How to Start a Bar: From Concept to Grand Opening

Here are the most important factors to consider when you want to open a bar:

1. Location and zoning — Find a location that aligns with your target customers. This can be near other nightclubs, entertainment venues, or busy commercial areas. Make sure you are compliant with zoning laws as some regulations affect alcohol sales, noise levels, operating hours, and more.
2. Licenses and permits — You will need a liquor license, a permit from the health department if you are serving food, and a permit from the fire department. If you plan to play music in your bar, whether live or recorded, you’ll likely need a music license from organizations like BMI, ASCAP, or SESAC to comply with copyright laws.
3. Theme — Choose a theme for your bar to stand out and attract more people. The theme should be relevant and appealing to the local community or the target demographic you want to attract.
4. Target customers — Get familiar with the local community and find out what they prefer to tailor your offer better. You can then have themed nights like karaoke or happy hours when most get out of work in your neighborhood.
5. Equipment — Consider refrigeration storage, beverage dispensers, bar sinks, and dishwashers. Also consider the sound system, lighting, and even security systems.
6. Staff — Hire trained and experienced bartenders, servers, managers, and cleaning crew.
7. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
8. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
9. Online presence — Take your business online and create a website where you can promote your services. Get listed on Google Business and Yelp, and encourage reviews.

You May Also Wonder:

How profitable is a bar?

Bars can be very profitable, with good margins. The keys are to create a unique concept, make it a fun environment, and provide outstanding customer service.

How should I price drinks in my bar?

Prices for drinks vary. A beer might sell for $6 to $9, wine for $8 – $12 a glass, and fancy cocktails could cost up to $20. Check prices in your area to make sure you’re competitive.

Is owning a bar hard?

Owning and operating a bar can be a costly venture, as it involves covering rent, staff salaries, and unexpected expenses. Additionally, bar owners often work long hours that can extend into the late nights and weekends, including public holidays. Moreover, the bar industry is highly competitive, with a saturated market that presents numerous challenges.

Why do most bars fail?

There are many reasons why bars can fail, but here are some of the most common factors that contribute to bar failure: lack of funds, poor location, over-reliance on alcohol sales, and mismanagement.

How do I attract customers to my bar?

To attract customers to your bar, create an inviting ambiance, offer unique and signature drinks, provide exceptional customer service, host special events and promotions, and utilize online platforms and social media for promotion.

What type of bar is most profitable?

The profitability of a bar depends on factors such as location, target audience, concept, and management. Different types of bars can be profitable based on local market demand and competition.

How can I build a diverse and enticing drink menu for my customers?

To build a diverse and enticing drink menu, cater to different preferences, consider seasonal and local ingredients, balance classic and innovative recipes, provide options for different occasions, and seek customer feedback for continuous improvement.

Step 1: Decide if the Business Is Right for You

Pros and Cons

Starting a bar has pros and cons to consider before deciding if it’s right for you.

Bar Industry Trends

Industry Size and Growth

• Industry size and past growth — The US bars and nightclubs industry was worth $36.3 billion in 2023 after expanding by 2.1% per year since 2018.((https://www.ibisworld.com/industry-statistics/market-size/bars-nightclubs-united-states/)) 
• Growth forecast — The global bars and nightclubs industry is projected to grow 3.40% every year until 2030 to reach $124 billion.((https://www.verifiedmarketresearch.com/product/bars-and-nightclubs-market/))
• Number of businesses — In 2023, there were 67,531 bars and nightclubs operating in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/bars-nightclubs-united-states/)) 
• Number of people employed — In 2022, the US bars and nightclubs industry employed 589,304 people.((https://www.ibisworld.com/industry-statistics/employment/bars-nightclubs-united-states/)) 

Trends and Challenges

Trends

• Cannabis beverages are being served more frequently in bars in states that allow them. Cannabis beverages provide a buzz, but the effects wear off faster than alcohol, allowing people to safely drive home.
• Bars are going digital, offering digital payment options, loyalty and rewards programs, and pre-reserving tables. 

Challenges

• Liability due to overserving is a huge concern in the bar industry, so training employees properly regarding serving levels is of the utmost importance. 
• Many bars have had to raise their prices due to the impact of inflation.

Consumer Spending

• Average consumer spend — The most recent numbers from the Bureau of Labor and Statistics show that the average American consumer spends $583 on alcohol per year.((https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm)) 
• Potential customer base — More than 60% of Americans report that they drink alcohol.((https://news.gallup.com/poll/509501/six-americans-drink-alcohol.aspx))
• Average prices — The median amount that people spend when they go to a bar is $30.((https://www.boozebusiness.com/drinking-in-america-who-what-and-how-much-is-spent)) 

Demand Hotspots

• Most popular states — The most popular states for bar managers are Pennsylvania, New Jersey, and West Virginia.
• Least popular states — The least popular states for bar managers are South Dakota, Nebraska, and Louisiana.((https://www.zippia.com/bar-manager-jobs/best-states/))

What Kind of People Work in Bars?

• Gender — 44% of bar managers are female, while 56% are male.
• Average level of education — The average bar manager has a bachelor’s degree.
• Average age — The average bar manager in the US is 39.1 years old.((https://www.zippia.com/bar-manager-jobs/demographics/))

How Much Does It Cost to Start a Bar Business?

Startup costs for a bar range from $65,000 to $120,000. Costs include the space and its preparation, furnishings, bar equipment, and a liquor license.

If you need to learn bartending skills, you can find a bartending school in your local area or take courses online on a site like Udemy.

You’ll need a handful of items to successfully launch your bar business, including: 

• Bar
• Barstools
• Tables and chairs
• Glassware
• Bar tools

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150–$200	$175
Business licenses and permits	$100–$300	$200
Insurance	$100–$300	$200
Business cards and brochures	$200–$300	$250
Website setup	$1,000–$3,000	$2,000
Space rental	$4,000–$6,000	$5,000
Liquor license	$1,000–$5,000	$3,000
Space preparation	$25,000–$45,000	$35,000
Glassware and furnishings	$5,000–$10,000	$7,500
Inventory	$8,000–$10,000	$9,000
Labor and operating budget	$20,000–$40,000	$30,000
Total	$64,550–$120,100	$92,325

How Much Can You Earn From a Bar Business?

The average bar patron spends $30. Your profit margin after all costs should be about 20%.

In your first year or two, you could get an average of 25 customers a day, bringing in $274,000 in annual revenue. This would mean $55,000 in profit, assuming that 20% margin. As your bar gains popularity, you could have 100 customers a day. With annual revenue of $1,095,000, you’d make a tidy profit of $219,000.

What Barriers to Entry Are There?

There are a few barriers to entry for a bar. Your biggest challenges will be:

• The startup costs of preparing the space for your bar
• Drawing drinkers away from established local bars

Step 2: Hone Your Idea

Now that you know what’s involved in starting a bar, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an Opportunity

Research bars in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a sports bar or a wine bar.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine Your Bar Offerings (Drinks and Food)

Your best bet is to offer a wide variety of alcoholic beverages, including beer, wine, and all types of liquor. You can also make unique signature cocktails that will make your bar stand out.

You could also put a kitchen into your bar and offer food. Studies show that customers stay longer and drink more if they have food.

How Much Should You Charge for Drinks?

Prices for drinks vary. A beer might sell for $6 to $9, wine for $8 to $12 a glass, and fancy cocktails for $10 to $18. Check prices in your area to make sure you’re competitive. Your profit margin after the cost of goods, rent, overhead, and labor should be about 20%. 

Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify Your Target Market

Your target market will depend on the concept you create. If your concept is designed to attract a younger crowd, you should focus your marketing on TikTok and Instagram. If you create a neighborhood bar, your target market may be a bit older, so you might want to turn to Facebook. 

Where? Choose Your Bar Location

Selecting the ideal location for your bar is paramount to its success. Look for a spot in a vibrant and lively area with high foot traffic, such as a popular downtown district or a bustling nightlife area.

Consider the demographics of the surrounding community and target your desired customer base accordingly, whether it’s young professionals, college students, or a specific niche market.

Additionally, assess the level of competition in the area and aim to differentiate your bar by offering a unique concept or atmosphere. By strategically choosing the right location, you can attract a steady stream of patrons and establish your bar as a go-to destination for socializing and entertainment.

You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Bar Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “bar” or “tavern,”, boosts SEO
• Name should allow for expansion, for example, “Speakeasy Bar” over “The Sports Bar” or “The Cigar Bar”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. However, once you start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Bar Business Plan

Here are the key components of a business plan:

• Executive summary — A concise overview of your bar business, summarizing key points, goals, and financial projections
• Business overview — Detailed information about your bar, including its concept, location, and target audience
• Product and services — Specific details about the drinks and services your bar will offer, emphasizing uniqueness and quality
• Market analysis — Examination of the target market, demographics, trends, and potential for growth in the bar industry
• Competitive analysis — Assessment of competitors, highlighting strengths, weaknesses, opportunities, and threats
• Sales and marketing — Strategies for promoting and selling your bar’s products, including advertising, promotions, and customer engagement
• Management team — Introduction of key personnel, their roles, and relevant experience, showcasing a strong and capable leadership team
• Operations plan — Details on the day-to-day functioning of the bar, covering staffing, suppliers, equipment, and procedures
• Financial plan — Comprehensive financial projections, including startup costs, revenue forecasts, and break-even analysis
• Appendix — Supplementary materials, such as additional data, resumes, permits, or any other documents supporting your business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose Where to Register Your Company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to bars. 

If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state. 

Choose Your Business Structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your bar will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole proprietorship — The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General partnership — Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) — Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corporation — Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corporation — This refers to the tax classification of the business but is not a business entity. An S Corp can be either a corporation or an LLC, which just needs to elect this structure for tax status. In an S Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind that, if you’ve chosen to be a sole proprietorship, you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans — This is the most common method but getting approved requires a rock-solid business plan and a strong credit history.
• SBA-guaranteed loans — The Small Business Administration can act as a guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants — A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and family — Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding — Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal — Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a bar business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Bar Business Licenses and Permits

Starting a bar business requires obtaining a number of licenses and permits from local, state, and federal governments.

You’ll need a liquor license for your bar. If you serve food, you’ll also need:

• Food service license
• Food handler’s permit
• Building health permit

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your bar business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability — The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business property — Provides coverage for your equipment and supplies.
• Equipment breakdown insurance — Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation — Provides compensation to employees injured on the job.
• Property — Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto — Protection for your company-owned vehicle.
• Professional liability — Protects against claims from clients who say they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP) — This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential Software and Tools

Being an entrepreneur often means wearing many hats — from marketing to sales to accounting — which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Restaurant365, lightspeed, or toast, to manage your menus, inventory, schedule, and invoices.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, FreshBooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences of filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop Your Website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Viral cocktail challenges — Initiate social media challenges that encourage customers to post their own cocktail-making videos, increasing engagement.
• Mixology masterclasses — Stream live sessions teaching signature cocktail recipes to invite participation and share expertise.
• Bartender battles — Organize and stream competitions among bartenders, allowing online viewers to vote and interact.
• Themed bar nights — Regularly change bar themes to create fresh and exciting experiences for patrons, maintaining interest and anticipation.
• Signature drink contests — Engage customers by letting them create and name new drinks, with the winning selections featured on your menu.
• Brewery and distillery partnerships — Collaborate with local producers for exclusive tasting events and special edition drinks, enhancing product variety.
• Arts and music collaborations — Utilize your space for performances by local artists and musicians, attracting diverse crowds and supporting the arts community.
• “Happy Hour” loyalty cards — Implement loyalty cards that offer special discounts during happy hours to encourage repeat visits.
• VIP experiences — Create a premium membership program that provides exclusive access to private events and priority bookings.
• Neighborhood partnerships — Develop a “bar crawl” experience in collaboration with neighboring bars to promote exploration of the local bar scene.
• Collaborative ads — Partner with local event organizers for co-branded advertising campaigns, expanding reach and pooling marketing resources.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your bar meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your bar business could be: 

• The best local beers at your new neighborhood bar
• Half-price happy hour every day from 4 to 6
• Fine wines and delicious tapas

Networking

You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a bar business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in bars for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in bars. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a bar business include:

• Bartenders — making and serving drinks
• Servers — serving food and drinks to tables
• General manager — scheduling, ordering, accounting
• Marketing lead — SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Bar — Start Making Money!

For many, owning a bar is living the dream — working in a fun environment and socializing all day. Now that bars are back, it’s a great time to get in on a thriving industry. If you’ve got a creative concept and a passion for pleasing people, you could open your own bar and build it into the next Cheers! 

Now that you know what it takes, it’s time to launch your bar and soon toast your own success.