If you’ve had a great time at a local bar and thought about running your own successful drinking place, you might wonder how to open a bar in your area. Running a successful bar can be a great idea, but you need to do market research and be aware of the licenses and permits you need to obtain before starting a bar. In this guide, we will explain the steps necessary to follow when wondering how to start a bar.
What is a bar?
A bar is a social gathering place where alcoholic beverages are served for consumption. People come to bars to relax, socialize, and enjoy their drinks. We can distinguish different types of bars, including bar concepts like
- A wine bar,
- A sports bar
- A craft beer bar,
- A cocktail bar,
- A neighborhood bar,
- A lounge bar
How much does it cost to open a bar?
The cost of starting a bar can vary widely depending on factors such as:
- licensing requirements,
While specific costs can vary greatly, according to Sage, the costs of opening a bar usually range from $100,000 and $850,000,000. If your plan involves opening a specialty bar like a wine bar, brewpub, or microbrewery, you might find that your costs are comparatively lower, typically ranging from $25,000 to $100,000. This is partly because obtaining beer and wine licenses is generally less expensive and more straightforward than acquiring permits that include hard liquor.
On the other hand, the cost of opening a nightclub can range from $240,000 to $840,000, taking into account expenses such as equipment, lighting, air conditioning, and other necessary investments, in addition to the costs associated with obtaining alcohol permits.
How profitable is opening a bar?
The key factors that determine the profitability of opening up a bar are careful planning, efficient execution, and consistent management. Bars can be highly profitable due to their ability to apply significant markups on alcohol prices, often ranging up to 500%. As a result, bars can achieve impressive gross profit margins, which can reach as high as 80%.
Below you will find all the steps to opening a bar.
Step 1. Decide on a bar concept
To begin with, start deciding on your concept of a bar. Brainstorm and write down all ideas that come to your mind. What kind of bar do you want to open? Is it to be a craft beer bar or something more sophisticated like a wine bar? How do you want your guests to feel when they visit your bar? Remember that your bar idea needs to be consistent with the chosen location, for example, if you open a bar close to the University, a pub or beer bar would be a good option.
Step 2. Choose a name for your bar
A nice part of the process that directly refers to your bar idea – choosing a name for your bar. Think about a name that is unique and consistent with your bar idea. Avoid all name ideas which are complex and too long. Remember that your bar name will not only be a sign above the promises but will also be presented on your marketing materials, website, and social media.
Once you have a bar name chosen, think about trademarking it. Thanks to that, your name and logo won’t be used by other establishments. It’s crucial, especially if you are thinking about building a chain of bars. Consider consulting a business attorney to guide you through the trademarking process.
Step 3. Write a bar business plan
Any type of business requires preparing a business plan. No matter if you are opening a restaurant, bar, or coffee shop, it always connects with careful planning and writing a restaurant business plan. Thanks to that, you will be able to talk to potential investors and “sell” them your idea while looking to finance your investment.
A bar business plan is a document that describes the whole business idea and refers to market analysis, competition, financial projections, etc. You can check out our comprehensive guide on how to write a restaurant business plan.
Step 4. Establish a business structure
Another aspect of starting a bar is establishing its business structure. Depending on the legal structure you choose, there are differences in taxes, liability level, and risk level. The most common entity types are
- Sole proprietorship
- General partnership
- Limited liability corporations
Step 5. Secure financing your bar
While opening a bar requires a significant investment, there are strategies to secure financing for your venture. One integral approach is to connect with potential investors, as having sufficient funding is essential to sustain your business operations and ensure its long-term success. By securing the necessary financial support, you can navigate the costs associated with launching and running a bar more effectively.
As a bar owner, you need to make a list of all the startup costs. Thanks to that, you will be able to check how much funding you need for a bar purchase. If you are wondering how to open your own bar without money, you can check our article on starting a restaurant business with no money.
Step 6. Acquire the necessary licenses
To operate your bar legally, you need to obtain all the necessary licenses and permits. To serve beer, drinks, and food in your bar, you must keep an eye on all permits. Remember that there might be different regulations depending on the state.
Here is a list of the most essential permits and licenses for a bar owner:
- Employer Identification Number – you can apply for it on Internal Revenue Service (IRS)
- Liquor License – it’s crucial to get it, as, without a liquor license, you can’t legally serve drinks and sell any alcohol. You must contact your state’s Alcoholic Beverage Control agency to apply for a liquor license. Important note
Liquor licenses not only grant permission to sell alcoholic beverages but also specify the type of alcohol you are allowed to sell and establishes the permitted operating hours and days of your establishment. This license is crucial as it governs various aspects of your business related to alcohol sales and operations.
- Food service License – if you think about serving food in your bar, you need to apply for Foodservice License. You need to contact your state’s public health department for that purpose.
- Registering with TTB (Alcohol and Tobacco Tax and Trade Bureau) – Before opening, all businesses that sell alcohol products are required to register with the TTB. Here you can apply for a Permit from TTB.
Other permits that might be necessary for opening your own bar include
- Business License
- Certificate of Occupancy
- Music License
- Sign Permit
- Pool Table Permit
- Dumpster Placement Permit
- Fire Department Permit
- Commercial liability insurance
Step 7. Find the ideal bar location
Choosing the bar location is crucial for your business. Consider the following factors before making a decision on the best place to open a bar:
- Assess Demographics: Analyze the demographics of the area where you plan to open your business, ensuring it aligns with your target market and customer preferences. For example, if you plan to open a sports bar, ensure its location is great for college students and sports fans.
- Visibility and accessibility: take into account the accessibility of your chosen location, considering factors such as transportation options and parking availability to ensure convenience for your customers.
- Check the competition in your area: Verify if there are other bars in the area you plan your bar opening.
- Budget for Rent and Utilities: Carefully consider the costs of rent and utilities in your chosen location, ensuring they fit within your budget and align with the expected revenue potential of your bar.
- Understand Zoning Restrictions: what are the local zoning regulations and restrictions? Are there any restrictions that may impact your bar’s operations, such as noise limitations or specific licensing requirements?
Step 8. Select a liquor supplier
As a business owner opening a bar, you need to look for liquor suppliers. Depending on the alcohol type you plan to offer, arrange meetings with different suppliers. Most of them have websites where you can check their portfolio.
When selecting a distributor, it’s important to consider the following factors:
- Minimum Purchase Requirements: an important aspect, as it directly influences your budget and inventory management.
- Brand Selection: check the supplier’s portfolio to ensure they offer the brands and products consistent with your bar’s concept
- Delivery Dates: what are the expected delivery schedules? Do they meet your inventory needs?
- Payment Options and Discounts: what are the available payment methods? Are there any discounts for bulk orders?
- Promotional Materials: does the supplier provide any promotional materials to boost your sales? Are there any brand ambassadors?
Step 9. Design your bar’s layout
The next step in starting a bar business is taking care of the captivating and functional design for your bar’s interior. Remember that the entrance is vital. It determines the first impression and whether the consumer decides to enter the bar or not.
Bar owners need to take care of the cohesion of the decor, the right chairs, tables, and furniture must harmonize with each other. You can decide to work with an interior designer who will help you with the preparation of the interior design and the selection of accessories. Depending on the nature of the premises, include TV, pool tables, etc. Don’t forget about matching the music that will be played on the premises to the bar style.
While designing your bar interior, don’t forget about compliance with space and electrical requirements.
Step 10. Buy necessary bar equipment
An essential step in opening any restaurant business is buying equipment. To start a bar and serve all the alcohol you plan, you need to buy the following:
Remember that this is an example bar checklist and it can be different depending on specific cocktail recipes, and the type of bar business you’re operating.
Step 11. Hire and train your staff
Start looking for skilled employees with experience working in a bar before opening your establishment. Depending on the bar type, your staffing may be different, for example, you will need fewer employees in a small neighborhood bar than a cocktail bar. Job positions that may be necessary for your bar include:
- Bar manager,
Apart from conducting interviews and hiring new employees, it is crucial to develop a well-structured training program that establishes clear expectations.
Step 12. Promote your bar
To promote your bar, you need to develop a marketing strategy for the bar before and after it is open. As a bar owner, you need to know what competition does and think of ideas to attract customers. First of all, you need to spread the word among potential customers and then incentivize them to visit your existing bar and come back again.
There are various brand promotion ideas, for example:
- Creating a Fan page and Instagram account
- Offering extra drink (the one which is not included in your drink menu) to your social media followers
- Creating a restaurant website
- Running happy hours
- Offering discounts for repeat customers
- Organizing promotional events
- Building a loyalty program
- Organizing contests for the most active followers on Facebook and Instagram
- Restaurant email marketing
Check our article on the best bar promotion ideas for inspiration.
Step 13. Open your bar
Having followed all the steps we described above, you are ready to open your new bar. Ensure proactive promotion prior to the event, for example, you can offer discounts on an opening day to encourage new customers to become loyal patrons.
A great option worth consideration is organizing a soft opening before you start running your bar on an everyday basis. During a soft opening, you will be able to test your bar’s operations, check if any areas require improvements, and implement them before hosting a grand opening.
Before hosting a grand bar opening, make sure that you promoted your opening among the local community.
Step 14. Create your bar website
After opening your bar, it’s essential to establish and maintain an online presence. Use a restaurant website builder to create a customized website for your bar. Select a bar template, showcase your menu items, and personalize the website to align with your brand.
Building a website is a quick and straightforward process. It’s important to recognize that having a restaurant website directly enhances brand recognition and strengthens your connection with customers.
If you are looking for inspiration, check the examples of the best bar website designs.
Step 15. Start selling online
When considering the creation of your bar website, don’t forget about the potential to boost sales by incorporating a food ordering system. With a simple setup, you can quickly launch your own commission-free food ordering system on your website in just 5 minutes.
This lets your customers conveniently place orders directly from your website, enhancing their experience and potentially increasing your sales. Sounds interesting? Check out our guide on how to set up an online ordering system.
Step 16. Create a QR code menu
Creating a QR code menu is a great option to reduce the need for table service. Customers scan a QR placed on their table and are redirected to the restaurant menu. You can create your digital menu in just a few minutes and edit it when necessary.
Don’t forget to add attractive photos of your drinks to increase sales. Check our food photography tips to take eye-catching photos.
- When thinking of how to open a bar, remember that everything starts with a concept and choosing a name for a bar
- Create a bar from scratch or buy an existing bar
- A successful bar can achieve a huge gross profit margin, which can reach as high as 80%
- As in case of other businesses, a business plan is a must
- While choosing a business model, take into account differences in taxes, liability level, and risk level
- Thanks to the financial projections included in your business plan you can evaluate the startup cost and secure funding
- There are many different bar types, for example, sports bars, cigar bars, signature cocktails bars, and other alcoholic beverage bars.
- Depending on a bar type, you might need different licenses and permits
- Location is a key to your own bar success
- Remember that the success of a bar business depends on its suppliers
- As a restaurant owner, pay attention to all the details
- Design your bar and buy all necessary equipment
- Skilled and reliable employees can differentiate your establishment from other bars
- Any new bar requires promotion. Use marketing strategies and check our promotion ideas to build brand recognition among customers
- Start with a soft opening before holding a grand opening
- Create a bar website and start selling online
- Create a QR code menu to increase sales
Frequently Asked Questions (FAQ)
Opening a wine bar is similar to starting any other bar. You need to follow the steps, including:
- Conducting market research on the wine bar industry – you should verify the number of wine drinkers in the area you consider running a wine bar as well as the potential for market growth.
- Determine the concept and style for your wine bar – it is vital to take into account different aspects on which the bar depends, especially competition. Focus on creating a unique concept to attract customers to your new bar. Try to make a menu that will differentiate your place from other wine bars. What’s important is trying not to fall into the trap of creating a too-narrow niche. If you do so, you may have a problem with the number of customers interested in your wine business. Moreover, remember that your competition in this case, apart from bars, will be shops where you can buy wine – both supermarkets and shops specializing in the sale of wine.
- Select a suitable location for your wine business – a crucial aspect for determining a bar’s ownership success. Have a look at the factors we pointed out in this article in Step 7. Find the ideal bar location.
- Decide on the legal structure for your wine bar – for that purpose, check different business entity possibilities and their pros and cons to decide which business structure will be the best option for your business.
- Create a detailed business plan – a successful bar requires writing a detailed business plan. Here you can see how to write a restaurant business plan.
- Secure financing for your bar business – check out different options for financing a new business. You can also check our article on how to open a restaurant with no money.
- Estimate the costs for equipment and staffing – costs are always a crucial aspect for small business owners, as they directly show if it is possible to start a business with personal assets only or if there is a need for additional funding. If you need to find the capital for opening a wine business, check out this article on how much it costs to open a restaurant.
- Select a wine supplier – as it can influence the quality and variety of wines you will offer to your customers.
- Design a bar layout and buy the necessary equipment
- Develop a comprehensive marketing plan – promoting your place among neighborhood bars and restaurants is crucial. Check out our bar promotion ideas.
- Create a website and start selling online – to increase the number of potential customers and boost your bar’s sales.
If you are wondering how to start a bar in Texas, follow the steps described in this guide above. Referring to the permits and licenses required in Texas, you will need to obtain the following:
- Business License – for more details, go to Texas Economic Development
- Certificate of Occupancy – you can apply for it in your local city or county’s small business department
- Food Seller’s Permit – for more details, go to the U.S. Small Business Administration
- Food Handler’s License – for more details, go to 360training
Liquor License – for more details, go to Texas Alcoholic Beverage Commission
Opening a bar in California is similar to opening a bar in any other state. Referring to the permits and licenses required in California, you will need to obtain the following:
- Business License – you can apply for it in your local city or county’s small business department
- Certificate of Occupancy – you can apply for it in your local city or county’s small business department
- Food Seller’s Permit – for more details, go to the California Department of Tax and Fee Administration
- Food Handler’s License – for more details, go to 360training
- Liquor License – for more details, go to Alcoholic Beverage Control
The opening and closing duties at the bar are a kind of bar checklist of activities necessary to ensure that a bar is prepared to be open for customers and then closed up correctly for the night. Depending on the type of bar, there might be different opening and closing procedures, but in general, they could look as follows:
- Opening Duties:
- Surface polishing and sanitization
- Arranging glassware, garnishes, and supplies
- Bar setup (ensuring that cash registers, POS system, and other tools are working correctly.)
- Inventory Check (ensuring that the inventory of alcoholic and non-alcoholic beverages is appropriate).
- Cash handling (ensuring that a sufficient amount of change is available at cash registers).
- Equipment testing (ensuring that TVs and other equipment work correctly).
- Room setup: Arrange the room, including tables, chairs, and any additional seating or decor, to create a welcoming and comfortable atmosphere for guests.
- Ice bin refilling
- Closing duties:
- Ensuring that there are no more customers in a bar
- Turning off TVs and other equipment
- Locking up the entrances
- Cash counting
- Perishable storage (to maintain their freshness and prevent spoilage).
- Labelling your food and alcohol with a date to track when it was opened.
- Cleaning all bar areas
- Refilling Disposables to ensure they are readily available for the next operating day.