Opening a bar is a business venture for the creative entrepreneur and social butterfly. If you’re someone who dreams of bringing a new business concept to life, starting a bar could be your next project.
Though many in the leisure and hospitality industry were initially displaced at the height of the pandemic, the post-COVID-19 economy has created limitless opportunities in the hospitality industry. With a fresh wave of raw talent and employment numbers within the sector down by 1.2 million from February 2020, there are more opportunities to open a bar than ever.
If you want to know how to open a bar, here’s what you need to know.
Types of Bars
Opening a bar is not as straightforward as serving drinks. The modern customer expects an experience when they visit a bar. After all, with alcohol being cheaper at convenience and liquor stores, patrons know they can drink at home for less.
You need to consider the experience you’re providing and how that experience differentiates from the competition. Get the experience right, and 72% of customers will tell six or more people about your business.
To that end, the first step in your opening a bar checklist is settling on the type of bar you want to operate.
The neighborhood bar is the quintessential bar in the U.S. These no-frills establishments are small, cozy, and prioritize serving a local crowd. Also commonly referred to as dive bars, they’re all about being laid back and having cheap drinks - with little to no food offerings.
Startup costs for neighborhood bars vary wildly, with the location and type of license influencing how much you pay. Existing neighborhood bars in a small town can cost $45,000 to purchase, making them the most cost-effective bar type to open.
The sports bar offers a broader range of food than the neighborhood bar and focuses on entertainment. Successful sports bars require wide-screen TVs, strong audio, and satellite TV to legally broadcast sporting events from across the country.
Customers who attend sports bars are looking to have fun together while watching their favorite sporting events on the big screen. Some sports bars have even added video games to entertain their patrons when no major events are in progress.
With Atmosphere, you can pump in regularly updated content to keep your patrons entertained during the off-season.
The beer bar or brewpub concentrates on an expanded selection of beers. Most of these bars will have their own draft beer, bottled beer selections, and a limited range of appetizers. The benefit of running a brewpub is you have complete control over which beers you sell and how many of those beers you stock.
Obtaining a license is much more affordable than opening any other bar type. Moreover, you have the natural advantage of beer being the most popular alcoholic beverage, with beer being the third most popular drink in the world after water and tea.
Unfortunately, the startup costs of a brewpub are considerably higher due to the need to invest in brewing equipment. Entrepreneurs looking at how to open up a bar of this type can expect to invest a six-figure sum in opening their doors.
A specialty bar focuses on a specific theme or a certain kind of signature drink. For example, the speakeasy is a specialty bar with elegantly dressed bartenders and classic cocktails.
Specialty bars have the natural advantage of holding a signature attraction that cannot be found in any other local bar.
A specialty bar's success relies on extensive local consumer research, so you match the expectations of the community you serve.
Nightclubs are the natural evolution of the bar, but they don’t need to be crazy party destinations. Nightclubs can resemble small cocktail bars with a DJ in the corner or full-scale dance clubs where people party until the sun comes up.
Unfortunately, obtaining the necessary licenses and the unique marketing challenges of nightclubs make this a challenging bar type to run successfully.
Be prepared to spend a lot of time molding your reputation as a trendy location with a “buzz” about it.
How to Open a Bar: The Complete Checklist
Working out how to start a bar business is far from straightforward. You must find the right space, comply with local regulations, obtain all the necessary licenses, and design a bar space people want to visit.
Here’s everything you need to know about how to run a bar successfully.
Step One – Create Your Concept
After settling on the type of bar you want to open, you need to create a concept. The concept is the vision of what you want your establishment to be, down to the tiny details that make it stand out from the crowd.
While differentiation is critical, keep in mind that your concept should fit the location and the market. Examples of concepts include a beach-themed bar or a sophisticated martini bar. Even the wildest ideas are perfectly acceptable as concepts, as long as the local market will accept them.
Consider which bars are already in the area and the demographic they serve. If you are struggling for inspiration, visit a few local bars in person.
Step Two – Decide on a Business Structure
Your business structure will determine how you get started with opening a bar. Several options are available to you, including:
- Buy an Existing Bar – Do your research before you take over and understand why the original owner wants to sell. Ask about staff organization, hygiene standards, and employee relations. A fair price to purchase an existing bar is typically one year of the total gross receipts.
- Create Your Own Bar – Launch your bar from nothing. This long and expensive process will require you to find a space and model it appropriately. The viability depends entirely on the financial detail.
- Remodel an Existing Bar – Take an existing bar and remodel it to suit your new concept. Generally, you should be looking to avoid a radical takeover if you want the existing bar to operate under the same name.
- Buy a Franchise – Leverage a chain’s existing reputation by becoming part of an established organization. You will have less room for creativity, but newbie bar owners will typically have more support in getting their business off the ground.
Step Three – Create Your Business Plan
Business plans are not just a document to attract third-party investment but a guideline to help you focus on the most critical tasks. Crafting a good business plan requires you to outline the details within your concept, perform a profit and loss analysis, outline your marketing, ideal customer, potential risks, and more.
By writing out your business plan, you can help identify holes in your business model that can be fixed before opening and reduce your risk of failure. Take as much time as you need to flesh out your business idea, including research into your customers and competitors.
Understand that a business plan is required if you will be seeking funding to start a bar. The more objective and well-researched your plan is, the more likely you will be able to convince your investors you’ll generate a return on their investment with a profitable bar.
The U.S. Small Business Administration (SBA) has a variety of free templates available to direct you in creating your plan.
Step Four – Find the Best Location
During the discovery phase of your business idea, you pinpoint who your customers are and the competition you will be against. The next step is to find the right location for your bar.
Bars need to balance general levels of foot traffic with:
- Type of clientele
- Bar concept
Don’t settle but be flexible with your vision. While a great location can often make a bar, a bar is less likely to make a location.
Low rental costs and high visibility rarely come as a package. The more visible your bar is, the more you can expect to pay. Your concept will also influence where your ideal location is.
For example, choosing a location down an alley makes sense if you are opening a “secret” bar. The same spot for a sports bar would make it extremely difficult to succeed.
After you have found your space, you’ll need to check out the location and figure out what you can do with it. You will also need to negotiate with the existing landlord on terms. Refer to your business plan to decide whether it’s a good deal.
Make sure you inspect several locations to weigh up your options.
Step Five – Sort Out the Paperwork
If you’ve found your dream spot and decided on any changes you need to make to bring your bar to life, the next step in how to open a bar is the paperwork.
Expect to go through the process of securing permission from local government agencies if you want to remodel the bar space. Every bar owner will also need to visit the building and safety department to ensure that the standards and regulations of a safe hospitality environment have been met.
Some states may also require you to settle your affairs with the local fire department, including scheduling a fire safety inspection.
Even if your new space was a bar previously, don’t assume that it still has a valid liquor license either. You may need to reapply for licenses from your local Alcoholic Beverage Control (ABC) board to serve both food and alcohol to open your doors.
Overall, obtaining a license can take up to 60 days during the investigatory process and 30 days to be issued.
The Business Side of Your Bar
On the business side of your bar, you’ll need to register your bar’s name. Consult a trademark attorney to perform all the necessary checks if you want to copyright your brand. It’s a good idea to trademark your brand early in case you want to sell merchandise or open up new locations further down the line.
You will also need an Employer Identification Number (EIN) from the IRS to pay your taxes. This number will also be required to obtain your licenses and permits.
Applying for an EIN is easy. The IRS allows new businesses to apply for their EINs for free online.
Finally, any establishment selling alcohol must register with the Federal Alcohol and Tobacco Tax and Trade Bureau (TTB). This federal agency is responsible for collecting taxes and enforcing regulations relating to protected categories of merchandise, such as alcohol, tobacco, and firearms.
The TTB offers a platform for applying for a permit/registration so that you can fill out the details yourself online.
Step Six – Design Your Bar
The design of your bar is the most exciting part of your business because you’re finally seeing your concept brought to life. Think form and function. Collaborate with an architect or interior designer to discuss ideas and decide what is viable.
Your bar's design should accurately reflect your bar’s name, theme, and overall concept. Think about the experience you’re attempting to create. What do you want your customers to think and feel when they enter your bar?
Some of the aspects of your bar you will focus on include:
- Color scheme
- Sitting areas
- Bar area
- Kitchen area
Consider the five senses in your design. What will your customer see? What are they going to hear? Focus on the minor details of your bar, down to the materials you use in the upholstery.
Even the smallest things can make or break the bar atmosphere, which is why at Atmosphere, we produce custom content for your bar to help you advertise, entertain, and engage patrons.
Plan Your Menu
Once your designer has got to work, you need to focus on planning your menu. Which food and drinks will you be serving to your patrons?
This step must be done before you start stocking up on equipment to keep your costs down. An exact menu isn’t required at this stage, but you should have a rough idea of food and drink types.
For example, if you’re launching a business bar, you want to focus on sandwiches and full-blown meals for busy professionals looking to unwind.
Again, the menu must match the bar’s concept and theme. You wouldn’t serve pasta in an old-fashioned American jazz bar, would you?
Invest in the Right Equipment
The design and menu of your establishment will determine which equipment you purchase. Firstly, a state-of-the-art Point of Sale (POS) system is essential for tracking orders and receipts. It forms the hub of everything from adding transactions to making table reservations.
As you choose different types of equipment, think about how that purchase will influence the overall profitability of your bar. Balance out what your clients want to see and what makes financial sense for your new venture.
Ask the following questions before buying anything:
- Does it improve the service of the bar?
- Will it meet my expectations for quality, volume, and speed?
- Do I have the space?
- Does it match up with my concept?
- Can it stand up to considerable amounts of wear and tear?
- What are the installation/maintenance costs of this equipment?
- Is it easy to clean?
You’ll also need to consider the glasses of your bar. Many entrepreneurs skip this step because they believe a glass is a glass, but this couldn’t be further from the truth.
The size of your venue and your expected number of customers will decide how many you need. Expect to stock up to 18 types of glasses, with up to 48 of each type for an establishment serving 50-75 customers every two-hour block.
Expect to need more glasses than you think.
Step Seven – Stock Up
You’re getting closer to opening your bar for the first time. One of the last items on your checklist is to fill your bar. This is the time to finalize your selection of food and drinks before searching for suppliers you can trust.
Opening a beer or wine bar is pretty simple in this respect. You just need to decide on which producers you want to feature. Liquor bars will need comprehensive inventory management to keep track of everything.
Your choice of supplier is critical because they can provide you with valuable information on current market trends, provide a wide range of brands, and offer favorable payment terms. Forging long-term relationships with your suppliers is critical.
Step Eight – Hire Your Team
Your in-house staff is integral to running your bar because they’ll make your place come alive - so you’ll want to hire with care. Depending on the size of the bar and what it offers, the number of people you’ll need to hire will vary.
Set salaries, find candidates, and carry out interviews. There are several avenues for finding qualified candidates, including:
- General job posts
- College job boards
- Bartending schools
- Headhunting from competing bars
Remember that hospitality has an enormously high turnover rate, so ensure you have a constant pipeline of qualified candidates to fill the gaps in your staff. The average hospitality turnover rate currently ranges between 25% and 30%.
Step Nine – Promote Your Bar
As you work up to your grand opening, you’ll need to create a website, register an account on social media, and begin generating a buzz.
Be sure to also register your bar with Google My Business. Not only is it free, but it’s an essential tool to allow your bar to appear on Google Maps, making it much easier for potential customers to find your bar.
The greatest challenge at this stage is letting people know you exist. Make a big deal with your opening night with discounted drinks and food. You may even want to consider inviting some local influencers over for the evening.
Some other strategies for promoting your bar could include:
- Handing out fliers
- Taking out a newspaper ad
- Posting on local community groups
- Collaborate with nearby businesses
- Provide special deals through group buying platforms
Don’t expect miracles overnight. It will take time for you to generate a following. Expect to invest a considerable amount of your cash flow into marketing during those first couple of years.
Create the Ultimate Bar Experience with Atmosphere
Figuring out how to start a bar and coming up with the best commercial bar design ideas to begin your business is no easy feat. Expect to spend the better part of a year from coming up with a vision to opening your doors.
The best bar in the world won’t overcome a poor atmosphere. Atmosphere’s digital signage and free streaming TV made for businesses are designed to attract the customer’s attention, set the tone, and maximize your profits.
We’ll help you fill the void in a quiet bar with custom content updated weekly. To learn more about how it all works, contact us now.