Anyone who is thinking of opening a bar naturally wants to know how much it takes to setup the business in order to decide on whether it’s a feasible project to pursue.
In general, most bars are started up with a capital investment of somewhere between $125,000 and $500,000. Depending on the size, location and type of place you have in mind, some small bars can be opened with under $100,000 and large nightclubs in popular areas may require more than $1 million to be invested, but on the whole, small to medium sized outlets need about one or two hundred thousand dollars to get going.
Now, even if these seem like lofty numbers, you may not need to invest so much money if you have other partners and co-owners who will contribute their share of the startup capital.
Less Money for a Minority Ownership
If you want to be a bar owner but you don’t have much money, you can always take a small stake in a venture. Technically speaking, if you invested $10,000 to own a 10% share in a Sports Bar that cost $100,000 to set up, you’re already a bar owner. Although your investment is significantly less than someone who owns 100% of a million dollar Nightclub, you’re both still bar owners all the same.
So, depending on whether you’re a sole proprietor, a major investor or a small shareholder, the cost of owning a bar business may range between $10,000 (for a minority partner in a small bar) to half a million or more (if you put up all the money yourself for a sizeable nightclub).
Example Breakdown of Bar Setup Costs
These are most of the major areas where the startup capital will need to be spent to set up a new bar. It includes placing deposits, investing in assets, purchasing inventory and incurring expenses before the bar is open for business, as well as budgeting for a few months of working capital to ensure there’s money in the bank to cover for any unforeseen events.
- Company Setup & Professional Fees ($5,000)
- Rental & Utility Deposits ($15,000)
- 2.5 Months Rental ($10,000)
- Pre-Launch Operational Costs ($10,000)
- Liquor License & Business Permits ($20,000)
- Renovation & Interior Design ($35,000)
- Furniture, Fittings & Equipment ($85,000)
- Bar Inventory & Other Supplies ($17,500)
- Marketing & Advertising ($7,500)
- Working Capital ($35,000)
(Note: You can find out how each of these costs are broken down in What are the Costs of Setting Up a Bar Business)
The cost for your bar is unlikely to have exactly the same capital requirements, as it will depend on the type, concept and size of bar you’re opening. Some costs such as the liquor license will also vary depending on which state or country you’re operating in. In addition, rentals and rental deposit costs could also be significantly higher or lower depending on the location leased.
Hopefully, you have now got a better idea of the main costs involved in setting up a bar. The example discussed should have provided you with a framework to modify and use for the bar you have in mind.
As you can see, it takes quite a fair bit of money to start up a bar, so make sure you find out more about whether it is profitable to own a bar before you invest your hard earned cash.
If you buy used equipment and lease rather than purchase where possible, you can lower the costs of starting a bar quite significantly.
For all first timers, it’s definitely a good idea to start off being a small co-owner before risking a large amount of cash as the main investor.
It may be wise to frame the question as ‘ How much do i have to invest to be a bar owner’ rather than ‘how much does it cost to own a bar’, as the latter seems to suggest that you are paying to be an owner rather than investing.