How to open a bar: a comprehensive guide

Create your bar business plan

Once you've landed on what type of bar business you want to start, you can set about building your bar business plan. A well-structured business plan is the foundation of your bar venture; it outlines your business goals, strategies, and financial projections.

A typical business plan for a bar should cover all of the aspects we've outlined below.

Executive summary - the executive summary of your bar business plan provides an overview of your bar concept, its unique selling points, and your long-term vision.

Business description - explain the type of bar you plan to open, its location, and your target audience. This description should also discuss the mission, vision, and values that underpin your ambition to start a bar.

Market research - analyze the local market, competition, and customer demographics. Identify trends and opportunities in the industry, highlighting how you see your business standing out or fitting in.

Organization and management - describe the structure of your bar business, including ownership and key personnel, plus an outline of the roles and responsibilities of each team member.

Products and services - include details of your planned menu, drinks, and any additional services your bar will offer. Make sure you highlight any unique offerings or signature drinks.

Marketing and sales strategy - develop a marketing plan, including strategies for attracting and keeping your customers. This should include details of your pricing and sales strategies.

Funding - map out what you'll need to open the bar, both in terms of the initial capital and ongoing or recurring costs and expenses. Include a detailed budget and financial projections.

Licenses and permits - list the necessary licenses and permits that you'll need to start a bar that fits your criteria. You should also explain how and when you plan to obtain them.

Risk assessment - identify potential risks and challenges associated with your proposed bar business. Make sure you also describe your planned strategies to mitigate these risks.

Financial projections - the financial projects of your bar business plan should provide income statements, cash flow forecasts, and balance sheets. It’s also a good idea to include a break-even analysis and return on investment (ROI) estimates.

Choose the right location for your bar

When starting a new bar business, selecting the right location is a critical decision that can significantly impact how successful your venture is. Consider the following factors when choosing a location:

• Target audience: identify the demographic you want to serve and choose a location where your target customers live, work, or spend time.
• Foot traffic: high foot traffic areas, such as downtown districts, shopping centers, or busy streets, can attract more customers—but can also be more expensive.
• Competition: analyze the competition in the area you're interested in. Is there demand for your type of bar, and can you differentiate yourself?
• Accessibility: make sure your bar is easily accessible by car, public transportation, and by foot. Consider parking options for your customers.
• Zoning and regulations: check local zoning laws and regulations to confirm that you can legally operate a bar at your chosen location.
• Rent and lease terms: evaluate the cost of rent or lease and negotiate favorable terms with the landlord. Factor in the total occupancy cost in your budget.
• Visibility and signage: a visible location with eye-catching signage can attract more customers. Assess the visibility of your bar from the street.

Bar equipment, suppliers, and inventory

With the perfect location sorted and your bar business plan nailed down, it’s time to turn your attention to bar equipment, furniture, food, and drink.

To start a bar and run it successfully, you'll need a wide range of equipment, suppliers, and a well-managed inventory. In this section, we've listed a number of important points for you to consider when sourcing your bar supplies.

Essential bar equipment - create a bar equipment list covering all the essentials, including bar stools, tables, glassware, cocktail shakers, blenders and refrigeration, and get sourcing. Remember to consider your bar concept and menu, investing in bar equipment that aligns with your overall vision, as well as what you plan to serve and how you want to serve it.

Alcohol and drink suppliers - spend time finding reliable alcohol distributors and suppliers and establishing good working relationships with them, allowing you to negotiate favorable terms for buying alcohol and ingredients. You'll also need to stock non-alcoholic beverages, mixers, and garnishes to cater to all customer preferences, providing options for designated drivers and non-drinkers.

Food suppliers - if you're planning to start a bar business that offers food, you'll need to secure suppliers for fresh ingredients and menu items for that too. Try to make sure you have a consistent supply of quality food products, and consider sourcing locally where possible.

Bar inventory management - to make stock management easier, consider getting set up with an effective inventory software system that can automate the tracking of stock levels, reduce waste, and help you minimize theft. Review your bar inventory regularly to make sure you have enough supplies at all times.

Bar licenses, permits, and insurance 

It probably goes without saying that compliance with legal requirements and risk management are essential for a successful bar business, but we’re going to say it anyway: make sure you dot the i:s and cross the t:s. 

Here are some of the key aspects to bear in mind:

• Bar licenses and permits: you’ll need a license from TTB (the Alcohol and Tobacco Trade and Tax Bureau) to start with, which can take 6-12 months to complete. Also research the specific licenses and permits needed in your state and locality, including a liquor license, food service permit, health department approval, and more.
• Liability insurance for bars: obtain liability insurance to protect your bar from legal claims and potential accidents. Consider general liability, liquor liability, and worker's compensation insurance.
• Health and safety compliance: Make sure your bar complies with health and safety regulations. Regular inspections and maintenance are essential to keep a safe environment.
• Music and entertainment licenses: if your bar features live music, DJs, or other entertainment, secure the necessary licenses to avoid copyright infringement.
• Responsible service training: provide your staff with responsible alcohol service training to promote safe and responsible drinking.

Bar name, brand and marketing

Creating a strong brand identity and an effective marketing plan are crucial for attracting people and building a loyal customer base when you start a new bar.

It's about putting your own personal stamp on your business and creating an environment that feels special to your target audience. Choose a unique and memorable name that reflects your bar's concept and personality, and create a brand identity, including a logo, color scheme, and brand story, that stands out.

You might also want to consider trademarking your name and logo within the geographical region you operate. This might involve hiring an intellectual property attorney.

Bar marketing strategy and customer experience

Develop a comprehensive marketing plan for your bar that includes online and offline strategies. Social media, a user-friendly website, email marketing, and local advertising can all be effective ways to reach your target audience.

Focus on providing exceptional customer service and an overall good customer experience. You could also encourage customer loyalty and positive word-of-mouth through promotions, happy hours, loyalty programs, and events.

Consider bar design ideas

Your bar design plays a significant role in shaping the atmosphere and customer experience. It should reflect your brand identity and values, while appealing to the customer demographics that you want to attract. Bear in mind that bar designs can be pricey to change, so aim for a look and feel that can stand the test of time.

When playing around with bar design ideas, consider the following:

• Interior design: create an inviting and comfortable interior space that aligns with your bar's concept. Select appropriate furniture, lighting, and décor to enhance the ambiance.
• Layout and flow: plan the layout to make sure it facilitates efficient service, easy access to the bar, and a smooth flow of customers. Designate areas for sitting, standing, and socializing.
• Theme and décor: choose a theme or décor style that complements your bar's concept. Pay attention to details like artwork, music, and lighting to set the mood.
• Outdoor space: if possible, consider an outdoor patio or seating area for patrons who prefer to enjoy their drinks in the open air.

Hire the right bar staff

Creating the right space and vibe will help you build your brand, but perhaps even more important is making sure you have the right people in your team. After all, what good is a luxurious cocktail lounge if your bartenders can’t make a first class Negroni or Paloma?

Your bar staff plays a crucial role in providing the kind of customer experience your guests expect and maintaining your bar's reputation. Make sure you think carefully about the team members you'll need, as well as your bar staff’s duties and responsibilities.

Here are some tips for finding, hiring, and training the right team:

• Bartenders: hire experienced bartenders with knowledge of cocktails, drink preparation, and customer service. Look for individuals who are personable and can engage with customers.
• Servers: choose attentive and customer-focused servers who can efficiently take orders and deliver drinks. Provide training on your bar's menu and customer service standards.
• Kitchen staff: if your bar serves food, hire skilled kitchen staff with experience in the type of cuisine you plan to serve. Maintain high food quality and consistency.
• Security and door staff: employ trained security personnel to ensure the safety of your patrons. Implement a clear entrance and exit policy with professional door staff.
• Staff training: provide training on responsible alcohol service, safety procedures, and your bar's specific expectations. Encourage teamwork and open communication among staff members.

As a starting point, try hospitality recruitment websites like Poached Jobs and iHireHospitality.com. 

Top tip: consider investing in smart recruitment software to make the hiring and onboarding processes seamless. 

How much does it cost to open a bar?

Understanding how much it will cost to open a bar is essential for your financial planning. While this can vary widely depending on location, size, concept, and many other factors, as a rough ballpark, expect to spend somewhere from $110,000 to $850,000 to open a bar from the ground up, with the average cost sitting at about $480,000.

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).

One-off costs to consider

One-off costs to start a bar can include expenses such as:

• Purchase of a property and initial working capital.
• Renovations and interior design; on average, you're looking at about $65,000 for a thorough overhaul, including fixtures, furniture, stereo equipment and lighting.
• Bar equipment - you can expect to spend upwards of $8,000 on taps, refrigeration and glassware.
• Kitchen equipment - expect to pay anything from $5,000 to cope with a basic menu, or $20,000 to $40,000 to outfit a professional kitchen set-up.
• Initial inventory - you're looking at $6,000 to $13,000 for food and booze. You'll know your customer base best, but a good starting inventory percentage breakdown is 45% beer, 40% liquor, 5% wine, and 10% mixers.
• Licenses and permits - expect to spend anywhere from $4,500 to $11,000.
• Payment software/POS system - you can get a basic cloud POS system for about $1,200, or opt for a more robust version for up to $20,000.
• Emergency funds - ideally, you want to have at least  $50,000 stashed away to cover any emergencies.

Ongoing and recurring costs

Then there’s the ongoing and recurring costs, which can include:

• Lease or mortgage payments.
• Payroll, staff salaries, and training.
• Taxes and fees - will vary by location, but expect to pay somewhere around $1,000 per month total.
• Utilities - between your electric, water, and gas bills, expect to pay about $2,500 per month.
• Insurance premiums - expect to spend $2,000 to $6,000 annually to stay insured.
• Food & drink inventory - you could easily spend $10,000 per month, depending on your turnover.
• General maintenance and repairs; you could spend upwards of $1,000 per month if frequent service calls are needed.
• Marketing, advertising, and office supplies.

To help you get to grips with both one-off and recurring expenses, we've created a handy bar startup costs spreadsheet template. 

It might also be worth buying a smart, intuitive accounting system to keep your finances and tax records up-to-date and compliant. Have a look at our Sage 50 and Sage Intacct solutions to find out more about how they can help your business as you launch and grow.

How to get funding for a bar

Let’s face it; there are lots of costs to cover if you're looking to start a bar business. It might seem daunting, and it’s important to be realistic about your budget and what you can achieve before you launch.

That said, there are various bar funding options available in the USA that can help you get up and running. Consider the following sources of capital:

• Personal savings: let’s start with the obvious. Using your savings is one of the most common ways to fund a bar startup. If you've managed to save up some capital, investing this in your business can help demonstrate your commitment to the business and minimize the need for external financing.
• Small business loans: consider applying for a small business loan from a bank or credit union. Explore government-backed loans like SBA loans, which offer favorable terms and lower interest rates.
• Investors: seek investors, such as angel investors or venture capitalists, who are willing to provide capital in exchange for equity in your bar.
• Crowdfunding: consider crowdfunding platforms like Kickstarter or Indiegogo to raise capital from a crowd of investors.
• Grants and competitions: investigate research grants and business competitions that cater to small businesses and startups. Some offer financial support, mentorship, and resources.
• Partnerships: partner with individuals or businesses that can provide bar funding or other resources in exchange for a share in your bar's success.
• Family and friends: some entrepreneurs turn to family and friends for financial support. If you go down this route, make sure you have a clear agreement and repayment plan in place.
• Franchising: explore franchising opportunities with established bar chains that offer support and financing options to franchisees.

Final words about starting a bar

If you're in the process of researching how to open a bar in the USA, hopefully this guide has given you some helpful pointers.

There’s no denying that starting a bar business comes with challenges, but it can also be a rewarding endeavor. The bottom line is that the more carefully you plan and prepare for your new venture, the more likely you are to set yourself up for success.

With a clear business plan and the right funding, you can turn your dream of owning a bar into a thriving reality. Keep in mind that the bar industry is highly competitive, so continuous innovation, exceptional customer service, and effective marketing will be key to your long-term prosperity.