Money in a shirt pocket

 

 

 

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 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.

 

 

MONTHLY INCOME

MONTHLY EXPENSES

YEARLY EXPENSES

OTHER EXPENSES

  • Alcohol
  • Lease
  • CAM –Common Area Maintenance
  • Managers Food Handlers Card
  • Beer
  • Electric
  • ABC Yearly License
  • Office Supplies
  • Draft Beer
  • Phone
  • County Licenses
  • Bar Supplies
  • Non-Alcoholic Drinks
  • Cable
  • City Licenses
  • Bar Equipment
  • Wine
  • Water
  • IRS Taxes
  • Bar Furniture
  • Bar Games
  • Sewer
  • State Taxes
  • Cleaning Supplies
  • Jukebox
  • Internet
  • Liability Insurance
  •  Bands & DJ
  • Pay Phones
  • Taxes
  • Pool Tables
  • Payroll
  • Snacks
  • Insurance

 

 

SALES

 

 

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).

 

Non-Alcohol Drinks


 

  • Soda
  • Bottled Water
  • Juice
  • Coffee
  • Tea
  • 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.

 

Snacks

 

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
  • Candy
  • Chips
  • Jerky
  • Peanuts
  • Popcorn

 

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.

 

Jukebox

 

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.

 

ATM

 

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 !!!

 

Pay Phones

 

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.

 


 

PURCHASES

 

MONTHLY BILLS

 

Lease

 

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 !!!

 Keg Deposits

 

Taxes

 

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.

 

Payroll

 

You have to pay your Employees –Usually weekly or twice a month.

 Also, there is EDD — Workmans Compensation etc.

 

Bookkeeper/Accountant

 

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.

 

Electric

 

Can run pretty high — in the summer it goes up because of air conditioners and winter because of heaters.

 

Water

 

This bill can be costly, but not near as bad as some of the others.

 

Sewer

 

Not to scary of a bill.

 

Cable

 

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

  • City
  • County
  • 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.)

Music

 

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 there own songs and bands etc. It is just so ridiculous.

 

  • Ascap
  • BMI
  • Sesac

 

Insurance

 

  • Liability  Insurance (Another ridiculously overpriced HUGE expense)
  • Workman’s Compensation

Bank Expenses

  • There can be several bank fees
    • Overdraft Fees
    • Monthly Fees
    • Bounced check fees etc. (I quit taking checks completely)

 

Bar Supplies

 

  • Bar Glasses
  • Bar Napkins
  • Bar Towels
  • Blenders
  • Coffee Pot
  • Condiments
    • Worcestershire Sauce
    • Hot Sauce — Tabasco
    • Salt
    • Pepper
    • Celery Salt
    • Sugar
    • Diet Sugar
  • Fruit
    • Lemons
    • Limes
    • Oranges
    • Cherries
    • Olives
  • Drinks
    • Juice
      • Orange Juice
      • Cranberry Juice
      • Tomato Juice
      • Clamato Juice
      • Grapefruit Juice
    • Hot Drinks
      • Coffee
      • Tea
      • Apple Cider
      • Hot Chocolate
    • Soda
      • Cola
      • Sprite/7-up
      • Club Soda
      • Tonic
  • Misc.
    • Whipped Cream
    • Milk
    • Creamers
    • Straws
      • 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
  • Flyers
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.

 

Office Supplies

 

  • Advertising
  • Bank Bags
  • Calendars
  • Cash Register Tapes
  • Coin Trays
  • Coin Wrappers
  • Computer
  • Computer Ink and Paper
  • Dry erase boards
  • Dues and Subscriptions
  • Fans
  • Files and File Folders
  • First Aid Kit
  • Microsoft Office Program
  • Money Counting Machine
  • Packing Tape
  • Petty Cash
  • Pens, Pencils, Highlighters
  • Postage
  • Printer
  • Quickbooks or similar Accounting/Bookkeeping program
  • Radio
  • Safes
  • Scotch Tape
  • Tacs
  • Telephone
  • TV for Office
  • Window Paint (to fancy up your windows for Holidays or Specials you are having etc.)

 

Bar Equipment & Misc.

 

  • Bar Sinks
  • Barbecue
  • Beer Coolers
  • Cash Registers
  • CO2
  • Coffee Pots
  • Cooler for Chilling Glassware and Pitchers
  • Credit Card Machine
  • Decorations
  • Dish Scrubbers (By hand type or electric)
  • Dishwasher (I wish)
  • Draft Beer Towers
  • Fire Extinguisher
  • Helium
  • Helium Tank
  • Hotdog Machine
  • Ice-Machine
  • Microwave
  • POS — Point of Sale software & System
  • Pool Tables & Repair
  • Recycle — Beer Bottle Redemption–trailer to haul all the bottles
  • Refrigerator
  • Registers
  • Repairs
  • Safe
  • Security Alarms
  • Walk-In Coolers

Bar Furniture

  • Bar Stools
  • Bar Tables
  • Pool Tables
  • Televisions
Hopefully when you purchase your bar — it comes with all of the items listed here and they are all in good to excellent condition.

 

Cleaning Supplies

 

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
  • Bleach
  • Brooms
  • Chrome Cleaner
  • Dish Soap
  • Mops
  • Paper Towels
  • Sanitizer
  • Toilet Paper
  • Toilet Seat Covers
  • Urinal Cakes
  • Vacuum
  • Windex

YEARLY BILLS

 

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 consider a food in some states.

 

 

 

34 Responses to BAR COST – BAR BILLS – BAR SUPPLIES NEEDED

  • Wes says:

    Just want to see if anyone has any thoughts on this??? I am talking to the small business association in my city trying to get a loan to open my own place. I was always taught do it right and do it right the first time. So i am requesting a pretty big loan. Any one have any major tips to help if i can get the loan? Any major mistakes that people have had to learn the hard way, that could possibly help me? Thank everyone. If i get the loan i will let all of you know the details.

  • jerri says:

    How kind of you to respond so quickly, Admin. My husband and I thought it was pretty cut and dried also, but the woman taking over the food portion insists that sodas are “hers”, even those stocked at the bar. She is so adamant about not giving up the sodas that we thought maybe we were wrong in our assumption that all beverages served at the bar were the bar’s. My husband tried to reason with her that if his bartender serves a soda drinker all night, providing a clean glass and ice, someone taking up a bar seat, that soda income should stay with the bar. It’s approxi- mately $600/year in soda sales. These people are in their early 60′s–not kids just starting out. We are meeting with a lawyer this week to go over the lease. Another thing, the food person refuses to carry insurance because “nobody down here sues” and she thinks she can hide behind the veil of an llc she’s created for herself, whereas we will definitely carry insurance. I’m sure you’re busy so please don’t feel that you have to respond to my wordy comment here, but I wanted to fill you in a little more on the situation. Again, thank you so very much for your help.

    • admin says:

      Hi

      Wow I had to respond again, as I don’t like what the restaurant owner is trying to do. It is none of my business — BUT … I am thinking are you set in stone for that particular business??? I feel you may be in for many problems and headaches with the restaurant owner. Just thinking maybe you should look for a better place to do business. However, if you are already signed to that particular place. You need to stick to your guns and buy your own soda, and sell your own soda. Also, I bought my soda by the box. It is much cheaper in the long run. Just an idea.
      I would definitely look that lease over with a lawyer and get everything done correctly including all your sales etc.
      I wish you much luck with your biz, and do me a favor and let me know how it went with the soda. I am here in CA and I am just irritated about this. Some people!!! hahaha Good Luck you guys, I hope you are very successful and you love what you are doing.

      Take Care,
      Janie

  • jerri says:

    So glad I stumbled on this site. I have a question I hope you can answer: if the bar portion of an existing establishment is going to be leased to one person and the food/restaurant portion leased to another person, who gets the money from the sale of soda drinks? The sodas will be sold in cans, not from a fountain. Thanks for any input you can give. As you can tell, there is a disagreement over this between the 2 parties.

    • admin says:

      Hi Jerri
      OK — the answer to that is pretty easy to me, unless there is something I do not know about. Who is purchasing the soda’s??? Whoever is buying the soda gets the sale of them. If both people are buying them, then both get the sales. I would assume then the sales would be split between both the restaurant and the bar to make it easy. Or each place would have to keep track of the sales and collect what is due to them. If the soda’s are sold at the bar, they get the sales — If soda’s are sold in the restaurant then they get the sales. Also be sure to keep track of any that were given away and any loss etc. It is sad their is disagreements about this — NOT a good thing for any business. Get everything in writing – a contract etc. If problems exist already, oh my gosh there will be more to come. So get it all in writing. Trust me — I learned the hard way on that. I hope this helps — Take Care

  • Corey says:

    Awesome, thanks. One thing that is very hard to find: how much is liquor bought at wholesale?

  • Daren Phillip says:

    This is a great sight, thank you for the all the advise and tips! I am thinking of opening my own pub. I have put a business plan together, figured out supplies/vendors, concept, etc… The only matter I am really confused on is the Liquor License. I am from IL. and I do not live in Chicago. Researching and talking to a few different people, it seems there is a standard State Liquor License, county and city License too. The yearly total on the three is $4,500. I hear so many different answers on this topic, some say it cost hundreds of thousands dollars to obtain a Liquor License and others say it does not cost that much. Here are my questions…

    When I am ready to pull the trigger, who should I speak to on this, to get exact figures?

    Is it easier and smarter to just take over a liquor license from someone looking to sell their business?

    How soon after I buy or take over a space do I need the license (s)?

    I know each state varies but any input you have here would be great!

    Thanks!
    D

    • admin says:

      Hi Daren
      OK this is a great question — but the answer is not easy as I do not know how the laws are in Il. I purchased my bar in CA — however, I bought it from a place that was already a bar. It was a bar in trouble with the ABC so they sold. There are different types of licenses. In CA there are several types of licenses. I was fortunate enough to get the 48 license which was liquor and beer could be sold. There is a 42 that the bar can only sell beer. <—not what I wanted. Then there is another license that makes you sell more food than alcohol. There are so many types. So you definitely need to go to the Alcoholic Beverage Control and find out what all the licenses are and which one you want. In CA they are not even selling any 48′s anymore. If they are they are hard to get. So it all depends on what Illinois has in licenses. Definitely do your research.
      Now if you can find a place that is already established and it is being sold with a good clean license, that is great. It isn’t always easy to get a place like that, and it can be very costly.
      If I had to do it all over again, I would buy my own building — buy the type license I want, if I could find one (not always easy) — I would buy my own building, as the lease was to expensive. That is the best way to go. But not everyone can afford to do that.
      So my best advice is to get into the ABC and find out what type of licenses they sell. They probably have limits on new licenses being sold. Then once you find out the type license you will need, try and find someone that is selling their business or that license.
      OK — You ask how soon you need the license. I assume, you need it right away. You cannot sell alcohol or beer without the license.
      So — just go to the ABC office and they can help you with all the crazy laws in your state.
      Oh I almost forgot, The $4500 in licenses is the cost per year, every year. You still have to buy the actual license — which can get pretty expensive. These are two different things. Trust me when I say, you need to have plenty of cash to start a business as everyone has their hands out.
      Thanks for the great questions!!!
      Janie

    • Wes says:

      Hi Daren,

      I just found this site today. posted my own question. i am in GA. the license here is about $3500 to $5000 per year. i have been told it varies with each county or city you are considered part of.

  • Tyler says:

    Hey! Love the website. Would love any additions and updates you have to offer! Very respectfully, TR

  • Sarah Travers says:

    Hi, my aunts owned a bar many years ago, but it was burned down. I’m sixteen and am thinking of rebuilding it with my cousin. My aunts lived on the second floor of it and I was wondering if it was normal to live in your bar. And if you do live in it would it save you money on taxes and insurance? Thank you!

    • admin says:

      Hi Sarah
      I don’t know where you live, and all States and countries have different rules etc. So you would have to research everything where you live. My bar was in California and I do know of a couple bars that the owner lived above the bar. It would sure be convenient. As for taxes and insurance, I do know that some states let you write off the area in your home that would be your office etc. This is something that you would definitely have to find out. There are so many rules etc. and every place is different. Also is the liquor license being kept up to date, stuff like that? Good luck to you, sorry to hear that the bar burned down. Take Care, Janie

  • John Filiatreau says:

    Hi, im only 16 but i have no desire to go to college. My question is do i need a buisness degree to own a bar or, well any buisness?

    • admin says:

      Hi John
      Wow 16 and thinking about owning a business? You are amazing. As for needing a business degree to own a bar — well I did not need one. But States and countries are different. I do recommend you take a business course or two or three or even more. Then you will be ahead of the game.
      As for a license for any business. Well there are businesses that have to have certain licenses. That is a wide open question. Might I suggest that you do learn as much as you can about business. Learning is a gift. I know it doesn’t seem like it at times, but it truly is. There is a lot to learn in any business, and the more you know – the better. Good luck to you and your endeavors. I wish for you much success!!!
      Janie

  • Jenni Sudduth says:

    I was wondering if you knew any good resources that could tell you some estimated average costs for things so that I could put together a business plan and model out some projected numbers for income and expenses and what not, but I haven’t really oufnd any numbers to play with.

    Thanks,

    Jenni

    • admin says:

      Hi Jenni
      I bought my bar – as a bar, so it came with pretty much everything.
      But to figure purchases and income etc. I would just research the costs of what it is you are looking for. As for income — I list all the things that income comes from on the page you looked at.

      http://www.allaboutbarsinfo.com/bar-costs-2/

      Other than that — just researching prices — and comparing etc.
      If anyone can help on this, it would be appreciated.

  • Jen says:

    Hi Janie,

    This is a great resource thanks so much! I was wondering if you have any info/ opinion on best and worst brands of equipment to purchase?…. We are looking to build from scratch. Also since we need everything full kitchen full bar are there companies that will give special rates for buying everything?

    Thanks in advance

    • admin says:

      Hi Jen
      As far as brands go — I really can’t recommend any because my bar came with everything. However I can recommend what to look for. First thing to me is — because you are building from scratch, be sure to allow yourself a decent size walk in cooler. I have seen some beauties in different bars, and I was stuck with a dinky little walk-in. It was awful, trying to fit all the kegs, back up bottles of beer and wine etc. I suggest you really plan well for all of the refrigeration and storage needs.
      Next, be sure to buy a large enough ice machine. You can really go through ice very quickly.
      Now as for all the other appliances — such as beer coolers, refrigerators etc. Go stainless steel — They make beer coolers stainless throughout. It is worth the extra money. If it is not stainless, after a few years you end up with rust on the inside of the coolers. Believe me it is nasty. Now I did not own a restaurant with the bar, but same rules apply to the stainless. It will save you money in the long run. For the bar, I can tell you that draft was a huge seller, so be sure to buy a draft system that has plenty of handles to serve a large variety of flavors. The beer companies can help you with this and even put in the whole draft system for you. At a price – but well worth it. I could go on and on — ha ha ha
      Good luck to you — I am envious as I always wanted to design my own bar.

  • Crystal Milkowski says:

    Gotta love google lol…..I was just wondering realistically how much it takes to start up a bar. Looking at a property with about 9000 sq ft for $2500 monthly rent. Any helpful hints you could give would be appreciated! Thanks

    • admin says:

      Hi Crystal
      Well my first advice would be to learn all you can about the bar business — taxes, laws, how to price items, IRS, your state taxes and laws etc. etc. etc. It sounds like a lot, but in time you will learn it all.
      Good luck to you,
      Take Care,
      Janie

  • JD says:

    This is FANTASTIC! Thank you so much for all of this incredible information. It is extremely useful.

  • Ty Bowie says:

    Great info. Would you have any suggestions on the percentage of costs. Meaning, what percentage of revenue should be allocated towards payroll, rent/mortgage, operating expenses, liquor/beer/wine?

    • admin says:

      Hi Ty Bowie

      After giving this much thought — If I were you I would allocate at least 90% of your income to bills and purchases. I say at least because there are many things that can come up that you will need cash for.
      It is important to hold onto as much of your revenue as you can, especially if you are a new bar owner.
      Once a year or two has gone by, you will be able to figure out exactly what you can comfortably pay yourself.
      I just know that there were many times that I had something go wrong or something come up that needed to be paid for right away, such as an ice machine needing fixed, or plumbing. Things like that.
      I did not like to use credit cards for anything!!! Why create yet another bill if you don’t have to.)
      Hope that helps.
      Thanks for visiting my site.
      Janie

  • Lisa says:

    Thank you so much. I bookmarked this site, so that I will know exactly what to look for when looking for a building. This is really helpful. I really like the area pertaining to the cable and wifi. I really appreciate you sharing this information.

    • admin says:

      Hi Lisa

      I just noticed that my answer to you way back when didn’t show up.

      You are welcome, glad this site helped you out. Good luck to you and your endeavors.
      Glad you like the site and yes, customers absolutely love wifi.

      Take Care,
      Janie

  • jo powers says:

    thank you for all the information. i find comfort knowing we are not alone in the over whelming pile of madness from being a bar owners. Everything thrown at us at once, makes it hard to remember any thing. Its nice to have it laid out. Thank you:)

    • admin says:

      Hi Jo
      Well You are welcome, glad I could help out a bit — Yes being a bar owner can get pretty hectic at times. There is just so much to remember and keep organized etc. etc. etc.

  • Brookie Archer says:

    Thank you this has been very helpful. I wanted to do some research about bar ownership before i pursued it any further. You have answered many of my questions.

  • Brendalynn Schulties says:

    Thank you for all your information

  • Allison Hernandez says:

    Thanks for the information, its very useful.

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