Starting your own bar business involves many variables concerning cost. The most important aspects concerning opening costs are where the bar is located, how big the business will be and if you own the space or will you be renting it. These variables make the average opening costs ofa bar between $150,000 to $500,000, but it can go higher or lower depending on differing circumstances.
When selecting a location for a bar business many factors must be considered for opening costs. If the space is in city limits there will likely be more taxes involved. Business taxes for a bar can vary from $5,000 to $10,000 per year depending on location. If the space needs to be built from scratch or remodeled, the build-out costs can fall between $80,000 and $150,000. Another location variable is rent, which will have to be paid from the time the space is acquired, which is usually months before opening. In a high-traffic area the rent could be $10,000 a month, while in low-traffic areas it can be as little as $10,000 a year.
A bar business needs a license to serve alcohol. While the liquor license is the most important aspect for the operation of a bar, it is actually the least costly aspect of opening one, in most cases. The fees differ greatly between states and municipalities, but usually fall in the range of a few hundred to a few thousand dollars. Many states require one license to serve beer and wine and another to serve hard liquor.
Staff and Payroll
An experienced staff is needed to run a bar business, especially in management positions, so determine how big your staff will need to be. If you have previous bar experience consider hiring yourself as a bartender at first to save on payroll for the opening months. For the rest of the staff you will need to have six months of payroll stashed away to pay the employees. This adds another $50,000 to $75,000 on average.
Is the actual bar the drinks will be served on already in place, or will you have to build or refurbish one? There will also need to be a refrigerator for the kegs, a draft system to pour the beer and, if you are serving food, all the kitchen equipment, as well as a point-of-sale (POS) system for the servers to punch in orders and make cash and credit card transactions. For an average-size bar, these costs will run between $50,000 and $100,000.
When it it comes to insurance the first thing that needs to be done concerning the opening of a bar is to register the business as an LLC (limited liability corporation) when getting a business license. This will protect your personal assets should a lawsuit occur. When selecting business insurance you want the highest coverage to protect the business against liability claims. The cost of this coverage varies wildly but averages between $8,000 and $12,000 a year.
Blake Guthrie covers travel, entertainment and outdoor recreation for many outlets, including the Atlanta Journal-Constitution, where he is a regular contributor. With years of experience as a professional cook, Guthrie also relishes writing about food and beverage topics. He earned a Bachelor of Arts in mass communications from Auburn University.