Many entrepreneurs dream of opening their own bar or restaurant. The sports bar industry can be particularly attractive since there are sports tournaments televised every season of the year, and sports fans are in every town in the United States. To open a sports bar and restaurant is a complicated endeavor, however, especially when trying to build something entirely new from the ground up.
TL;DR (Too Long; Didn't Read)
It can cost anywhere from $110,000 to $850,000 to open a sports bar depending on whether you purchase or rent the property along with other variables.
The Basic Needs of a Sports Bar
A sports bar, in general, is normally a combination of a bar and restaurant — a place where customers can get food and beverages together and sit and watch whatever game or event they want to see. Normally, the bar serves beer, wine and liquor as well as sodas, and the kitchen menu can be anything from standard bar appetizers to complete gourmet meals depending on the atmosphere of the bar. Food and drink are the obvious standards, but a sports bar also needs to have good seating and a friendly, accessible arrangement of televisions with access to whatever programs customers will expect.
To provide all of these, the business owner will have some choices to make. Location is key. Is there a local bar that happens to be up for sale, or is there a building up for rent or purchase that will be a good spot for a sports bar?
Purchasing an existing bar will obviously lower the upfront costs of opening a sports bar since most of the internal logistics and layout will already exist. If you are renting or purchasing a new building space, you will need to design and build your own kitchen, bar space and seating from scratch. The advantage here is that you will have full control over the design of the space, and the disadvantage is, of course, the upfront cost.
Cost of Starting a Sports Bar
Purchasing an existing bar will save you a lot of dough, which is usually needed for renovation, rebranding and improvements. For a bar that leases or rents its property, startup costs can range from $110,000 to $550,000 depending on the amount of work that must be done. A bar owner who purchases the property and pays a monthly mortgage can look at upfront costs between $175,000 and $850,000.
Developing a Concept and Target Market
Within all of this, the theme, concept and target market for the sports bar must also develop as well. The atmosphere of a local bar has a huge impact on whether customers will return in the future. A key component of opening a new sports bar is to determine how it will stand out in the local market, so creative sports bar ideas are critical.
The atmosphere of a sports bar is usually more casual than other bars and restaurants. Sports fans like to go out in team clothing, have a few drinks and some good food and cheer (or jeer) with like-minded fans in a public place.
This means the theme concept for a sports bar should be something that fits this specific target demographic, which can absolutely vary from location to location depending on economic demographics as well.
Overhead Costs of a Sports Bar
As you might expect, the property itself is a big portion of the upfront cost. Property costs can vary significantly depending on the location and on whether the owner wants to rent or lease the property or purchase it up front.
On average, the upfront cost of renting a space will be around $110,000, with an average monthly rent payment of $6,000 to be calculated into the overhead. The upfront costs go to initial rent payments, security deposits and any required renovations in the existing space. Mortgage payments will of course be higher per month, and a larger down payment may be required up front.
Renovations on an existing place can cost anywhere between $50,000 and $100,000 depending on the need. If new bar equipment (beer tap system, refrigerators, shelving, sinks, point-of-sales monitors, etc.) has to be installed, this upfront price will absolutely increase. Keep in mind that in addition to kitchen and bar space, the sports bar will also need restrooms, a location set up for delivery and unloading and a way to handle the disposal of food and other waste that stays far away from the bar itself.
Filing and Licensing Costs
Any new business or corporation needs to register with the state government to become a legal entity that can conduct business. This filing usually costs anywhere from $100 to $500, with additional licensing fees paid annually at $100 to $1,200 depending on the location.
In addition, a sports bar must also obtain licenses for serving beer, wine and liquor as well as a license to operate a kitchen if the owner also decides to serve food. These costs will vary from state to state and city to city. On average, a liquor license will cost $4,500, but the price can vary from $300 to $10,000 depending on the location. A food-service license will likely be a similar cost. Most of these charges can be easily found on state government websites.
Insurance is also a necessity to protect the investment and to cover liability in the case of damages or injury on the premises. On average, the insurance policy for the building and equipment will fall between $2,000 and $6,000 annually. The actual cost will depend on location, establishment size and what type of coverage is desired.
Personnel Costs of a Sports Bar
A sports bar will require two different types of employees: a set of employees who will make and serve the food and beverages and a set of employees who will manage the back end of the bar, including accounting, inventory, marketing and potentially legal advice.
Some of these tasks can be done by the owner; in fact, entrepreneurs often purchase or open bars because they are able to do some of these tasks themselves. Some owners might be chefs or bartenders, while others may do their own accounting books and inventory management. It’s up to each owner to decide what work he is capable of doing and how much of his own personal time he wants to put into the sports bar every day.
Point-of-Sale and Electronic Management Systems
Electronic management systems come hand in hand with personnel costs. Bars will need a point-of-sale management system that will make it easy for servers and bartenders to track customers, fill orders and build receipts. These systems can represent a good upfront cost depending on how many POS terminals are required and how much detail the owner wants to be able to get from the system.
There are also accounting and inventory management programs that can assist an owner in tracking the orders and costs, which can reduce the personnel load required to keep the restaurant functioning properly.
Overall, on average, labor staff will end up costing around $13,000 monthly. This again can change based on minimum wage laws at the location, the local competition and level of the competitive wage and the size of the establishment. There may be an additional upfront cost for training on the bar’s POS system as well as individualized training on how to be a friendly, successful service employee at this particular establishment to uphold the atmosphere.
Food and Beverage Costs
It’s important for a sports bar to start fully stocked. Opening inventory can cost anywhere from $5,000 to $20,000 for a small- to medium-sized sports bar. On average, monthly alcohol costs are around $6,000, but this will absolutely vary depending on the type and size of the bar. You should decide what kind of mix of alcohol you will be serving in order to estimate what portion of the inventory stock will be beer, liquor, wine and related mixers.
The same goes for sports bars that have decided to include kitchens as well. However, whereas liquor is slow to go bad, food can go bad quickly, so startup costs can vary widely depending on the kind of menu that will be in service. The kitchen manager will want to look at other industry examples and recommendations to make sure the menu is ready to go at opening and will likely have to make weekly orders to keep everything fresh and well stocked.
Sports Bar Entertainment Costs
In addition to all of this, a sports bar has an additional upfront and ongoing cost requirement due to its nature: the cost of the electronics required to show relevant sporting events at the bar. This will include the cost of the televisions and mounting hardware, any additional speakers, the cost of the network supplier package and the cost of logistically connecting and managing the system. The cost of the entertainment system will depend on the size of the establishment, the number of television screens that are desired and the type of network sports package that is chosen.
Sports bars are mainly focused on televised sports programs, but some offer additional entertainment like billiards, darts or arcade games. These can add to the upfront costs as well as maintenance costs for the bar if you decide to include these activities. It’s best to look at the local competition to see whether customers will expect and enjoy these types of activities or if a giant, expensive pool table might go to waste in this particular environment.
How Much Does a Sports Bar Owner Make?
The question of a sports bar owner’s salary can be a difficult one, mainly because of the extensive startup costs that need to be covered before the business will be making a profit on the books. Unless you are independently wealthy, most of the startup money will be provided by partners, investors or loans and will need to be paid back over a time period. In most cases, if the bar can make enough profit to pay off its initial cost in a two-year period, the bar can be considered successful.
In some cases, the bar is operated where the owner pulls a salary from the bar’s profits, making the salary an expense that the bar also has to cover in addition to the rent and loan payments. Either way, it’s hard to separate a bar’s profits and an owner’s take-home salary with a newly opened sports bar that is still establishing itself.
On average, a bar owner will make between $30,000 and $60,000 per year with a small to moderately sized local bar. The national median average salary for a bar owner is around $67,000, but this average includes bar owners of elite establishments in city markets that can support extreme markups on drinks. For a typical sports bar, which is meant to be comfortable and friendly rather than a luxurious club, salaries are likely to be on the lower end.