Opening a Bar

[Thremp]

I'm not sure really how to approach this subject so I wanted to run a couple ideas out and then see if people could brainstorm possible problems (or offer solutions) and then I'd go through and try to think out something for each possible problem.

1) Bars are basically event promotion. Getting people through the door is really the only thing that matters. Everything else is kinda meh. This is the only thing I don't really need derided since the "Bars are so hard to open" blah blah blah is really std and boring. Opening any business is hard and it'll likely fail. Whatev.
2) I'd be a semi-blind partner. I'd handle most of the numbers work, but would do almost nothing with the actual bar.

[housenuts]

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Getting people through the door is really the only thing that matters. Everything else is kinda meh.

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everything else isn't meh. getting them in the first time isn't hard. getting them to come back is the tricky part. so you gotta make it good. everyone always checks out the new bar in the city. does it last? depends how good it is inside.

i was talking to this bartender a bar, who i knew from another bar he used to work at. he was saying the other bar essentially tanked when they got a new manager and the manager had no customer relation skills. that's why he left. essentially the new manager was a bookworm accountant type. he ran everything by the book. he stopped allowing bartenders to give out comp drinks, and free cover and such. loyal customers stopped coming. all it takes is a bartender to give you a free shot of tequila or something halfway through the night because you're a loyal customer, and it reinstills in your mind why you love that place and keep going back there. it's "your" bar. but when that stops, it just becomes like any other bar. you're just another dude there.

[Thremp]

housenuts,

Yeah, I understand that. Novelty will get people there for a short time. I'm more concerned with the techinical aspects and preventing possible problems before they arise. Someone else worries about getting people in the door.

I like what you're saying, it does open up the way for cheating etc. This will likely be a cheapy college style bar with drink special nights etc etc. Though I have heard that having the "face of the bar" being someone who is plugged in with the social scene is very important. Clearly myself as a 2p2 uber-nerd will not be this person. I'm not disliked and I'm sure a pseudo position of power would land me more fake friends than I need, but my far sketchier partner handles that side.

Questions for anyone to mull over:

1) Bouncers?
2) Employees dealing drugs or using in bar?
3) Bribes?

We are considering a structure where we have a clear person in charge. A "Head" Bartender who would be there every night and receive higher pay as well. Thoughts on this idea?

[zacd]

My uncle owns a bar and in effect knows many other people that own bars. I grew up around that type of business (Ithaca, NY) so I'll try to list some aspects that I think are important...

1) Location and Demographic: I'm sure you've already thought about all of this. Obviously college towns are great but often way too many open in a small area and basically eat themselves. In Ithaca new bars open every year with a lifespan of 1-4 years usually. I'd say the ones that survive are the ones who a)are located far enough from other bars but still close enough to get to by foot and b)establish themselves quickly as a fun place. Don't even bother opening a bar if your target area is already over-saturated. Every new owner always thinks they can pull business away from others with their sweet idea but it rarely happens. The goal is to get a core group of returning customers and they will bring new people who become part of the core, etc etc. If you never establish repeat business you will fail.

Stock product based on your consumers. If you're catering to mainly college kids you don't need to stock much JW Blue and if you're pulling mainly professionals you won't need alot of Natural Ice.

2)Being an Owner: Very important. So many bars fail because the owner creates the perfect place for HIMSELF to party. Falling asleep at the bar every night fully cocked is a great way for your employees to rob you blind and ruin the chances of you living a long, healthy life. I applaud your decision to stay behind the scenes. Owning AND running a bar is a life-draining experience.

3)Pool-tables, music, arcade machines, etc: Pool-tables, pinballs, and especially whatever music device you choose will all make bank. Arcade cabs for the most part will not, unless you can magically get a new game rotated in twice a year. Most bars bring in an amusement company to stock their place and split the profits 50/50, 60/40, or lower if you make nothing. My advice, if you have some excess capital, would be to purchase all your own equipment. It will pay itself off reasonably quickly and after you've sufficiently profited -- home-owners buy second hand pool tables like they're going out of style. Remember if you do choose to buy all of your own equipment you are responsible for the upkeep (pool tables will jam monthly at least).

4)Food: Some bars do well just selling terrible food way overpriced. Some bars use their food services to bring customers in. I've seen $1 burgers and $.10 wings do exceptionally well. You sell the food at near loss and make the $$ from the alcohol sales. Oh that's another thing, I'm not sure if you're doing live music or other forms of entertainment but make no mistake -- all of your profit is from alcohol sales. Everything else is just a lure. If you're doing exceptionally well and can get away with charging a cover that's awesome. But beware, covers often drive customers away.

5)Employees: You'll never have a shortage of help but you'll always have a shortage of good help. Always schedule your best bartenders for your busiest nights. When you have to run 2-3 bartenders at once make sure they work well together and don't step on each others feet. A good bartender is worth so much and dont be afraid to spend lots on one. Especially on slow nights, a good bartender can turn a Tuesday night into a Thursday or Friday. Have one bartender exclusively for your waitresses on fri/sat.

6)Laws, licenses, etc: Read up as much as you can about all of that stuff. In New York the ABC Board will usually send a minor into your place every 1-3 years. First offense is a fine I believe. Second might be your liquor license (in which case it's game over folks).


Anyway I hope I gave you some things to think about. As you can tell most of my experience is with college bars. If you're planning a more upscale place I don't really have any advice other than charge lots.

The most important thing to do first is to establish an idea of your chances of survival. If you can make it 5 years profitably you're generally golden until you want to sell, lose your license, or they raise the drinking age or something. Go to the other bars around where you're planning to establish yours. Go every night of the week and take it all in. Figure out what they're doing right and what you could improve on. If there are no other bars in your target area you're either extremely lucky or it's not a profitable area.

Good luck!

[Thremp]

zacd,

This is essentially a dirt hole. I personally don't go to bars like this at all. But first, thank you for the well written and thoughtful post. Lemme see if I can get through this.

1) Location and Demos are solid. There is a central bar district where just about every bar is located. Well atleast ~70% of the main bars in town. So it creates a ton of bar hopping. The particular area we were looking at is a little bit spaced away from the main area (3 blocks) and across the street from another bar. Both were open previously but were dubiously managed.
2) Word. I'm sure I'll come through random nights and make sure everything is fine or bring my friends around to the place every once in a while. But for the most part I'd like to keep it fairly apart from my actual life. I'm kinda hoping ownership culls my drinking a bit as well. Since if I have to go count dollarz at 5AM on Sat morning. I'm likely to not get shammered that night.
3) It'll probably be a "dance club" place with a decent sound system. It'll be able to have a DJ and other stuff. This is mostly the other guys deal. He handles all those sorts of things.
4) Meh. No food. Well maybe, we might have Crawfish Boils or something else occasionally on off nights or something of the sort, but running a full on kitchen seems like mega hassle.
5) I think truer words have never been spoken. Hopefully we can find several responsible kids. I'm inclined to believe that hiring a trustworthy guy and like 4 hotties would be the best bet. Though I'm not super well versed in this area. I'd imagine hot bartenders are always a plus.
6) Yeah, I do need to brush up on this.

From a financials stand point: The initial investment is fairly low and should be able to run at a decent clip if we can get everything off the ground. Markups on drinks etc etc are very high like everywhere. If things go even moderately I should recoup my investment costs in ~6 months plus whatever equity we gain in the business. Obviously, the biggest worry is just outright failure, but starting with something that isn't capital intensive seems to be a solid plan. (Atleast from the small biz readings I've managed)

[BradleyT]

Did you see this article a while back?

http://www.washingtonpost.com/wp-dyn...090201331.html

Some of those vegas clubs bring in $50 million a year...

[eastbay]

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zacd,

This is essentially a dirt hole.
...
3) It'll probably be a "dance club"

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A "dirt hole" for girls? Sounds like you have some more thinking to do.

eastbay

[scott1]

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my far sketchier partner handles that side.


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This seems like a bad idea.

[spex x]

You've gotten a lot of great advice already, and you seem smart and competent enough. I just wanted to say that this proposition seems somewhat risky. I don't know about a bar, but my dad used to own a liquor store and his margin was 8%. You've gotta sell a hell of a lot of booze to live, get an adequate risk-adjusted ROI, etc. on an 8% margin. That amounts to constant work IMO. Dunno if thats typical or not, its possible that dad didn't know what he was doing.

Personally, I no longer get involved with partners. If I find a deal that I need a partner to pull off, I either look for investors that could take the place of a partner, or I pass. If you do decide to get involved with a partner you need to make sure the you get everything in writing, most importantly who has what responsibilities and how the cash will be split. I can forsee a major potential problem if you've each put in 50% of the cash, but your partner does 90% of the work. There WILL come a point at which he's tired to getting half the money for doing all the work. This is inevitable, so figure it out up front.

[zacd]

Thremp,

You're one of the more intelligent guys around the forums and I am sure you can find a better investment than this. A few more thoughts:

1)Dance clubs are totally hit or miss. What music to play? How big should the dance floor be (hint: as small as you can make it)? For the most part dancing is going to reduce people's time spent buying booze. Where you place your actual bar(s) inside is going to have a big impact on profits with a dance club.

2)Bar-hopping might seem great because you're basically assured of at least some business but for an owner bar-hopping is unwanted unless you run the place where the customer's spend the most time.

3)I would never advise someone own and operate a bar until they have worked in one.

4)Partnership businesses can be stressful. It sounds like you're going to be handling most of the managerial duties and he's going to decide on the entertainment. So he's going to have to come to you to validate purchasing x. You will inevitably have to say no to something and this may cause conflict. I also don't like it when you say he is "sketchy".

So now I am sounding like a pessimist but I think some of the reasons are valid. However if you really have the desire to go through with this and you think a dance club is an unfilled niche of your area go for it. Just play it like any other gamble, only risk what you're willing to lose/know you can't get back. As with any alcohol/food/restaurant/etc establishment where physical patronage is required, luck is going to play a factor.