Buying a Bar: 5 Things You Absolutely Need to Know

Have you ever gone out to a bar and thought to yourself “I’d run this place so much better”? It’s not impossible. In fact, it’s a great industry to invest in. Sure, the industry is challenging, and you’ll have to work hard to achieve your goals, but there’s no doubt it’s profitable and always in-demand.

Bar

The bar and tavern industry brings in $28 billion per year, so you’ll have no problem finding your slice of the pie. However, the best first step is to prepare yourself by saving funds for “seed” or startup money. Bars cost between $110,000 to $500,000 (on average) to open, and there are many fixed costs after that. For owners who plan on buying the facility too, the price tag goes up significantly.

Bar owners also need to pay for all the necessary permits, which vary based on locality. Naturally, a bar will also require a great deal of alcohol inventory. All of the essential startup costs go into creating the menu and establishing the service. Make sure you have a sound financial plan so that costs don’t catch you off guard.

Established cash flow brings profits.

Now for the good news. After investing a ton of cash, the bar owner starts to reap the rewards. A well-run and heavily trafficked location can bring in tens of thousands weekly, providing sufficient cash flow to run things and pay down any startup debt.

The average bar brings in $25,000 to $35,000 in weekly revenue, so there’s an excellent chance that the owner will make a profit quickly. Naturally, the owner still has to reduce expenses and keep the customers happy, but margins are high enough on food and drink to earn a sizable return.

You can pay investors back quickly.

With sufficient cash flow, it’s possible to pay back loans or investors in two years. As long as there’s adequate cash flow in the operations, it’s even possible to accelerate the time table. Naturally, how much you earn rests solely on how customers react to your business. If they love the environment, they’ll contribute cash every month, which keeps operations moving along nicely.

Bar owners who keep their early momentum going are in an excellent position to enjoy substantial profits. New bars tend to attract plenty of business from customers who are willing to give the establishment a chance. The ones that manage to retain them and turn them into loyal customers put a hefty premium in their investor’s profits every year.

Congenial staff is everything.

The team working at the bar makes or breaks a patron’s experience. Nobody wants to pay for drinks at an establishment with surly workers or uncaring staff. It pays to hire staff that fits the bar culture and makes customers feel welcome. The bar personnel is the most significant determinant of where a location succeeds or not. If you can get the most out of your employees, the effort will show up in the form of extra revenues.

Alcohol service training should be a continuous effort to keep everyone performing their best. Eager employees enjoy it because it teaches them how to master their profession to earn the highest possible income. They gain experience by working on the job, but tapping into training resources helps them achieve the next level of professionalism that propels their careers (and the bar’s fortune) skyward.

You’ll need three licenses.

In addition to alcohol certification and training for your bartenders, you’ll need various licenses for the establishment itself. Firstly, you’ll need a state-issued, on-license liquor license. This states that you intend for alcohol to be consumed on the premises. 

You can obtain a tavern license, which entitles you to serve all kinds of legal alcohol, or a beer and wine license, which prevents you from serving hard liquor. Note that the review period for a liquor license can take a while, particular depending on the demand within your state and how long it will take the review board to get to your request. 

What’s more, a liquor license isn’t the only kind of license you’ll need if you want to run a desirable establishment. You’ll also need a music license so that you can play music in the background without subjecting yourself to a copyright lawsuit. You’ll also need a health and food service license if you plan on serving small plates and nibbles in your establishment.

Having a business plan is key.

It takes a lot of effort to buy or start a bar, but it’s an achievable dream for anyone with a plan. Figure out how much you’re willing (or able) to put into the venture, and you can lay the groundwork for getting an establishment up and running.

If you’re planning on starting the bar with a team of investors, they’ll have plenty of input to add. It takes a few people sometimes to pore over the numbers and to come up with a viable plan for establishing the business. Most importantly, it’s worth researching the local market to determine whether there’s potential. Sometimes, there are golden opportunities available for those willing to do the research. 

You’ll need a good supplier ASAP.


There are three kinds of suppliers you should form relationships with: general bar suppliers (cocktail napkins, straws, etc.), glassware suppliers, and alcohol vendors. The latter ensure your bar is properly stocked with all the alcohol essentials to make any and every cocktail your clients may order. 

Developing relationships with local breweries and wineries could be one cost-effective way of doing this, while also showing you support the community. It’ll also give your bar extra appeal to those craft beer connoisseurs that live in the neighborhood. 

Seek out contracts with suppliers and distributors that have reasonable delivery costs, delivery schedules that align with your needs, and a selection that you can potentially sample so you can ensure you’re getting your money’s worth. 

You won’t become Sam Malone overnight when you open up your bar, but you will be able to quickly and comfortably create an establishment patrons love when you build relationships with the right suppliers, provide for your employees, and secure your licensing. Once all the technicalities are out of the way, you can focus on theme, the type of customer you’re trying to attract, and the overall atmosphere you wish to create.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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