How Much Does It Cost to Run a Bar?

From neighborhood hangouts and wine bars to craft beer establishments, the bar industry has become one of the more popular and fastest-growing segments. It’s also an extremely competitive space as more bars are popping up every day. If you’re considering opening and running your own bar, considerations such as costs involved must be examined closely before entering bar management. One of the primary reasons businesses fail is cash flow management, and the bar industry is no exception. This is why it’s crucial to understand actual bar costs when opening a new venture.

No matter if you’re a craft beer bar selling IPAs or a new restaurant offering upscale wine, you’ll need to carve out your spot in this crowded industry. With over 60,000 bars and nightclubs open in the U.S., there is plenty of room for you to find success. However, to do this, you must ensure that you consider the total costs of running your establishment and create an extensive plan and budget. From supplies and inventory to marketing, there are several factors this will impact your operating cost. Let’s take a look at the costs of running a bar.

Marketing and Advertising

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When you first open your bar, there will be numerous costs associated with permits, renovations, equipment, and other things before you even open the doors. However, once your bar is open, your budget will focus on keeping the place running and getting customers in the doors. The most successful bars and clubs dedicate a portion of their operating budget to marketing and advertising. A good marketing strategy will help you reach existing patrons and attract new customers through the doors. Utilizing digital tools such as social media and other options can be an affordable way to market your business.

Restaurant social media marketing meets customers where they are. You can advertise that new beer with a fruity character or that delicious food that has just been added to your menu. Social media has quickly become a marketing tool used by most establishments to build customer loyalty and create a sense of community among your patrons. With a Facebook or Instagram post, you can use creative hashtags to push new promotions, offer free dinner, and get patrons excited about your brand and bar. Finding the right mix of marketing strategies and promotions could account for as much as 10 percent of your overall budget. The actual figure will depend on the tools that end up being most successful for you.

Type of Bar

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The type of bar that you choose to open will weigh heavily on your total operating costs. A small pub, sports bar, brewpub, or nightclub will all require different expenses and amounts. If you’re opening a specialty beer place selling craft American IPA, you’re going to pay more for your inventory. Specialty beer styles such as craft IPAs known for big flavors will cost more than regular American domestic beers.

Additionally, if you’re opening a sports bar, you’ll probably need to factor in some food. Wine bars and nightclubs offering a range of items will require more capital. The average bar will spend about 45 percent on beer, 40 percent on liquor, 5 percent on wine, and 10 percent on mixers when considering alcohol inventory. For an average-sized establishment, it’s estimated that you’ll spend about $13,000 per month to supply your bar adequately.

Aside from advertising and stocking the bar, other costs you should consider are your rent, staff, utilities, taxes, and fees for services such as accounting. An average-sized bar can expect a monthly operating budget of around $20,000 or more. Owning and operating your own bar will require significant planning and budgeting. With the proper advertising and management strategies, however, you can find success in the bar industry.

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