Are you considering opening your own bar business? The hospitality industry offers exciting opportunities for entrepreneurs looking to tap into the ever-growing bar scene. With the right business plan and execution, owning a bar can be a fun, engaging, and profitable venture. This comprehensive guide will walk you through everything you need to know to start a successful bar business.
What is a Bar Business?
A bar business involves the retail sale of alcoholic beverages for on-premises consumption. Unlike restaurants, bars focus primarily on serving drinks in a social setting, with food as a secondary offering. Bars can take on many concepts—from local neighborhood pubs to upscale cocktail lounges and wine bars. They provide a space for patrons to relax, enjoy libations, and interact.
The Importance of Bars in Hospitality
Bars play a major role within the broader food and hospitality ecosystem. They offer a third space outside of work and home where people can unwind and connect with others. The bar business is also a high-growth sector, fueled by rising consumer spending on recreational and experiential purchases. As per-capita alcohol consumption increases globally, bars stand to benefit.
Overview of the Bar Business Landscape
The bar industry is highly fragmented, with 90% of establishments classified as small businesses. Independent operations make up a majority, though chain and franchise bars are growing. Due to low barriers to entry, competition is fierce. Business viability depends hugely on location, concept, customer experience, and operational efficiency.
Types of Bar Businesses
There are several distinct models within the bar business sector, each catering to certain customer segments. Some of the most popular include:
Sports Bars
Concept and Target Market
Sports bars offer a casual social setting for patrons to gather around sporting events. They attract sports fans and groups of friends seeking an energetic atmosphere. Sports bars feature TV screens everywhere broadcasting games and sports talk shows.
Revenue Streams
- Primary: Alcohol sales
- Secondary: Food, merchandise, sponsors
Sports bars aim for high customer volumes to drive beverage consumption. Food and merchandise boost incremental sales. Brand sponsorships and team/league deals can also contribute revenue.
Marketing Tactics
- Game day promotions like food and drink specials
- Loyalty programs
- Sports celebrity guest appearances
- Partnerships with teams/leagues
- Local sponsorship of youth sports leagues
Wine Bars
Unique Selling Points
Wine bars focus on wine service in a warm, sophisticated setting. Offerings include:
- Extensive wine list spanning varietals and regions
- Wine tastings, pairing menus, classes
- Knowledgeable staff to guide customers
- Relaxed, intimate atmosphere
Wine Selection and Inventory
Careful wine selection is crucial, based on:
- Variety – Old/new world styles, popular/obscure regions
- Quality – Trusted labels at different price points
- Rotation – Regularly updating selections
Managing inventory levels through tracking pour costs, sales velocity, and trends is vital to minimize waste.
Regulations
Wine bars must comply with laws governing alcohol sales and service training. Additional licensing, bonding, and special taxation rules apply for wine retail and distribution.
Cocktail Bars
Market Trends
The cocktail renaissance has fueled demand for bars focused on mixed drinks and artisanal ingredients. Customers increasingly seek adventurous flavors and unique experiences.
Mixology Training
Hiring innovative, highly-skilled bartenders is paramount. Some bars offer mixology classes to train staff and engage customers. Educational programs differentiate brands and build word-of-mouth.
Pricing and Revenue
While cocktails command higher prices, ingredients and labor costs are also higher. Margin management through calibrated recipes and measures is key. Retail sales of branded barware and drink mixes provide added income streams.
Juice Bars
Health-Conscious Consumers
Cold-pressed juices and superfood smoothies have surged in popularity as customers seek nutrition-dense, minimally processed options. Juice bars leverage this demand.
Menu Development
Menus highlight fresh, often organic produce blends. Popular bases include:
- Leafy greens like kale, spinach
- Fruits like apple, orange, mango
- Veggies like celery, cucumber, beetroot
- Herbs like ginger, turmeric
Operational Considerations
Juicing produces high waste volume. Efficient suppliers, inventory management, and waste policies are critical. High sanitation standards for fresh produce also apply.
Barware Businesses
Products and Suppliers
Barware companies offer items like:
- Glassware – Cocktail, beer, and wine glasses
- Tools – Shakers, strainers, openers, cutting boards
- Storage – Fridges, racks, speed rails
Strong vendor relationships ensure quality and affordable pricing on customizable wholesale barware.
Sales Models
Online retail eases geographic reach but in-person shops allow customers to see and feel products. A combined omni-channel strategy is optimal.
Marketing
Content marketing through tutorials and ebooks raises brand visibility with bar owners. Affiliate programs also pay dividends.
Business Planning
Success rests on meticulous planning and preparation. Critical steps include:
Market Research
Analyze demographics, psychographics, competition, and industry and consumption trends. Assess if a market can sustain another bar.
Location Scouting
Ideal locations have ample foot traffic, parking, and proximity to public transit. Easy access for deliveries is also key. Consider visibility, square footage, zoning, and accessibility.
Lease Negotiation
Try negotiating percentage rent terms to reduce overhead risk. Get language allowing for build-out amortization and exclusivity rights.
Licensing and Permits
Research all required local, state, and federal licensing around alcohol sales, food service, music, occupancy, and more. Factor timeline and costs.
Financial Projections
Conservative cash flow projections will account for fluctuating sales, inventory needs, operating expenses, contingencies, and slim profit margins.
Marketing Your Bar
Marketing is indispensable for pulling in customers in a crowded market. Useful strategies include:
Social Media
Engage customers through:
- Facebook specials and events
- Instagram posts showcasing drinks and ambience
- Twitter for quick updates and responses
User-generated content and hashtags expand reach.
Events
Host themed events like trivia nights, craft classes, tasting menus, and live entertainment to drive traffic and social buzz.
Loyalty Programs
Thank regulars with:
- Points-based rewards
- Free merchandise
- Special member events
- Complimentary drinks
Operations
Running an efficient bar operation maximizes customer satisfaction and profitability.
Inventory Management
Use historical sales data to optimize reorders and reduce waste. First in, first out (FIFO) rotation minimizes spoilage.
Staff Training
Invest in quality hiring, extensive new hire training, ongoing coaching, and a positive work culture. Emphasize providing excellent, knowledgeable service.
Technology
Specialized software can seamlessly handle tasks like inventory, orders, CRM, and reporting. Hardware like smart POS improves order speed and accuracy.
Growth Opportunities
Once established, bars can expand their offerings through:
Franchising
For proven concepts, franchising enables geographic expansion using others’ investment. But quality control is challenging.
Diversification
Bars can broaden into full-service dining, entertainment venues, retail, classes, and more. This provides additional revenue streams while leveraging existing competencies.
Local Partnerships
Tapping into “drink local” sentiment through collaborations with nearby breweries, distilleries, and farms builds community engagement.
Challenges to Overcome
While rewarding, bar ownership also comes with difficulties, like:
Regulation
Changes to federal, state, or local laws around issues like licenses, smoking, noise, or operating hours can quickly impact businesses. Stay adaptable.
Competition
The ease of entering the industry makes competing for customers and talent intense. Unique value propositions and solid unit economics help overcome this.
Staffing
High turnover is common in the service sector. Work culture, training investment, and compensation/benefits should be geared toward retention.
Conclusion
The bar sector provides real small business opportunities, but also carries risks. With proper planning around concept, location, operations, marketing, and staffing, entrepreneurs can build appealing, distinctive, and ultimately profitable bars. Patience, passion, and business acumen go a long way in this industry. The potential to create a community fixture and positively impact patrons makes bar ownership very rewarding.
Final Thoughts on Opening a Bar
Some key takeaways:
- Conduct in-depth planning and research before jumping in
- Choose a niche bar concept that fills a need in your area
- Emphasize excellent customer service and hospitality
- Utilize multiple marketing channels to build awareness
- Focus on efficiency and managing costs
- Assemble the right team and invest in training
- Stay proactive with compliance and adaptable to a changing market
Even with challenges and competition, the bar industry can offer a profitable and fulfilling small business ownership opportunity. There is no denying America’s enduring passion for gathering together and enjoying alcoholic beverages. For entrepreneurs able to tap into this demand with the right combination of concept, ambiance, operations, marketing and service, the potential for success is real.