Throwing back an ice-cold one at a neighborhood pub is a tradition as old as time — and a profitable one at that. The U.S. bar, tavern and nightclub industry tops $26 billion in sales revenue annually. But if you plan to open a club or a place that serves spirits, you’ll have to make a considerable investment before realizing those revenues. Read on to learn how much "real" cost to open a bar can be.
What are the economics of owning a bar?
Factor in the following one-time and ongoing expenditures when evaluating how much it will cost you to open a bar:
- Start-up costs: According to Restaurant Owner, start-up costs can range from $125,000 to $550,000 for the average rented or leased bar or $175,000 to $920,000 for a purchased bar. This factors in:
- Renting/leasing or buying the real estate for a new or established bar
- Physical bar assets (e.g., furnishings and any equipment and systems used to operate the bar and accept payments)
- Initial product inventory (e.g., alcohol and food) and any shipment charges
- Licenses/permits you must obtain to sell alcohol and food in a given location.
- Advertising/marketing
- Operating costs: Starting at $20,000 per month, this factors in the day-to-day costs of running a bar:
- Restocking the inventory
- Mortgage/Rent (including any interest payments)
- Staff
- Advertising/marketing
- Equipment maintenance
What's the average cost to open a bar?
Factoring in the above criteria, it can cost you a minimum of $125,000 to open the average rented/leased bar or $175,000 to open a bar you purchased. Ongoing operating costs can run you at least $20,000 per month after that. However, it's important to keep in mind that these are averages. The location, size, and bar concept (e.g., full-service bar, sports bar, brewpub, etc.) can profoundly influence these costs. For example, you can buy an established bar in a small town for as little as $20,000. Similarly, the price of opening a brewpub in a big city, for example, can rise to $1 million because specialized equipment is needed to make the beer on-site. If the costs above are beyond your budget, know that making a solo investment in a bar isn't the only option for starting your business. Investing in a bar with a group of individuals allows you to share the start-up and operating costs and day-to-day stresses of running the establishment. The other benefit of joint ownership is that it spreads your risk. Should the bar not succeed, you will have only lost a fraction of your investment.
What licenses do I have to get to open a bar?
There are a multitude of licenses and permits you must obtain from your state and municipal government to operate a bar. These licenses/permits and their associated costs vary widely by location, but the most common ones are listed below:
- Business permit: This permits you to operate in a distinct jurisdiction
- Certificate of occupancy: This certifies that your bar location meets specific building and maintenance requirements
- Liquor and food licenses: At a minimum, you need a liquor license to sell liquor. In New York, you can expect to pay at least $4,500 for a liquor license alone. But if you also plan to sell food, you'll generally also need a food service license.
- Building and Employee Health permit: This certifies that proper sanitary practices are employed in the building and by food and drink handlers.
- Entertainment licenses: These permit you to license and play recorded music or feature live musical acts at your bar.
