How Much Does It Cost to Start a Bar

If you’re wondering how much does it cost to start a bar, you may find a wide range of figures online. This range depends on various factors that can significantly affect your initial investment. But if your dream is to open a bar, you’ll want to figure out which costs have the most impact on your small business.

For example, location plays a major role in determining startup costs. Opening a bar in a prime urban area will cost more than setting up in a smaller town.The size of your bar also impacts costs; a larger venue requires more investment in space, furnishings, and staff.  Understanding these factors helps you plan effectively and allocate your resources wisely, so let’s dive in.

How much does it cost to start up a bar?

There’s no simple answer to the question, “What is the startup cost of a bar”? However, a few useful figures can inform your business decisions. According to RestaurantOwner.com, the average cost to start a bar was $425,500, with the bulk of the cost spent on renovation.

Of course, this will differ depending on your space and concept. For example, if you were wondering “how much does it cost to open a small bar” compared with how much it might cost to start a mobile bar business, you may see a significant difference due to needing a brick and mortar space for the former. 

Here are some other significant expenses that impact your bar startup costs. 

Location and building costs

Depending on the costs in your region, especially in well-trafficked areas, you may need to allot a significant amount of your funds toward location and building costs. First you need to decide whether to lease or purchase a property. Leasing offers flexibility and lower upfront costs, while purchasing provides long-term investment potential. Both options require a significant financial commitment. 

Renovations and build-out expenses can vary widely. You may need to remodel the interior, install a bar counter, and create seating areas. These costs can quickly add up, especially if you need to meet specific design standards or local building codes. Permits and licenses are non-negotiable.

You must obtain a liquor license, health permits, and other necessary approvals. These can be costly and time-consuming, but they are mandatory for legal operation. For more insights on starting a bar, you might find this restaurant startup guide useful.

Equipment and inventory costs

Bar equipment and glassware form a substantial part of your initial investment. You'll need refrigeration units, ice machines, sinks, and dishwashers. Don't forget the smaller items like cocktail shakers, blenders, and glassware. Quality equipment ensures smooth operations and a better customer experience. Initial inventory of alcohol and supplies is another major expense.

Stocking a variety of liquors, beers, and wines can be costly. Additionally, you'll need mixers, garnishes, and other bar supplies. Plan your inventory based on your bar's concept and anticipated customer preferences.

A Point-of-Sale (POS) system is essential for efficient operations. It helps manage sales, track inventory, and streamline transactions. Investing in a reliable POS system can save you time and reduce errors, making it a worthwhile expense.

Staffing and operating costs

Hiring and training staff is crucial for providing excellent service. You'll need bartenders, servers, support staff, and a bar manager. Training ensures your team knows how to mix drinks, handle customers, and maintain a clean environment. 

So where do the costs come in? You’ll need to budget for competitive wages to attract and retain skilled employees. Insurance and utilities are ongoing expenses you can't overlook.General liability insurance, property insurance, and workers' compensation are necessary to protect your business. Utilities like electricity, water, and gas are also significant monthly costs. 

Marketing and advertising help attract customers and build your brand.Allocate funds for online marketing, social media campaigns, and local advertising. Effective marketing strategies can drive traffic and increase sales, making this investment worthwhile. 

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How to create a bar startup budget

Creating a budget is a mix of excitement and anxiety. You’re planning your dream, but the numbers can be intimidating. Still, a well-thought-out budget is your roadmap to success. With a budget, you can apply for small business loans from the Small Business Administration or other funding sources, so that your dream and become a reality. 

Determine your bar concept

Start by choosing a theme and target audience. Your theme could range from a cozy neighborhood pub to an upscale cocktail lounge. Knowing your audience helps you tailor your offerings and ambiance to meet their preferences. Factor in the cost of your bar design and adjust if you don’t have the budget. 

Develop a business plan. Outline your bar's mission, vision, and goals. Include a detailed market analysis to understand your competition and potential customer base. A solid business plan serves as a roadmap and can help secure financing. For more comprehensive bar management tips, check out these bar management tips.

Estimate one-time costs

Calculate property and build-out expenses. Decide whether to lease or purchase a property and factor in the costs associated with each option. You may also ask yourself how much to buy a bar compared to renovating and building one out from scratch.

Whether you buy an existing bar or start a new one, include expenses for renovations, interior design, and necessary construction work. Ensure your space meets local health and safety regulations.

Factor in equipment and inventory purchases. List all the equipment you'll need, such as refrigeration units, ice machines, and glassware. Don't forget smaller items like cocktail shakers and utensils. Estimate the cost of your initial inventory, including a variety of alcohol, mixers, and garnishes.

Project ongoing expenses

Estimate monthly staffing and operating costs. Determine how many employees you'll need and their wages. Include costs for training and any benefits you plan to offer. Consider other operating expenses like utilities, insurance, and regular maintenance.

Plan for unexpected expenses and emergencies. Set aside a contingency fund to cover unforeseen costs, such as equipment repairs or sudden drops in business. This financial cushion can help you navigate challenges without disrupting operations. For more financial planning insights, explore these first-year finance tips.

How profitable is owning a bar?

According to RestaurantOwner.com, the average bar took around 6 months to become profitable, and average sales reached $1,380,000 in the first year. Owning a bar can be a profitable enterprise as long as you budget wisely and go in with a clear plan. 

Benefit your bar with Homebase 

Now that you know the basic costs of how much it costs to start a bar, you might be ready to implement your business plan and get to work. Many hands make light work, and you’ll soon find yourself needing to hire employees to staff and support your bar. But hiring employees means managing shift schedules, payroll, and employment law. Where do you even start? 

 Luckily, we’re here to help you hire, onboard, and more. Homebase's all-in-one employee scheduling, time clock, and payroll software is designed specifically for small businesses. Sign up now and see how we can simplify your workflow.