The costs of opening a bar can vary wildly depending on location, size, restaurant licenses, expected stock, food offerings, storage space and a number of other variables. Still, there are certain costs that any new bar owner can expect. By outlining at least those costs, as well as average costs and a breakdown of costs by different states, aspiring bar owners can take to their budgeting tools to see if a new bar is really in the cards, or what decisions need to be made to take the next step.
Restaurant Licenses and Permits Are a Major Cost
Assuming the property is already paid for, at the bare minimum, new bar owners will need the following:
- Business license
- Beer and wine license
Of course, most bars require more than just beer and wine to be successful, so also prepare to have:
- Full liquor license
- Food and victualing license
- Entertainment license
In other words, have a significant licensing budget in place before you start pouring celebratory shots. Each of the above is key, especially the liability insurance, considering the nature of the bar business.
Liquor licenses in particular are a major cost of opening a bar that also vary in cost dramatically by state. Here are a few examples of what a liquor license costs, on average, across the country:
- In California, a full liquor license can cost anywhere from $12,000 to $400,000. A license for just beer and wine, on the other hand, can be as low as $3,000 to $5,000, according to the Alcohol Beverage Consulting Service based in California.
- As New York magazine points out, a two-year liquor license in New York costs $4,500.
- This handy Fee Chart for Liquor Permits breaks down every little cost you might incur in Texas, from the $1,000 you can expect to spend on a Brewpub License to the extra $3,000 you’ll have to spend on a Nonresident Brewer’s Permit. There’s also the $150 it would cost you for a Wine Only Package Store permit, and the $260 it would cost for a Wine and Beer Retailer’s Permit for an Excursion Boat.
- According to Bizfluent, in Minnesota, the fees vary by city. In Hutchinson, Minnesota, the annual fee for a wine and beer license is $600; and one for a full bar license costs $2,000, not to mention an extra $125 if you want to sell on Sundays. Breweries in Hutchinson are required to pay $375 for an off-sale license and $600 to operate an on-site taproom.
- Like Texas, Washington, D.C. has also published an extensive list of exact permit costs on their ABC License Fees and Renewal Schedule page. In D.C., an off-premise liquor retailer license costs $2,600, while a restaurant with a capacity of 99 or less has to pay $1,000 to serve beer, wine, and spirits.
Get started on your bar ownership journey with help from our Restaurant Licenses and Permits Guide.
Factor Equipment into Your Bar Cost
If you’re building a bar from scratch, you probably know what you need to buy. But, if you’re buying an existing bar, you might be able to bypass some of the equipment costs, but a new business should have its own gear. Chances are the previous owners didn’t find much success with their format. (Otherwise, why were they selling?)
Realistically, any new bar business should refresh the following:
- Restaurant POS systems
- Ice machines
- Security systems
About that last one: Maybe you think your new bouncer is enough security for any small business, but bars have tremendous cash flow, making them a constant target for nefarious deeds. Plus, security video implemented with a POS system can help you quickly nail down and identify any bad behavior, from either side of the bar.
Making a Name for Yourself Costs Money
In the age of social media and targeted marketing through a POS system, promotion doesn’t have to be expensive, but if you spend money on promotions and merchandise, you could soon have a loyal group of regulars wearing your company logo all over town.
Additionally, paid email and social marketing tactics, targeted to relevant audiences, will only draw more attention to your establishment with a click of the button.
Make the Bar Your Own with Custom Features
Any slab of wood with drinks can technically be called a “bar,” but we all know successful bars and taverns are all about atmosphere. Whether it’s a sports bar with 40 TVs, or a gastropub with amazing snacks and craft beers, whatever space you create needs to reflect your preferences, as well as those that reflect the neighborhood.
The Average Cost to Open a Bar
According to a survey released by Restaurant Owner, the median cost to open a bar or tavern is $425,500, with the lowest being approximately $275,500 and the highest being $650,500. The survey also found was that it takes the average bar or tavern around six months to become profitable, so if you’re looking to open one, you’ll need roughly six months of runway funding to give yourself a fighting chance. In breaking down their findings, Restaurant Owner noted that:
- The average cost to open came out to $124 per square foot, or $2,710 per seat.
- Construction costs average $250,000, with $85,000 of that comprised of kitchen and bar equipment, and $20,000 dedicated to pre-opening and training costs.
- The average space for a new bar or tavern was 4,250 square feet with an average of 28 square feet per seat.
- New bars and taverns garnered an average $1,380,000 in annual sales with a net profit of 5.5 percent and a 2.4:1 sales-to-investment ratio.