a bar is entirely about aesthetics. How you design your liquor bottle display and decorate accordingly, is one of the main factors behind what will bring in customers.
Basic Bar Liquor
To start, you'll need to stock your bar with some basic liquors and beverages. The list includes:
- Draft beer
- Bottled and canned beer
Bar Bottle Display
Once you're all stocked up, it's time to decide how to display your liquor. You have several options:
- A liquor bottle stand, to showcase your collection.
- Wine storage racks, to show off how much wine you have available.
- Shelving for your entire collection.
- Floor to ceiling racks to impress your customers.
Of course, these aren't your only options. Whatever suits your bar is a good place to start.
Liquor Storage: Cabinets & Shelves
When it comes to choosing what you want to display your liquor in, it's important to keep organization in mind. With the world of cabinets and shelving open to you, you have plenty of options. Keep your liquor collection in mind as you look through the options, to make the best decision for your bar.
Liquor Storage Cabinets
When it comes to liquor storage cabinets, there are several great options to get you started:
- Glass-front cabinets
- Standard bookshelves
- Open-front wall cabinets
- Mobile cabinet trays
- Glass-front locker-style cabinets
You can find great options in bar and restaurant retailers, online stores, and even some great cheap options in home goods stores like Ikea.
Liquor Storage Shelving
For liquor storage shelves, you have just as many options as with cabinets. From home goods to hardware shops to Etsy, there are so many places you can look for your shelves. As long as the shelving you find will support books, it'll work for liquor bottles.
Another project for setting up your bar is finding ways to display wine bottles. There are a lot of great ways to display wine. This list of the top 10 most creative options is a good starting place.
- Ten: Flat Wine Rack
- Nine: Single Wine Bottle Holder
- Eight: Empty Wine Bottle Display
- Seven: Wine Bottle Screen
- Six: Large Format Wine Bottles
- Five: Wine Tower Display
- Four: The Wine Cellar View
- Three: Wine Case Display Ideas
- Two: Bottle Wall Mount
- One: Wine Bottle Stand
These options can work well separately, mixed together, or they may spark a totally new idea. All that really matters is that you showcase the wine you want customers to enjoy. Of course, a great display will go a long way to keeping your customers happy.
What Is Happy Hour?
Happy hour is, traditionally, an hour when drinks and often appetizers are served at half-price or less. While a bar happy hour may fit this definition, many other types of establishments have created their own versions of what happy hour means. These days there’s a place for everyone to find their joy with happy hour.
Happy hour typically starts at 4 p.m. or right around then. While the name would imply it only runs for an hour, a lot of places have expanded beyond the hour.
Legal Happy Hour Aspects
As a bar owner, before you decide that happy hour is a good choice you’ll need to be sure what you can legally offer. You may find that you live in a state where happy hour is banned.
Even in those states where happy hour alcohol deals are banned, there are often some sorts of happy hour appetizer deals. Everywhere else, many bars and restaurants offer BOGO drinks and apps, along with other deals.
Weekend Happy Hour Deals
There are some places that offer happy hour specials on the weekends. Often, these deals come with brunch offers, so while they’re not exactly happy hour they’re basically the same deals. If you’re a bar or restaurant owner, it’s worth looking into what deals you can offer on the weekends, not just during the week.
The Reverse of Happy Hour
Reverse happy hour goes beyond the hour or two right after work. Many bars and restaurants are offering happy hour deals from as early as 2 p.m. to closing. This expanded happy hour is great for people who work flexible hours, or people who just like happy hour outside of the regular hour.
What is Happy Hour
Ultimately, happy hour is a time when customers and owners can share in the delights of great deals. Whether it's two for $5 cocktails or half-price apps, happy hour deals are great for any bar or restaurant.
One big question about opening a bar is: are bars profitable? The answer to that is, yes. An average bar revenue is $27,500 a month. This comes to an annual revenue of $330,000.
The other big question is: do bars make a lot of money? The answer here is that it depends. With variables such as location, marketing, prices, aesthetics, and more, how much money your bar makes isn't set in stone.
Average Bar Revenue
The average gross profit margin for a bar is between 70 and 80%. 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.
When you’re planning your drink costs, keep in mind things like ingredients cost (including alcohol) and the number of drinks you sell.
How Much Do Bar Owners Make
Owning a bar is a profitable business, but it takes time. 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.
As you put work and money back into your bar, this number will grow as the years go by.
How Much Do Bar Managers Make
A bar manager salary generally comes out to about $45,000 a year. The bar manager job description can cover everything from managing employees to dealing with customer issues to making sure everything is running smoothly. With that in mind, and with potential for raises, an average of $45,000 is a great start.
How Much Can a Bartender Make
The average salary for a bartender is $26,094, and that’s before tips. So, the question of how much can a bartender make is truly 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. That's about $150 in tips every day.
The Best Bar Books
The best books for starting a bar are the ones that give the best information with ease. The best bar books that make up this list all have their specialties. No matter how many you choose, the best books for starting a bar are the ones that will work for your bar. From information on "What does one part mean?" to drink recipes, these books have it all.
The Best Bar Books
- Trendy Bar & Nightclub Business Startup: How to Start, Run and Grow a Successful Bar & Tavern Business by Michael Sanders
- The Little Black Bar Book: A Comprehensive Guide To Starting, Owning And Operating Your Own Bar Or Nightclub by Chris Lenahan
Cocktail Recipe Book Options
Of all the great cocktail recipe and bar recipe books, these two are the ones you should own:
- The Essential Bar Book: An A-To-Z Guide to Spirits, Cocktails, and Wine, with 115 Recipes for the World's Great Drinks by Jennifer Fiedler
Whether you’re looking for the best cocktail book for beginners or of all time, these two books are the place to start.
Overall, the best books for starting a bar are the ones that give you the information that is right for you. From the best cocktail books of all time to the best bar books for anyone, this list gives a lot of options. While every book on this list is worth reading, only you will know which ones are the best bar books for you.
To stay inspired as you work towards opening a bar, check out this list of some of the oldest bars in America.
- The oldest bar in America is the White Horse Tavern of 1673 in Rhode Island.
- In New York City, the oldest bar is Fraunces Tavern from 1762. A runner-up is The Ear Inn, which opened in 1817.
- The oldest bar in Boston, from 1780, is Warren Tavern. The Bell in Hand is a contender for this title, as it opened in 1795. Many sources debate these two.
- The oldest bar in Philly is McGillin's Olde Ale House, from 1860.
- In New Orleans, the oldest bar is Lafitte's Blacksmith Shop Bar, the building of which has been there since 1722, or perhaps 1723.
- San Francisco's oldest bar, the Old Ship Saloon, dates back to 1851.
- In Washington DC, the Old Ebbitt Grill takes the title as a bar that's been around since 1856.
While your bar will be a recent addition, you'll be joining in a long tradition of bar ownership.
Guide to Opening a Bar: In Conclusion
Overall, this guide to opening a bar gives you the building blocks to open and operate a successful bar. The rest will be up to you. The management, the purchasing, the learning about what works best for you and your customers. It'll come along once you've opened the doors.
One thing you may need some help with is figuring out liquor inventory, to keep everything running smoothly. BinWise can help you there.
While this information may seem like a lot you need to work on, you'll be able to take actionable steps as you go. Whatever your path to opening your bar is, this guide to opening a bar will get you there.