How much does it cost to open a bar?

 Is it your dream to open your own bar? If so, you’re probably wondering, “just how much does it cost to open a bar?” While costs can vary quite a bit, the average cost to open a pub from the ground up is about $480,000—although costs can range from $110,000 on the low end to $850,000 on the high end. However, if you’re looking to take over an existing bar, it’s possible to get started for as low as $25,000 (with the right planning, of course).

Costs can vary with a number of factors, too. If you’re planning to open more of a specialty bar, such as a winebar, brewpub, or microbrewery, your costs may be lower (between $25,000 and $100,000), partly due to the fact that it’s cheaper and easier to obtain beer-and-wine permits than it is to get permits that include hard liquor. 

If your aspirations are bigger than opening a neighborhood bar or pub, or a smaller, more intimate winebar, the cost to open a larger-sized venture, such as a nightclub, is substantially steeper. Opening a nightclub can run between $240,000 and $840,000, due to equipment, lighting, air conditioning, and other expenses—on top of alcohol permits. 

Feeling overwhelmed? Don’t worry, you’re not alone. That’s why we created our bar startup costs spreadsheet and companion guide. While this guide focuses mostly on costs required to open a bar, you can easily make adjustments that would apply to opening a smaller or larger business.

Check out our free worksheet to break down everything it will take to get your bar started off on the right foot.

Breaking down bar startup costs

The big question is, “how much money do I need to open a bar?” Yet, to answer that with any degree of specificity, you’ll have to determine what kind of bar you want to open. For example, the cost of opening a brewpub will differ from the cost of opening a wine bar. Similarly, opening a nightclub costs more than opening a casual neighborhood pub. Different ventures will incur different types of costs. However, across the board, bar startup costs can be broken down into two categories: one-time costs and recurring costs.

One-time costs

One-time costs are your upfront costs—simply, this is the amount of capital needed to get your doors open and your patrons pouring in. Just keep in mind that starting and maintaining your bar are different sets of costs to consider. Your typical starting expenses will include everything that goes on behind the scenes to get your establishment up to code and ready for opening day.

  • Licenses and permits – these are number one on the code front. The liquor license is likely your most important one, but most localities require a number of operating licenses. If you’re doing any construction, make sure you have the proper building permits. And don’t forget to consider the associated legalities if you’re planning on serving food. Expect to spend anywhere from $4,500 to $11,000.
  • Rent/mortgage payments – this one can vary dramatically depending on your location. Do some comparative research and plan on having at least 6 months’ worth put away—it can take some time to turn a profit, but you’ll have to keep your doors open in the meantime.
  • Bar and kitchen equipment – here’s another area that depends greatly on your particular situation. A beverage-only bar will require much less equipment than a bar that serves food. The bare-minimum bar will need taps, refrigeration, and glassware. You can expect to spend upwards of $8,000 on those items, depending on the size of your operation. Food menus can range from simple to extensive, and will impact how much kitchen equipment is needed. You’ll at least need some basic appliances if you’re serving food. If you’re economical, you can probably rough it through a bare-bones menu for about $5,000 or outfit a professional kitchen set-up for $20,000 to $40,000.
  • Insurance – another legal necessity. You’re looking at $2,000 to $6,000 in premiums to start.
  • Renovations and/or remodeling – this cost varies greatly depending on how much of an overhaul you’re planning on doing and what you expect your end result to look like. On average, factoring interior design and decorating, fixtures, furniture, stereo equipment and lighting, you’re looking at about $65,000 for a thorough overhaul.
  • Operating reserve – this fund should cover anything that will need to be replaced from normal use and act as a safety net to cover the costs of operating your bar during the off months. Experts suggest $100,000 for healthy coverage, but the reality is many bars operate on less.
  • Signage – every bar needs a sign. You’ll spend about $1,000 on average.
  • Starting inventory – the customers came for a reason—you’ll want to make sure you’re well-stocked. For food and alcohol, you’re looking at $6,000 to $13,000. You will know your customer-base best, but a good starting inventory percentage breakdown is 45% beer, 40% liquor, 5% wine, and 10% mixers. Adjust as needed.
  • Staff salaries – specifics vary dependent on the size of your operation, but every bar needs employees. Most bars require a manager, bartenders, and barbacks to really operate smoothly. If you’re serving food, you’ll need a kitchen staff (chefs, line cooks) and a serving staff (servers, bussers). Employees should be paid competitive salaries based on individual experience. As the owner, you’ll need to pay your employees even if you’re not turning a profit yet. Make sure you have the funds on hand.
  • Payment software/POS system – you’ll want to make sure you accept the major forms of payment and are set to accommodate customer payment requests like splitting the bill. You can get a basic cloud POS system for about $1,200 to start or go for a more robust version for up to $20,000.
  • Emergency funds – you’ll want to be covered in case of emergencies. The ideal is $50,000. That might sound steep, but you should at least make it a point to have something put away for potential disasters.
  • Miscellaneous – you never know what you may run into as you progress. Miscellaneous expenses can range from legal or consulting fees to a great advertising opportunity you just have to seize. It’s recommended to factor at least $3,000 for miscellaneous expenses.

Recurring and ongoing costs

Once your bar is up and running, your operating costs will begin to level off. These are the costs of maintaining that were mentioned earlier. Take a look at these particular items if you’re wondering: “how much do bars cost to run on a day to day basis?” You’ll want to factor in these costs along with your projected revenue stream to see how profitable you’ll be in your venture.

  • Rent/mortgage payments – you can’t avoid this one. You should have the first 6 months covered in your startup budget, but you’ll have to get used to paying this every month. Again, price will vary depending on location and size.
  • Insurance – another unavoidable expense. Expect to spend $2,000 to $6,000 annually to stay insured.
  • Utilities – you have to keep the lights on and the music playing. Between your electric, water and gas bills, expect to pay about $2,500 per month.
  • Food and alcohol inventory – this might be an obvious cost, but you’ll have to keep the bar stocked each month. You can easily spend $10,000 per month, depending on your turnaround.
  • Taxes and fees – always check with local authorities about specific taxes and fees applicable to your bar, although it’s likely they’ll let you know. These fees will vary by location, but expect to pay somewhere around $1,000 per month total.
  • Payroll – once you start turning a profit, you’ll be deducting payroll costs from those funds. Your staff is the backbone of your bar, so you must keep them paid.
  • Professional fees – this cost runs on a sliding scale. If you’ll be doing the accounting for the bar yourself, you won’t have regular fees. However, it’s a smart move to bring in a professional periodically to consult if you have any issues. Expect to spend around $200 per hour when needed.
  • Maintenance and repairs – nothing lasts forever. You’ll have to be on top of this one to keep your bar up to code. Bathrooms must be in working order. Kitchen and refrigeration equipment must be functioning. And don’t forget about your heat and air conditioning. You could spend upwards of $1,000 per month if frequent service calls are needed.
  • Marketing and promotion – ongoing advertising is key for bar success. You’ll want to devote some capital each month to stay relevant and keep new customers coming.
  • Office supplies – here’s one that you might not think of but can really add up. You can spend about $500 per month between printer ink, paper, pens and the like.
  • Miscellaneous – again, you always have to be prepared if a problem or opportunity arises. Budget in about $2,000 per month to cover unexpected legal fees or operating supplies.

Common bar startup myths and mistakes

Every new bar owner is bound to make some mistakes. We’ve compiled some of the most common ones we’ve seen so you can be sure to avoid them.

  1. Don’t overcomplicate the menu. Simplicity can be a great asset to a new bar—especially when you’re trying to make a name for yourself. Focusing on a select few menu items and doing them well can set you apart from the host of bars with a wide variety of mediocre offerings.
  2. Don’t overspend on décor. It’s easy to get carried away in your quest to set the perfect ambience. Take cues from your menu and start simple. Keeping a bar open is financially taxing enough—you have to keep your goals in perspective from the start if you want to be successful.
  3. Don’t overspend on renovations. It’s tough when you have the image of your perfect watering hole set up in your head, but you can’t afford to go crazy with renovations before your bar is turning a solid profit. Remember: you can always renovate later. To start, spend as little as possible to make the place presentable. But that doesn’t mean skimp on quality—shoddy work can lead to costly repairs later, not to mention potential code violations and a danger to patrons.
  4. Don’t forget the music. Music is a crucial part of setting the mood of your establishment, so make sure you don’t overlook it. Gauge the crowd and try to tailor the soundtrack accordingly. Be selective with the tunes but be wary of music licensing fees, if applicable.
  5. Don’t underestimate startup costs. One of the biggest reasons bar startups fail is lack of proper startup cost planning. Figures will change from the original plans, but you should estimate high on initial costs so you don’t end up going broke down the line.

Industry tip

Running a bar is hard work. Don’t get bogged down tracking expenses—consider upgrading to online accounting software with Sage Business Cloud Accounting to save time and money.

What bar owners wish they knew when starting their business

Take note of these wise words from the experts. These tips and reflections from successful bar owners are the most valuable resources you can get as you start your venture.

  • “Employees are the hardest hurdle to jump.” You have to make sure your staff is fully interested and invested in the success of your business. They need to actively have your best interests in mind—the bar industry can be especially prone to disloyal employees. You’re better off hiring an inexperienced, but loyal employee than an experienced, but questionable one. Ken Brownell, owner of South Philly Bar & Grill offered the following advice: “Remember: a green employee can be trained the way you want them to be trained. No matter what, make sure every employee gets bar certified, RAM (Responsible Alcohol Management) licensed and intimately knows and enforces the rules.”
  • “Positive reinforcement works.” Your management technique can really make or break your bar. Sometimes reprimanding employees is necessary, but the real work is in evaluating your employees’ performance and ensuring they learn from their mistakes. If you have to critique a staff member, make sure you end on a positive note and let them know what they’re doing right. Help them focus on correcting their flaws. Give actionable insights that help rather than simply make them feel bad.
  • “Continually reassess your needs.” Your bar’s needs will inevitably change over time. What’s valuable at the outset may not be worthwhile a few months later. For example, it can be beneficial to hire a public relations company to get the social media aspect of your business up and running—professional resources can do wonders for getting your bar on shared lists and profitable events. But once your bar gains some momentum, the value of that professional help may dry up—that can turn into an unnecessary $800 monthly expense. Make sure you frequently measure your return on investments.

How to use the bar startup cost worksheet

Our bar startup costs worksheet is simple and intuitive to use. Once downloaded, it’s fully customizable to fit your needs. The template includes both high and low-end estimates, so you can get a full picture of how much it will take to start your bar.

  • Download the free template.
  • Add or remove fields applicable to your bar venture.
  • Assess your needs and related costs.
  • Make note of potentially changing costs or costs to be determined.
  • Plug in your numbers and enjoy the simplified breakdown of your startup and ongoing costs.

Focus on building your business, not tracking expenses—try Sage Business Cloud Accounting

Opening and maintaining a bar requires a lot. Day in and day out, you invest your time, energy and focus into creating something great. So, why waste your valuable time and efforts tracking expenses the old-fashioned way? Administrative tasks can now be fully automated—so upgrade your business model by deploying online accounting software through Sage Business Cloud Accounting and save yourself some time and money. You have enough on your plate. Outsource the busy work and get back to doing what you do best—making your business a success.

Ready to grow your business ?

Sage Business Cloud will help you spend less time on admin and more on attracting customers.