Looking to enter the hospitality industry? Read on to find out more about the costs and considerations when opening a bar business.
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Starting a business and opening a bar in an economic downturn might seem like a cocktail recipe for disaster – but don’t lose hope just yet. There will always be people looking for a refreshing drink and a good time, even during a recession. The challenge for new bar owners now is how to meet consumer demand for affordable, experience-led hospitality.
However, plenty of success stories have still emerged despite the difficulties of the past few years – particularly when it comes to themed or activity bars. While the closure of many high street bars might mean fierce competition, it also leaves a wider space for you to make your mark. One of the key topics we’ll explore below is branding and marketing, and how to grow a loyal audience of bar-goers when consumers tighten the purse strings.
At Startups.co.uk, we’re experts on today’s hospitality market. We know it’s more important than ever for new businesses to get clear, to-the-point advice when setting up a new establishment. Read on to find out everything you need to know before you get started. We’ll take you through the key areas to consider such as finance, marketing and regulation, so you can build your dream bar with confidence.
These are the 5 steps you need to know to start a bar:
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Get Started“What we do puts smiles on people’s faces. I’d always worked in Property Management which is kind of a thankless task as there is never really any joy from the customer and the hospitality industry is very different.
Yes it can be very tough and god knows it has been very much so over this Covid Period but that also brings opportunity. I do think there are options out there for people who want to create something that is fresh, ethical and in tune with the customer, landlords will be amenable to good offers and offer good deals.”
Do your market research
Before launching a fully-fledged bar business, you need to know what you are getting yourself in for. The best way to start is to get experience working in or managing a bar so you can understand how the day to day business is conducted.
Once you’ve experienced the ins and outs of running a bar you can start to conduct market research and identify where your bar might fit in the market.
You may already have an idea about the kind of bar you want to open, but market research will help you understand whether your idea will be profitable and what people will actually want to drink there.
What should you look for when conducting market research?
Market research should be the point where you ask yourself questions that will allow you to identify your target market.
Include everything from the age of your target market to their occupation. Will your bar cater to people with higher salaries such as city professionals or will you aim to serve those on a budget like students?
The answers to these questions will be a helpful starting point for you to identify possible locations for your bar and see what your competitors are doing.
What are your competitors doing?
Sussing out competitors is very important. If certain bars are aimed at the same demographic you should make a list of what you think their strengths and weaknesses are.
How are they spreading the word; via social media or word of mouth? Do they hold any promotions or events that are particularly popular? Go for a drink and assess what their price points are and what kind of vibe they have created with the décor. You can find out more about conducting market research from our detailed guide.
Offering his advice James Mark, JimandTonic founder, said:
Standing out in a crowded field and getting your message across is one of the biggest challenges. We’ve pivoted quite a few times which has helped us in some cases stay afloat but in most cases grow. You have to be very determined and hustle away, there is a lot of rejection so you can’t let it get you down.
Footfall is still not quite what it was pre-March 2020. Total UK football fell by 13.7% in October 2021, compared with October 2019, according to BRC-Sensormatic IQ data.
However, this is a 3.2 percentage points improvement on September and above the 3 month average decline of 16%, suggesting that customers are returning to the UK high street.
Indeed, there have been encouraging signs of growth for the hospitality sector – largely thanks to the lifting of restrictions this summer.
What COVID-19 rules do hospitality firms need to follow?
In August 2021, all COVID-19 safety rules and regulations were fully lifted, which means that you don’t legally need to require any specific safety measures from customers or staff members.
However, cultural changes have still taken place, including a new understanding about the spread of germs that public places can influence.
There are still some basic safety requirements that help to make punters feel safe, such as:
- Spaced out seating for social distancing
- Hand sanitiser stations
- Increased cleaning and disinfecting rota
- Optional mask wearing
You should consider keeping these rules in place to help returning customers feel more at ease when sitting in your premises.
Come up with a bar concept
Once you’ve identified your demographic, location, and possible price point you can come up with your bar concept. Your concept needs to be original in order to differentiate your bar from your competitors.
There are many interesting concepts that have come into play in the last few years such as craft beer and roof top bars.
You could be even more creative with your bar and base it on something special about its location or be as strange as a clinical or monkey themed bar.
The possibilities are endless at this point – you just need to find a USP for your offering and make sure your target market will actually want to drink there.
Write your business plan
Now to get your ideas and projections down on paper.
Once you’ve got an idea about where you want your business to go you can start writing your business plan (take a look at our business plan template).
This should bring together all of your ideas in a succinct way. As your theme is important and central to your bar you should describe this as well as the atmosphere and structure of the business.
It’s also important to make sure your business will work financially, your business plan should include set up costs, any needed investment – and your revenue projections, which leads us nicely onto our next step.
Another great way to organise your business plan is to use a project management software. These sophisticated tools are aimed at delegation and multi-project management, and can help you stay on top of deadlines as you design your dream bar business.
Check out our free online comparison tool to learn more about the providers available and their top deals and discounts.
Consider the costs
To open a bar, your starting budget should be no less than £20,000 with the expectation that this number will increase as you establish your business.
Aside from stock, you should factor in the costs of rent which could be from £3,250 to £6,500 depending on where your bar is based.
Do you plan on serving alcohol?
By law, you must obtain a licence to serve alcohol. You’ll be charged a fee based on the rateable value of the property.
Application fees range from £100 to £1,905, depending on the fee band of your venue.
If you’re thinking of selling alcohol online, it’s worth checking out our page on what licenses you’ll need for selling alcohol online.
Your licence will also take certain things like if you play music in your bar into consideration.
When applying for your licence, the following will have an impact on the type of licence you need:
Your bar will probably be selling alcohol, but will you be serving hot food and drinks between 11pm and 5am? If so, make sure you get the right licence.
Do you plan on providing the following types of entertainment?
- Theatrical performance
- Showing a film
- Indoor sporting event
- Boxing or wrestling (indoor or outdoor)
- Live music
- Recorded music
If so, your licence will need to reflect that intent, otherwise your insurance might not be valid.
Another key legal cost will be business insurance; it is recommended that you get the highest coverage for your business to make sure you’re covered for any alcohol fuelled conflicts between customers or against your staff.
You’ll also need to consider some type of point-of-sale system to enable customers to pay and to allow you to accurately report on your sales and stock levels (you can take a look here for our guide to the best small business POS systems – we also have a specific guide to pub and bar epos systems).
Spread the word
While taking the time to set up your bar properly is crucial, the best way to ensure that your bar is a success is to make sure positive word spreads quickly.
Word of mouth is a great way to get news about your business out, but social media is also a powerful – and free – way to get people interested. For example, if you’ve got any quirky cocktails or décor certain demographics may be inclined to share images with their friends.
Social media
‘Instagramability’ is big, especially in hospitality.
For some Instagramable-inspo to help you find your niche, check out these bars that found fame and fortune through quirky interiors and camera-friendly cocktails:
- Disrepute Known for it’s 60’ glamour chic look and nothing less than stunning cocktails.
- Sketch Dealing with the weird, the wacky and the wonderful, Sketch has nailed quirky aesthetics as its USP.
- Bourne & Hollingsworth Bar Florals, botanics and ‘pretty in pink’ pastels swirl together to create Bourne & Hollingsworth’s visit-worthy Instagram that’ll get any millennial itching to go.
So, social media is well worth investing in because if it looks good on the ‘gram, people will flock, smartphones primed at the ready to snap your bar’s good side, whilst sipping your best-looking beverage.
What’s more, the best way to ensure that your business gets the best feedback is to provide excellent customer service. Hiring the right staff and providing adequate training will be essential to ensure you can consistently deliver.
For more detailed information, read our comprehensive guides on how to start a wine bar or how to open a pub.
Another great way to attract and retain customers is to have a company website, so you can build a larger audience base from across the UK.
Read our guide to the top 7 website builders for small businesses, to learn more about the benefits and methods to making your own online page.
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