How to start a wine bar
Drink to success with this start-up opportunity that capitalises on the growing trend of wine drinking in Britain
The most important steps to think about to starting a wine bar business are:
More and more people are drinking wine in Britain. According to Vinexpo, the world's largest wine trade fair, wine consumption has risen by 60% in the last ten years, which is quite something from a nation that is perhaps more associated with having less culinary qualities and flavours than its European counterparts.
In fact we each drink around 20 litres of wine per year as well as having some of the most adventurous tastes in the world with wines from approximately 43 different countries available on the retail market.
Wine bar ideas
Perhaps you could start exporting and/or importing wine and join the long queue of competition that has lifted Britain to being the second largest importer of wine after Germany? Or you might start your own off-licence, but how about going straight for the drinkers' throat and owning a wine bar?
This is an area that also has stiff competition, particularly from larger corporates but also a market where wine is the core product. So what's stopping you popping a few corks and taking advantage of this trend? After all, even though there is a supposed global downturn, sales don't appear to be letting up and people always appreciate a good tipple…
“The definition of a wine bar is quite blurred”, says Michael Davis of Virtualpubs.com, who help people buy and sell licensed properties in the UK and Spain. Davis also owned and ran a number of wine bars in the UK over a ten-year period. He adds: “You could say they're modern or even glorified pubs but there is a fine line between the two. A wine bar is a more up market operation, often with wooden floors, subtle lighting and more classical or jazz related music instead of the piped lift music that some pubs have.”
Wine bars also vary from pubs in others ways. There is generally a larger selection of wines but beer is now also sold in many outlets. The clientele is often younger, 21 to 35 years old.
There is also a more trendy and fashionable element to some wine bars with many people frequenting them to be seen in the right place and with the right people, so you will have to decide what image you wish to portray.
Who is it suited to
With no strict qualifications needed to enter the wine trade Davis explains that running a wine bar isn't rocket science. “Running any business is about the individual and whether they want it enough. Running a wine bar is similar to many businesses that are in the public domain, being an excellent communicator is key.”
Communication is a skill you simply cannot learn. So before jumping the gun, this is where your first taste of working with the public and serving them wine, beers and spirits should begin says Davis. “Gaining the right experience before spending large sums of money is crucial. If you don't have the academic skills that relate to purchasing, administration and book keeping it doesn't mater – these areas can be farmed out to other people such as solicitors, lawyers and accountants.”
If you don't have the experience, now's the time to go and get some. A period of time spent working in a wine bar will help to focus your own plans for the business, as well as giving you an idea of what music people like to listen to, what wines and drinks they prefer and, most importantly, igve you an insight into the type of clientele you will be dealing with. Davis points out that knowing your market is vital. “You will need a knowledge of what's happening on the street and what people in that area want as well as learning how the younger set like to relax in a wine bar.”
However, many wine bars now operate a catering element whereby high-quality food operation whereby high quality food is added to high quality drinks. To utilise this additional source of revenue you will need to either have some catering experience yourself or hire outside help, which, with a high turnover in catering positions, may be a costly alternative – so think hard about catering.
Your starting point in a business should always be ‘do I really want to do it?' If you do and are driven by the idea then gaining some kind of experience should always be the starting point.
Stephen Gould, director of recruitment and training at the Punch Pub company, one of the largest independent operators of leased and tenanted pubs in the country, says that buying a premises and starting from scratch maybe putting a lot of risk in too early. He says: “A good way to gain experience is to become a manager of a wine bar in a leased or tenanted operation, you can then also input your own ideas and judge the market before taking the plunge.”
Once that experience is in place you will have to balance the business side of things which means preparing a business plan. This will involve setting out how much money you need to fund your project, where you intend to locate and what you plan to do that is different from the other licensed premises in your area.
This is quite a refined sector so take your ‘big idea' and test it against the following criteria:
- the right location
- an understanding of the marketplace and the demographics of your area
- competitor analysis, who's doing what well and how many licensed properties there are surrounding your business
- how that level of service can be improved on
- the local economy, employment and whether people around you have enough disposable cash to spend in your wine bar
Once you have decided on the location, the size of the premises is important. Do you want to serve a hundred people or a thousand? Who will be your main customers and how will you make them interact? “If you only have two people in your bar who are at separate ends of the room, for example, you need to find a link between them both in order to get them talking and bring more people into the bar. This is the secret to business – to make your customers interact and feel part of the whole atmosphere,” comments Davis.
But to gain this atmosphere you will need to sell the right products. How large a selection of wines and other alcoholic and non-alcoholic drinks do you wish to sell? If your knowledge of wine is limited, then stick to what you know best but if you are more of a connoisseur and decide the market is craving for more vintage wines, let your imagination run riot and use your strengths as much as you can. However control your stock levels and how many wines are opened at the same time.
Davis explains: “Originally wine bars used to have enormous selections of wine with up to 50 varieties but it is only the larger brands such as All Bar One that can deal with this, plus the shelf life of wine is limited to around a day and a half. This has reduced in smaller outlets, so make sure your selection is suited to your customers.”
Before you start out it is also essential that you get the right supplier(s) and the best procurement deal for equipment, food and drink as you won't have enough time when things get going. This is particularly important if you are planning to serve food on the premises. Fresh food will be more costly so scan the area for the best deal and above all, don't take the first offer that's put on the table.
As well as the above criteria, you'll need to get the look and feel of your wine bar right first time. Will you choose to have wooden floors, low lighting, soft music and plain coloured walls or go for a more vibrant feel?
Gould comments: “The best people I've seen run licensed properties are the ones that have known how they want the wine bar to look like from the outset. They have noticed this is not just a retail proposition but that it is the whole package that counts. It is the quality of the bar, the toilets, pricing, standard of service, the fit-out which includes the décor and the lighting, a high standard of catering and friendly staff as well as a warm atmosphere that makes a sustainable business. If you fall down on good service then it will dilute the whole operation.”
Rules & regulations involved in running a wine bar
To sell alcohol for consumption on your premises you must have a licence, which is awarded by the local magistrates. You must be over 18 years old, have no criminal record, prove that you are a ‘fit and proper' person, and understand your legal and social responsibilities.
Most licensing benches advise candidates to hold a BII (British Institute of Innkeeping) National Licensee's certificate. Although this is not a guarantee of success, it will prepare you for the application. If you plan to develop the catering side, you will also need to contact the local environmental health department to ensure that you meet their standards.
If you are entering a tenancy or lease the landlord will often run an induction course for people. As well as covering the licence application, this will also introduce you to all the skills you need to run a business successfully, including legal skills; financial management; marketing; beer and cellar skills and food hygiene. There are also training courses for experienced licensees.
Although you will be a wine bar owner you are also an innkeeper, and it is perhaps worth considering becoming a member of the BII. This is the professional body of the licensed trade with 15,000 members benefiting from business advice, free helplines, credit card savings and subsidised training courses.
The cost of starting up a wine bar
Some wine bars are bought outright (this is known as free trade), some are managed or franchised under a brand name while others are leased from private companies and brewers. Many are also run by private bar owners and simply rented by a private landlord. So, the capital you put in could range from £20,000 to £200,000 plus. However, in order to ascertain how much you need we have broken down the average start up costs that you can expect to pay:
- Purchase of the lease: £5,000 to £80,000. If you are purchasing an existing business you will have to pay for the existing term of lease remaining. This figure is very much dependent on the value of the business and your negotiation. If you are buying the premises out right then expect this figure to double in larger cities or London
- Fixtures and Fittings (F&F): £3,000 to £30,000. Many suppliers will supply containers or branded display items such as coolers and dispensers free of charge with certain goods and stock. The purchase of F&F may have tax implications. Speak to your accountant for more information.
- Valuer's fees: £800 to £1000
- Agent's fees: Approx £500
- In-going stock: £2500 to £7000
- Dry Stock (food): £500 to £2000
- Till rolls and cleaning materials: £100 to £200
- Cost of stock take: £100 to £200
- Glassware: £500 to £1,200 (you may also need to consider costs of commercial glass disposal!)
- Rent leases (if you rent): £500 to £6,000. You will be asked for a month's rent in advance for new leases or an apportionment of the current month for assignments
- Till floats and change drawer: £800 to £1,200 – three tills at £250 plus £300 change
- Insurance premiums (F&F, stock, public & employer's liability): £250 to £450 – average cost of annual premium
- Buildings insurance: £250 to £1,000 – Average cost of annual premium
- Surveyor's fee: £300 to £800 – Cost of full structural survey
- Solicitor's fees/licensing: £750 to £2,000 – should cover all legal fees
- General working capital: £3,000 to £10,000 – this will cover unforeseen costs such as rentals on equipment
- Training: £750 to £1,250
TOTAL: Prices will vary so we have given an estimate figure of between £20,000 and £150,000 but this will rise considerably if you buy the property outright.
How much can a wine bar owner earn?
Making a profit in business is naturally your primary target but if you're starting from scratch getting a return on your investment may take longer than you think, particularly if your outlay runs into hundreds of thousands of pounds. Davis suggests that you can make up to 60% gross profit from running your own wine bar but that after costs and wages, for example, are taken out then the turnover figure is more likely resemble between 8% to 10%.
So, before dimming the lights, putting on a selection of easy listening tracks and serving Pina Colada's with paper umbrellas to Del Boy lookalikes, make sure you get your business plan down to a tee and give a venture such as this one a huge amount of thought – only then will you be able to toast to your own success.