Are Bars Still Profitable? 3 Things To Know Before Opening One
Bars have been around for many years, and there’s every reason to believe they’ll continue to be around for many more to come. People love going down to their local bar for a few drinks over the weekend, or to catch up with friends at lunch. No matter where you go, you’ll always find a fair few bars in any given town.
This begs the question: if there are still loads of bars around, are they still profitable business ideas? Could you open a bar in your local town and start raking in a lot of money?
In truth, there are loads of factors that come into play when you open a bar and start your business. These factors will ultimately decide whether or not your business is successful and makes a profit.
So, if you think starting a bar business is an idea you want to run with, then here are some things to consider before you open:
Location Matters More Than Anything
There’s a reason many towns and cities have dozens of bars all clustered close to one another. It all has to do with their location. If a bar is in a popular hotspot that generates lots of foot traffic, it will always end up with customers. People have their favorite bar, and it’s mainly down to the atmosphere you create in yours.
The clever idea is to have a look at all the bars in your area and see what they offer. You will soon find that there’s a gap in the market for a certain type of bar in this location.
For example, let’s say you notice no one really offers a ‘family friendly’ bar—this can be your unique selling point to draw a specific crowd. Likewise, it may be missing a student bar, so you can swoop in and provide this.
The most important thing is that you get your location right to begin with. A bar in a great location will always attract customers, regardless of how much competition is around.
Alcohol Sale Laws Differ By State
If you sell alcohol—which you’ll probably do in a bar—then you have to abide by certain laws and regulations. These laws can differ, depending which state you open your bar in.
Did you know that in the state of Alabama you can’t sell alcohol between 12am and 12pm on Sundays in some counties? Then, in Texas, everyone who sells alcohol is required to obtain a TABC certification. Different states have different laws, and you should get to grips with yours before you start your business.
After all, it could have a massive impact on how much money you make. If the alcohol selling hours are very restrictive in your state, then you’ve got less time to make money through the week!
Speaking of laws, it’s illegal to sell alcohol to people under the age of 21 in the U.S. This immediately makes a difference, as it restricts your target market. Let’s say you open a bar in an area of town that’s mainly populated by families with children under 21. You don’t really have a lot of people to sell alcohol to, which can limit your income.
Overhead Costs Can Be Quite Steep
One of the biggest obstacles facing bar owners is the cost of running one. Overhead costs can be fairly steep, and the main concern is keeping them as low as possible. Naturally, you’ll have to purchase a lot of materials to sell in your bar. No one has the time to brew their own booze, although this can be a smart way of saving money! So, you have to find and buy alcohol, food, and snacks to sell in your bar … not to mention the cost of hiring employees to serve customers.
There are some things you can do to keep these costs as low as possible – buying your goods wholesale is the best idea here. However, you should probably put most of your focus on raising your sales to counter these costs. If you’re selling enough goods, you’re going to end up making a profit.
Therefore, make an effort to market your bar properly and reel in as many customers as can be. Mentioned earlier was how the location of your business is key, so you should also try to find a unique selling point. Another idea can be to host events during the week that draw in big crowds or hold happy hours where drinks are discounted.
So, are bars still profitable business ideas? Yes, but it depends on where you open yours and how you market it. Some bars see a lot of success, while others falter. It’s a gamble, but when it works, it can really pay off.