How to open a bar

Wondering how to start a bar business? It can be an exciting and profitable venture, but it also takes a lot of careful planning and consideration.

From choosing the right location to crafting a unique brand identity, there are numerous steps involved in successfully launching your bar.

In this comprehensive guide, we’ll walk you through each aspect of what you need to consider to open a bar, providing valuable insights and tips to help you navigate the process.

Whether you dream of owning a cozy neighbourhood dive, a sophisticated wine bar, or something in between, our guide covers everything you need to know to turn your vision into reality.

Here’s what we’ll cover:

Different types of bars

Before you dive into the process of opening a bar, it’s essential to define the type of bar you want to operate.

There are lots of different types of bars, catering to different clientele and offering distinct experiences, so start by considering the venue and vibe you want to create, as well as the audience you want to attract.

Opening a neighbourhood bar?

A neighbourhood bar typically serves a local clientele and focuses on providing a friendly, comfortable atmosphere. It often features a broad selection of beers, simple cocktails, and may have a pool table or dartboard for entertainment.

Opening a wine bar?

Wine bars specialise in serving a wide range of wines, focusing on quality, grape varietals, and regions. These bars often offer food pairings, charcuterie, and cheese to complement the wine experience, and customers are likely to expect staff with a solid knowledge of the products.

Opening a cocktail bar?

Cocktail bars are known for their creative and expertly crafted cocktails. They should have well-trained and skilled bartending staff, a diverse cocktail menu, and typically a stylish ambiance.

Opening a microbrewery or beer bar?

Microbreweries or beer bars serve a variety of craft beers, including their own brews. They may have a rotating selection of craft beers on tap and in bottles, and some offer food menus to complement the brews.

Opening a sports bar?

Sports bars are primarily designed for fans who want to watch live sporting events on large screens. They often serve pub-style food, a wide range of beers, and create a lively atmosphere during game nights.

Create your bar business plan

Once you’ve landed on what type of bar business you want to start, you can set about building your bar business plan.

A well-structured business plan is the foundation of your bar venture; it outlines your business goals, strategies, and financial projections.

A typical business plan for a bar should cover all of the aspects we’ve outlined below.

• Executive summary – the executive summary of your bar business plan provides an overview of your bar concept, its unique selling points, and your long-term vision.
• Business description – explain the type of bar you plan to open, its location, and your target audience. This description should also discuss the mission, vision, and values that underpin your ambition to start a bar.
• Market research – analyse the local market, competition, and customer demographics. Identify trends and opportunities in the industry, highlighting how you see your business standing out or fitting in.
• Organisation and management – describe the structure of your bar business, including ownership and key personnel, plus an outline of the roles and responsibilities of each team member.
• Products and services – include details of your planned menu, drinks, and any additional services your bar will offer. Make sure you highlight any unique offerings or signature drinks.
• Marketing and sales strategy – develop a marketing plan, including strategies for attracting and keeping your customers. This should include details of your pricing and sales strategies.
• Funding – map out what you’ll need to open the bar, both in terms of the initial capital and ongoing or recurring costs and expenses. Include a detailed budget and financial projections.
• Licenses and permits – list the necessary licenses and permits that you’ll need to start a bar that fits your criteria. You should also explain how and when you plan to obtain them.
• Risk assessment – identify potential risks and challenges associated with your proposed bar business. Make sure you also describe your planned strategies to mitigate these risks.
• Financial projections – the financial projections of your bar business plan should provide income statements, cash flow forecasts, and balance sheets. It’s also a good idea to include a break-even analysis and return on investment (ROI) estimates.

Choose the right location for your bar

When starting a new bar business, selecting the right location is a critical decision that can significantly impact how successful your venture is. Consider the following factors when choosing a location:

• Target audience: identify the demographic you want to serve and choose a location where your target customers live, work, or spend time.
• Foot traffic: high foot traffic areas, such as downtown districts, shopping centres, or busy streets can attract more customers—but can also be more expensive.
• Competition: analyse the competition in the area you’re interested in. Is there demand for your type of bar, and can you differentiate yourself?
• Accessibility: make sure your bar is easily accessible by car, public transportation, and by foot. Consider parking options for your customers.
• Zoning and council regulations: check local zoning and council regulations, including Permitted Development Rights (PDR), to make sure you can legally operate a bar at your chosen location or venue and whether you need planning permission to do so.
• Rent and lease terms: evaluate the cost of rent or lease and negotiate favourable terms with the landlord. Factor in the total occupancy cost in your budget.
• Visibility and signage: a visible location with eye-catching signage can attract more customers. Assess the visibility of your bar from the street.

Bar equipment, suppliers, and inventory

With the perfect location sorted and your bar business plan nailed down, it’s time to turn your attention to bar equipment, furniture, food, and drink.

To start a bar and run it successfully, you’ll need a wide range of equipment, suppliers, and a well-managed inventory.

In this section, we’ve listed a number of important points for you to consider when sourcing your bar supplies.

Essential bar equipment

Create a bar equipment list covering all the essentials, including bar stools, tables, glassware, cocktail shakers, blenders, and refrigeration, and get sourcing.

Remember to consider your bar concept and menu, investing in bar equipment that aligns with your overall vision, as well as what you plan to serve and how you want to serve it.

Alcohol and drink suppliers

Spend time finding reliable alcohol distributors and suppliers and establishing good working relationships with them, allowing you to negotiate favourable terms for buying alcohol and ingredients.

You’ll also need to stock non-alcoholic beverages, mixers, and garnishes to cater to all customer preferences, providing options for designated drivers and non-drinkers.

Food suppliers

If you’re planning to start a bar business that offers food, you’ll need to secure suppliers for fresh ingredients and menu items for that too.

Try to make sure you have a consistent supply of quality food products and consider sourcing locally where possible.

Bar inventory management

To make stock management easier, consider getting set up with an effective inventory software system that can automate the tracking of stock levels, reduce waste, and help you minimise theft.

Review your bar inventory regularly to make sure you have enough supplies at all times.

Bar licences, permits, and insurance

It probably goes without saying that compliance with legal requirements and risk management are essential for a successful bar business, but we’re going to say it anyway: make sure you dot the i:s and cross the t:s.

Here are some of the key aspects to bear in mind:

Bar licences and permits

You’ll need a premise licence and a personal license to sell alcohol in your bar. You might also need Change of Use / planning permission. Check with your local authorities to find out what’s required.

Employer PAYE Reference and VAT registration

If you’re hiring any staff members, you’ll need to register as an employer with HM Revenue and Customs (HMRC) to set up a PAYE (Pay As You Earn) scheme for tax and National Insurance.

You also have to register for VAT with HMRC if you’re bar’s taxable turnover is expected to exceed the current VAT registration threshold.

Insurance

You will need public liability insurance as well as employers’ liability insurance if you’re hiring staff. You should also consider buildings or commercial property insurance and contents cover.

Music and entertainment licenses

If you intend to play any copyrighted music (live or recorded) you’ll need a music licence from PPL PRS Ltd.

And if you’re going to be showing live sports or other TV programmes on screens, you’ll need a TV Licence and commercial subscriptions from the relevant broadcasters.

Food hygiene rating / registration

If you plan to serve food or snacks in your bar, you’ll need to register as a food business with your local authority a minimum of 28 days before opening your doors to the public.

You’ll be subject to food hygiene inspections and will be given a food safety rating based on the inspection findings.

It’s widely recommended that any team members handling or preparing food have a Level 2 Food Hygiene Certificate.

Signage permit

You might need a signage permit, depending a bit on your local council’s regulations and the size and location of your outdoor signage.

Bar name, brand and marketing

Creating a strong brand identity and an effective marketing plan are crucial for attracting people and building a loyal customer base when you start a new bar.

It’s about putting your own personal stamp on your business and creating an environment that feels special to your target audience.

Choose a unique and memorable name that reflects your bar’s concept and personality, and create a brand identity, including a logo, colour scheme, and brand story, that stands out.

You might also want to consider trademarking your name and logo within the geographical region you operate. This might involve hiring an intellectual property attorney.

Bar marketing strategy and customer experience

Develop a comprehensive marketing plan for your bar that includes online and offline strategies.

Social media, a user-friendly, mobile responsive website, email marketing, and local advertising can all be effective ways to reach your target audience.

Focus on providing exceptional customer service and an overall good customer experience.

You could also encourage customer loyalty and positive word-of-mouth through promotions, loyalty programs, and events.

Consider bar design ideas

Your bar design plays a significant role in shaping the atmosphere and customer experience.

It should reflect your brand identity and values, while appealing to the customer demographics that you want to attract.

Bear in mind that bar designs can be pricey to change, so aim for a look and feel that can stand the test of time.

When playing around with bar design ideas, consider the following:

• Interior design: create an inviting and comfortable interior space that aligns with your bar’s concept. Select appropriate furniture, lighting, and décor to enhance the ambiance.
• Layout and flow: plan the layout to make sure it facilitates efficient service, easy access to the bar, and a smooth flow of customers. Designate areas for sitting, standing, and socialising.
• Theme and décor: choose a theme or décor style that complements your bar’s concept. Pay attention to details like artwork, music, and lighting to set the mood.
• Outdoor space: if possible, consider an outdoor patio or seating area for patrons who prefer to enjoy their drinks in the open air.

Hire the right bar staff

Creating the right space and vibe will help you build your brand, but perhaps even more important is making sure you have the right people in your team.

After all, what good is a luxurious cocktail lounge if your bartenders can’t make a first class Negroni or Paloma?

Your bar staff plays a crucial role in providing the kind of customer experience your guests expect and maintaining your bar’s reputation.

Make sure you think carefully about the team members you’ll need, as well as your bar staff’s duties and responsibilities.

Here are some tips for finding, hiring, and training the right team:

• Bartenders: hire experienced bartenders with knowledge of cocktails, drink preparation, and customer service. Look for individuals who are personable and can engage with customers.
• Servers: choose attentive and customer-focused servers who can efficiently take orders and deliver drinks. Provide training on your bar’s menu and customer service standards.
• Kitchen staff: if your bar serves food, hire skilled kitchen staff with experience in the type of cuisine you plan to serve. Maintain high food quality and consistency.
• Security and door staff: employ trained security personnel to ensure the safety of your customers. Implement a clear entrance and exit policy with professional door staff.
• Staff training: provide training on responsible alcohol service, safety procedures, and your bar’s specific expectations. Encourage teamwork and open communication among staff members.

As a starting point, try hospitality recruitment websites like Hospitality Jobs UK and Caterer.com.

Top tip: consider investing in smart recruitment software to make the hiring and onboarding processes seamless.

How much does it cost to open a bar?

Understanding how much it will cost to open a bar is essential for your financial planning.

While this can vary widely depending on location, size, concept, and many other factors, as a rough ballpark expect to spend somewhere in the region of £97,500 to £325,000 (as a minimum).

The cost might be lower if you’re looking to take over an existing bar.

Similarly, it could also easily go significantly higher—into the millions even, if you’re opening an upmarket bar in a sought-after big city neighbourhood, for example.

One-off costs to consider

One-off costs to start a bar can include expenses such as:

Venue

The cost to purchase or lease a property will vary dramatically based on your location and arrangement.

As a rough guide, expect to cover a security or mortgage deposit in the range of £20,000-£250,000.

Renovations

Depending on your specific renovation needs and interior specifications, this work could easily set you back around £50,000-£100,000 (or £50-£145 per square foot).

Bar furniture and equipment

For an average-size bar, you can expect to pay in the region of £20,000-£65,000 for furniture and equipment, including installation and kitchen equipment.

Initial inventory

You could be looking at roughly £2,000-£20,000+, including alcohol, non-alcoholic drinks, and food.

Licenses and permits

Expect to spend £10,000-£30,000 for premise licence, personal licence, other permits, and associated legal costs.

Point of Sale (POS) system

You can expect to pay around £20-£200 per handheld card reader, and anywhere from £250 to over £1,000 for a countertop terminal or full till system.

For the full system set-up, you could pay a total of around £3,000 or more, depending on the equipment you need and how complex your inventory management is.

Working capital/contingency funds

It’s a good idea to have at least £10,000-£25,000 set aside for the first 3-6 months of operations, to cover any unforeseen issues and expenses.

Ongoing and recurring costs

Then there’s the ongoing and recurring costs, which can include:

Venue costs

For a city centre bar location, rent averages £6,500 per month, while rent in a more suburban locations could range from around £2,000 to £4,000 monthly.

Staff

Payroll, staff salaries, and training will vary significantly from business to business, but staff wages represent the largest variable cost, often accounting for 25-35% of total revenue.

That could easily amount to £8,000-£15,000 per month, covering management, bar and kitchen staff, and cleaners for an average sized bar.

Insurance

You’ll typically pay around £2,000 to £5,000 annually for comprehensive insurance coverage for a pub, depending on your location, level of coverage, and risk factors.

Tax

If your bar’s taxable turnover exceeds the VAT threshold, you’ll need to register for VAT.

The VAT rate is currently 20% of most sales in a pub or bar, including all alcoholic drinks, hot food, and any food or drink consumed on the premises.

You’ll also have to pay corporation tax at a rate of 19%-25% depending on your turnover, as well as Business Rates (tax for non-domestic properties) and PAYE / National Insurance (if you plan to employ staff).

Utilities

Between your electricity, gas, water, and waste disposal, you can expect to pay anywhere from around £500 to £1,500 monthly, depending on your bar size and energy efficiency.

Food & drink inventory

You could easily spend from £2,000 to £10,000 monthly depending on sales volume and product mix.

POS system

In terms of ongoing costs for integrated payment software, solutions typically range from around £20 to £200+ per month.

To help you get to grips with both one-off and recurring expenses, we’ve created a handy bar startup costs spreadsheet template.

It might also be worth buying a smart, intuitive accounting system to keep your finances and tax records up-to-date and compliant.

Have a look at our Sage Accounting plans to find out more about how they can help your business as you launch and grow.

How to get funding for a bar

Let’s face it; there are lots of costs to cover if you’re looking to start a bar business.

It might seem daunting—and it’s important to be realistic about your budget and what you can achieve before you launch.

That said, there are various bar funding options available in the UK that can help you get up and running. Consider the following:

• Personal savings: let’s start with the obvious. Using your savings is one of the most common ways to fund a bar startup. If you’ve managed to save up some money, investing this in your business can help demonstrate your commitment to the business and minimise the need for external financing.
• Start Up Loans: consider applying for government-backed Start Up Loan of up to £25,000.
• Small business loans: you could apply for a secured or unsecured small business loan from a bank or other business lender. Your chance of being approved and the amount you can borrow will depend on your circumstances and the lender.
• Investors: you could seek investors, such as angel investors. Focus on building relationships with relevant investors and creating a strong business plan and pitch. Start by looking at platforms like the UK Business Angels Association (UKBAA), UK Angel Investment Network, and SyndicateRoom.
• Crowdfunding: consider crowdfunding platforms like GoFundMe, Indiegogo, Kickstarter, or Crowdfunder to raise money for your bar.
• Grants and business finance support: research grants that cater to small businesses and startups. Some offer financial support, mentorship, and resources.
• Franchising and pub partnerships: explore franchising opportunities with established bar chains that offer support and financing options to franchisees. Or you could partner with a pub company, like the Stonegate Group, which can provide a range of pub partnership opportunities, from leased and tenanted, to operator-led and Free of Tie agreements.
• Family and friends: some entrepreneurs turn to family and friends for financial support. If you go down this route, make sure you have a clear agreement and repayment plan in place.

Final words about starting a bar

If you’re in the process of researching how to open a bar in the UK, hopefully this guide has given you some helpful pointers.

There’s no denying that starting a bar business comes with challenges, but it can also be a rewarding endeavour.

The bottom line is that the more carefully you plan and prepare for your new venture, the more likely you are to set yourself up for success.

With a clear business plan and the right funding, you can turn your dream of owning a bar into a thriving reality.

Keep in mind that the bar industry is highly competitive, so continuous innovation, exceptional customer service, and effective marketing will be key to your long-term prosperity.

Looking to start a different type of business?

We’ve created a range of guides about startups and startup costs in a host of sectors and trades.

How to use the bar startup cost worksheet

Our bar startup cost worksheet is simple and intuitive to use. Once downloaded, it’s fully customisable to fit your needs.

The template includes both high and low-end estimates, so you can get a full picture of how much it will take to start your bar.

1. Download the free template.
2. Add or remove fields applicable to your bar venture.
3. Assess your needs and related costs.
4. Make a note of costs that might change or costs to be determined.
5. Plug in your numbers and enjoy the simplified breakdown of your startup and ongoing costs.