The Sales and many Costs of running a bar
Keep in mind this is just for an average bar. Nothing fancy.
I just want all potential Bar Owners to see where the money comes from and how fast a good portion of it goes right back into the business or to all the bills you pay on a regular basis.
So many people think this is a get rich quick business, when in fact it is not. Don’t get me wrong, you can make a decent living in this business, however Bars have a huge overhead.
Owning a bar is so fun until it comes to paying all the bills and paying for all the things you need to run a bar.
So many of the things you have to buy doesn’t bring you any return, unfortunately. A bunch of the stuff you need has to be purchased often — Such as fruit, toilet paper, paper towels — just to give you an idea. This can be quite costly – and this is where you have to learn to be frugal and find places with the best buys.
Notice the sad part — The first row on this column is Sales — Not much there next to the other 3 columns which is all purchases. But, somehow bars manage to exist. It is not a get rich quick business, that is for sure. But it can be financially rewarding if you do things right and think things out before you do them. Always save money for emergencies, because just like owning a home — you never know what costs may come up in your bar business.
Alcohol – Wine – Beer – Draft Beer (Draught Beer)
Obviously this is where most of your Revenue comes from.
This is why you should always do inventory and control your PC (Pouring Cost).
- Bottled Water
- Hot Chocolate
- Apple Cider
You have to keep an eye out for to many Non-Alcoholic Drinks being given out for free. This can get quite costly. The cost of just one box of soda syrup is outrageous.
I suggest you do NOT sell gum in your bar – it just ends up stuck to the bottoms of your tables or bar or carpet, floor etc.
- Breath Mints
Bar Games & Pool Tables
These are great for earning some extra funds for the bar. Usually the Vendor that puts them in your bar splits with you 50/50 or 60/40. You need to find out. You definitely want to ask around and find out who has the best service, games etc. I feel the split should be 50/50 — After all, they need your business as much as you need their machines in your bar. So 50/50 is fair. Make sure you know they have an honest reputation, so you don’t have to watch over their shoulder when they are counting out the money from all the game machines.
It is great if you own a Jukebox outright, as this is another nice little form of revenue. Sometimes, the bar Games Vendor has Jukeboxes also and Pool Tables – if you don’t already own your own.
The more items you own — rather than rent the better. But — there is always that but … just remember, if you own them and they break you have to pay to fix them.
Love this — This is easy money!!! Let someone else put an ATM in your business and they split the ATM Fee with you. The more the Fee for each transaction the higher your split is with the ATM Vendor. At least that is how it worked at my bar. Every Vendor does things differently, so once again … ask around, find out who offers the best deal.
I didn’t want to own my own ATM machine…who has that kind of money that you have to put in those things … NOT ME !!!
Having a Pay Phone for customers will not earn you a bunch of cash, but it will however keep your business phone free for business and not idle chit chat.
This is usually a HUGE ridiculous expense. Unless you are lucky enough to own your own building. I am sure you would still have a payment for that. If you do, it is most likely less expensive than a Leased Building. All I know is that leasing a property for your business can cost you greatly, to the point of ridiculous !!! If you are purchasing a bar, be sure to find out about the lease agreement and the amount of money the bar that is there presently is making. Make comparisons to be sure that your bar would survive in the area you are looking at.
Alcohol – Wine – Beer – Draft Beer (Draught Beer)
You will be purchasing a whole lot of these — Selling too !!!
There are tons of different taxes — your bookkeeper can help you with all of this.
There are monthly, quarterly and yearly taxes. Oh what fun!!!
It all depends where your bar is located. Some places have outrageous taxes, others have it a bit easier. All I know is it is a big hunk of your money that you get to say good-bye to.
You have to pay your Employees — Usually weekly or twice a month.
Also, there is EDD — Workmans Compensation etc.
Accountants can be pretty pricey, but they are well worth the expense as your Accountant can help you immensely. Help you save a bunch on taxes.
Can run pretty high — in the summer it goes up because of air conditioners and winter because of heaters.
This bill can be costly, but not near as bad as some of the others.
Not to scary of a bill.
You can usually get your phones, internet and cable in one bill. Just be careful as some of these cable companies like to charge you much higher because you are a business. Search around for the best deal.
It is a good idea to have your business set up so customers can use their computers in your business — that is a big hit!
Credit Card Processing Machines
There are many companies to choose from, so learn all you can before you decide on this.
Some companies charge way to much, some are free. Study up if you want a credit card machine — do your homework — it will be worth it in the long run.
Licenses & Permits
- ABC – Department of Alcohol Beverage Control
- Food & Beverage Association
- Entertainment License – (Some States or Cities require an Entertainment License – Be sure to look this License up as I learned that some Entertainment Licenses are meant for Strip Clubs – NOT regular bars. Even though this is so – the city will take your money for this License even though it is not applicable to your business. It took time, but we did prove that we did not have to have this license as we were NOT a strip club. Read the rules on this particular License – as some cities have NO idea what it is for. I know for a fact that many of my bar owner friends were paying for this License even though they legally were not required to have it. Always take the time to learn about the different licenses in order to save yourself a good chunk of funds. Trust me – dealing with the City and the State, taught me that a lot of them have no clue about some of these Licenses or Laws. It really is important to research these Licenses yourself. Just one more word of advice – just because the City or State tells you something, does not necessarily make it so!!! Save yourself a whole lot of money by checking everything out yourself.)
If you have music such as Bands or DJ\’s Karaoke and Jukebox – you get to pay several companies Royalty Fees!!! Lucky YOU!!!
I use to get so upset at these companies — not because of the Royalty thing — Just that every time I turned around — here came another company a different company. The way they charge is a bit weird also. Some bars went to court after refusing to pay them and the Bars lost. Go figure!!! Anyway, each company represents their own songs and bands etc. It is just so ridiculous.
- Liability Insurance (A ridiculous overpriced HUGE expense)
- Workman’s Compensation
- There can be several bank fees
- Overdraft Fees
- Monthly Fees
- Bounced check fees etc. (I quit taking checks completely)
You will find yourself purchasing the below items quite often. Can get pretty costly. Especially the glassware and napkins. Oh – fair warning, I cannot tell you how many times I saw people grab handfuls of napkins to clean something up. UGH !!! So I tried to have lots of towels available for everyone to use in case of spills etc. Believe me when I say — washing the towels cost a lot less than buying napkins!
- Bar Glassware and Pitchers etc.
- Bar Napkins
- Bar Towels
- Coffee Pot
- Worcestershire Sauce
- Hot Sauce — Tabasco
- Celery Salt
- Diet Sugar
- Orange Juice
- Cranberry Juice
- Tomato Juice
- Clamato Juice
- Grapefruit Juice
- Hot Drinks
- Apple Cider
- Hot Chocolate
- Club Soda
- Whipped Cream
- Short Straws
- Long Straws
- Stir Sticks
- Tooth Picks – Parasol Picks – Fancy Picks
- Salt Rimmer
- Salt & Pepper Shakers
- Shakers/Mixing Cups
- Bottle Openers
- Paper Plate – Styrofoam Bowls – Paper Boats
- Plastic forks, spoons and knives etc.
- Sharp Knives
There are loads of other things to buy — but you get the idea — there are a whole mess of things you need to buy to keep a bar running.
- Bank Bags
- Cash Register Tapes
- Coin Trays
- Coin Wrappers
- Computer Ink and Paper
- Dry erase boards
- Dues and Subscriptions
- Files and File Folders
- First Aid Kit
- Microsoft Office Program
- Money Counting Machine
- Packing Tape
- Petty Cash
- Pens, Pencils, Highlighters
- Quickbooks or similar Accounting/Bookkeeping program
- Scotch Tape
- TV for Office
- Window Paint (to fancy up your windows for Holidays or Specials you are having etc.)
Bar Equipment & Misc.
- Bar Sinks
- Beer Coolers
- Cash Registers
- Coffee Pots
- Cooler for Chilling Glassware and Pitchers
- Credit Card Machine
- Dish Scrubbers (By hand type or electric)
- Dishwasher (I wish)
- Draft Beer Towers
- Fire Extinguisher
- Helium Tank
- Hotdog Machine
- POS — Point of Sale software & System
- Pool Tables & Repair
- Recycle — Beer Bottle Redemption–trailer to haul all the bottles
- Security Alarms
- Walk-In Coolers
- Bar Stools
- Bar Tables
- Pool Tables
Hopefully when you purchase your bar — it comes with all of the items listed here and they are all in good to excellent condition.
I am just naming a few of the many cleaning items you will need on hand in your bar.
- Air Freshener — and a lot of it — hahahha
- Chrome Cleaner
- Dish Soap
- Paper Towels
- Toilet Paper
- Toilet Seat Covers
- Urinal Cakes
CAM — Common Area Maintenance
An extra expense the landlord charges for taking care of all things outside your building — just terrific — this is extra costs usually once a year.
Yearly Fire Inspection
Fire Extinguishers — must have an up to code date – This is yet another charge to have them inspected, tagged with current year etc.
Food Handlers Cards
Some states make the Owner or Manager take a class that costs a bit — then all employees must have current food handlers card even if you don’t serve food.
Believe it or not, ice is considered a food in some states.