Estimating the startup costs for your bar
Opening a bar is an opportunity to create a place for social gatherings and share your passion for drinks. Like any business, it requires careful planning and financial budgeting.
There are many reliable strategies available online to help you estimate the startup costs for a bar in your market. You'll be able to create a realistic budget if you consider the following expenses: property, equipment, inventory, staffing, marketing and licences.
Experts have different ideas about the average startup costs for a bar. Startups, the entrepreneur information resource, says you could expect to spend between €25.000 and €57.000 at a minimum.
It can be difficult to estimate exactly how much money you will need to start your own bar. Adding up the items below should give you an idea of how much it will cost to start your ideal bar.
Table of Contents
Bar location costs
Choosing the best location for your bar will increase your chance of success.
Different locations come with different property prices. High-profile areas and popular tourist destinations are the most profitable places to open a business. However, these locations usually come with higher prices.
Property in suburban or emerging neighbourhoods is usually less expensive, but the lower populations mean fewer potential customers.
Many bar owners choose to start by renting a property because of it is more affordable. There’s no real standard for rent pricing, and rates largely depend on their local market. However, in the short term, renting is generally more immediately affordable than purchasing property.
If you can afford a property purchase, it will save you money in the long term. However, commercial property often sells for €37-€43.50 per square metre according to the global commercial real estate professionals at CBRE. This can be costly upfront if you must consider all the other upfront costs as well.
On top of the property cost, there are other expenses involved in owning or renting a property. You should also consider utility costs, renovation expenses, and any other local taxes you may have to pay.
A good starting point is to research local real estate listings to learn the average cost of properties in different locations. When you find a property that interests you, contact the property manager to learn more. Speaking with multiple property owners will help you compare their offers and learn which questions to ask.
Some things are difficult to see from online pictures, so visit properties in person before signing an agreement. Visiting in person gives you a better understanding of the neighbourhood and the property’s true value. You can also ask questions or bring up concerns you find during the property tour.
With all this work to be done, you may find hiring a commercial real estate professional a valuable solution. Real estate agents can make your property search much easier by conducting research, studying purchasing trends and negotiating on your behalf. These agents specialise in such matters and already have knowledge of your local property prices.
Bar equipment costs
There are many different kinds of equipment needed to start a bar. The answer will depend mainly on what you want your bar to offer. You can sell drinks, or you could also offer food, events and merchandise.
At a minimum, you’ll need refrigeration units, ice makers, glassware, cocktail shakers and bar taps to serve drinks. Depending on your cocktail selection, you may also need juicers, coffee percolators and glass freezers to keep drinks cold.
Depending on your food selection, you may need a range of appliances. Deep fryers are a cost-effective option for quickly cooking up fried snacks. For a wider selection, you may need ovens, stoves, microwaves, griddles and toasters.
Some bars have full-functioning restaurants while others don’t serve food at all. There are no rules about what food you should or shouldn't serve. The choice depends on your own personal preference.
Professional kitchen equipment suppliers offer many options suitable for bars. Compare prices, warranties, energy efficiency and customer service ratings. Remember to budget for installation costs and any building modifications you may need to use the equipment. For example, gas ovens and stoves will need connections to gas lines and ventilation for safety.
You can also save money by purchasing used bar equipment. Many professional kitchen equipment suppliers offer discounted appliances that were either on the showroom floor or returned. These pieces of equipment are always thoroughly tested before being offered for sale. You can always upgrade later once you start making revenue.
Try to find equipment that provides both quality and is affordable. Good equipment helps keep operations efficient, but you don’t need the most expensive brands to get started.
Bar inventory costs
Stocking your bar with different drink selections is important for serving all your customers and meeting everyone’s preferences. When stocking inventory for bar guests, think about local tastes and trends. Offer both well-known brands and rarer selections to cater to a wide range of customers.
When estimating your inventory costs, consider both alcoholic and non-alcoholic beverages, including beer, wine, spirits, mixers and soft drinks. Contact local distributors and try to negotiate good pricing terms. Explore opportunities for bulk purchases or supplier discounts.
Don’t forget to include food ingredients when creating your bar inventory estimations. If your bar has a small food menu, you will also need to take these costs into account. Even if you don’t have a food menu, there are still other fresh ingredients you need to keep in stock. To create signature cocktails, fresh juices or even just to make a good cappuccino, you will need fresh produce.
Any savings are a huge help because initial stocks often cost over €15.000 according to Startups. There are always ways to keep these costs lower so shop around for suppliers who can match your pricing needs.
Remember that stock management is an ongoing process. Set aside a portion of your budget for regular resupplies. You may find it helpful to keep a written record of your bar liquor inventory list. This will help you estimate how much you need to buy when restocking any item.
Keeping enough well-trained staff on duty is important for providing excellent service. The hiring process, however, can be costly just to get started. Employers could spend both time and money on recruitment, background checks, onboarding procedures and training.
Once you have your staff employed, there are also monthly costs to think about. Employer payroll costs depend on what local average wages are. Software developer, EPOS, estimates staffing can take up 20-50% of bar revenue, depending on the number of staff and sales.
Plan carefully how many staff members you need, based on your expected business volume. Too few staff cause poor service, but too many can empty your funds.
Employee benefits are another cost of labour. Based on data from JobTerix, the price can be up to €12.000 per employee per year. This depends on local pricing and how many benefits are offered. Benefits will help attract employees who are experienced but can drain finances.
Research average wages and benefits in your area to make sure your offers are competitive. You could also offer a referral benefit so current employees can recommend other potential candidates.
Lastly, make sure you know all your local labour laws and regulations before you start the hiring process. Certain employees need specific licences or certifications so check these carefully.
Licences and permits
Owning a bar comes with unique legal requirements. Bar Licenses and permit costs depend on your local government, so research the specific regulations in your target area. These can be one-time fees or renewed on a regular schedule.
When budgeting your bar licence costs, check the application fees for your common requirements. These include liquor licences, health and safety permits, food handling certifications and sometimes entertainment licences.
How much is a license for a bar? Liquor licences come with very different costs depending on local laws. It is possible that you could spend up to tens of thousands of euros on your liquor licence alone. This will depend on your bar’s size and location.
If you need help researching your local laws and regulations, reach out to local government authorities, legal consultants or professional associations. They can help you understand the exact requirements for your area.
Your licences and permits are not an area where you can save money. These regulations are in place for a reason and not having them could result in your bar being closed down. Keep them updated and save money from your budget for recurring fees.
Marketing attracts customers to your bar and helps build your brand. Set aside a budget to create successful marketing strategies tailored to your target audience.
New businesses, or those in highly competitive areas, should invest more of their revenue on marketing efforts. As your business grows and becomes stable, you can gradually reduce your marketing spending.
The general range of marketing budgets is 6%-20% of revenue, according to Experian. You can calculate these from your expected revenue when just getting started. Your expected revenue should be included in your bar’s business plan.
Digital marketing through social media, developing a website and paid advertisements are popular choices that are also very affordable. Offline marketing is still effective as well. Event sponsorships, local partnerships and printed ads can all attract more attention.
To get an estimate of marketing budget startup costs, you need to think about all the factors involved. These include graphic design, advertising campaigns, photography, content creation and promotions.
It’s worth building a user-friendly website with your contact information and hours of operation. You may also want to establish a solid social media presence and invest in targeted advertising to reach your desired audience.
Social media is something you can do on your own that doesn't require a lot of time of money upfront. As your revenue grows, you can hire specialists. If you want to keep costs down, there are enough online courses that can teach you the basic skills.
Monitor the effectiveness of your marketing efforts and adjust your spending accordingly to optimise your return on investment. Marketing budget calculators found online can help you plan these expenses.
Buying a bar vs starting a bar
One important decision you must make is whether to buy an existing bar or start a new one. Both options have advantages and drawbacks.
Buying a bar business gives you an established customer base, location and trained staff. However, it also comes with a higher upfront cost. You’ll need to pay for the value of the existing business, equipment and potential renovations or rebranding.
Do thorough research before buying an existing bar. You’ll need to know its financial history, reputation and growth potential to make sure the deal is profitable.
Starting a new bar gives you complete control over the concept, design and operations. It allows you to create a unique experience and establish whatever brand you choose.
However, building a customer base, establishing a reputation, and hiring and training staff will require more time and effort. Consider your budget, relevant experience and business knowledge when deciding whether to buy a bar or start your own.
Estimating the start-up costs for your bar is a big step in establishing a successful business. You can make better-informed decisions and plan a profitable venture by considering location, equipment, inventory, staffing, licensing and marketing costs.
Remember, these cost estimates vary greatly depending on the specific region. It’s wise to conduct thorough research and seek advice from local experts before you begin.
With careful planning and a clear vision of the cost of starting a bar, you can create a beloved business. Stay passionate, keep focused and embark on your start-up journey with confidence.
Looking for more information about opening a bar? Here are 10 pros and cons of starting a bar you might not have considered.