Small Business Brief

Food Business

The Economics of Opening a Bar

You’ve always had a thing for making creative mixed drinks and talking to other people. It’s something that you’ve had fun doing for years now. So, you’ve been thinking about opening up your own bar.

There’s a lot of competition in the food and drink industry. If you’re not willing to put money into your business, it will be hard for you to keep your doors open.

So, what is the cost to open a bar? It might be more than you think after getting the proper license and paying your rent. You also have to keep the place stocked up with food and alcohol.

Check out this guide to get a complete price breakdown.

License and Permits 

The main bar startup costs involve getting your license and permits. The most important one is your alcohol permit. Without it, you won’t be able to serve your main money maker. 

You also need basic operating licenses, and if you want to make any big renovations to your building, you’ll have to get special building permits. After everything is said and done, you may spend about 11,000 dollars on everything. 

Rent and Mortgage 

You can’t have a bar without a building to operate out of. How much you’ll pay for rent and mortgage, depends on the state your business is located in. This means that we don’t have an exact cost breakdown for you in this regard. 

What we can tell you is that you should have at least 6 months’ worth of rent saved up. It will take a while for you to start turning a profit with your bar. These savings will help you keep your doors open until you begin getting regular customers. 

Bar Equipment 

Bar startup costs always include an extensive amount of equipment. The cost will vary based on your menu. If you’re going more for a restaurant/bar combo, you’ll be looking at spending around 40,000 dollars for everything. 

If you’re sticking to the bar side of things, you can get by with paying 5,000-8,000 dollars. Whatever you decide to do, sit down and make a list of everything you need. This way, you don’t forget anything. 


First things first, you’ve got to have liquor. It’s going to be your main moneymaker as a bar owner. There are three different types of liquor you should familiarize yourself with. 

The first one is well drinks. These are the common liquors that the bartender keeps near them at all times. These are used when people ask for a shot of something or a drink without naming an alcohol brand. 

The second type is call liquors. The bartender will use these when the customer does ask for a specific brand. The last type is your top-shelf stuff. 

You’ll need to grab the good scotch, tequila, bourbon, vodka, gin, and rum. Don’t forget to grab high-quality beer and wine to go with it.


Next up on the list is glassware. Some basic ones you should buy are champagne glasses, wine glasses, pints, shot glasses, martini glasses, and highball glasses. 

Do yourself a favor. Ask manufacturers if you can sample some of their glasses before you purchase them. This will save you some money in the long run. 

Other Equipment 

Commercial equipment is where you’re going to spend the most money. You’ll have to get refrigerators to keep your food and drinks cool. 

Bar blenders and frozen drink machines are a must for cocktails. Most customers are going to expect you to have beer dispensers. Underbar sinks will allow you to keep your glasses clean and on hand during peak hours. 

Depending on how busy you get, you might need to have two ice dispensers near the front of the bar. POS systems are also necessary. 


One of your employees is walking around the bar when all of a sudden they slip and fall. If you don’t have worker’s compensation insurance, you’ll have to pay for their doctor bill out of pocket. This is a type of insurance that most states require companies to have. 

It’s not the only one you should look into, however. You also need general and liquor liability insurance to protect yourself in the event a customer gets hurt or sick while at your bar. 

You can expect to spend up to 6,000 to get your policies started up. You can go here to learn more about nightclub and bar insurance. For now, let’s move on to salaries. 


Employees like making money, so salaries have to be included in your start up cost to open a bar. Keep in mind that you’ll have to sign paychecks even if your bar isn’t making money quite yet. 

Make sure that you set aside some extra funds to take care of it or, you won’t have anyone to work in your kitchen and tend your bar. 


It will be hard for you to keep your doors open if you don’t have lights. You also need water to clean glasses and electricity to play music. It will cost a little over 2,000 dollars to pay for all your utilities each month. 


It’s impossible to turn a profit if you don’t have anything to sell. This means you have to take inventory each month and order new supplies. 

For a while, this cost won’t be too damaging. Enjoy it while you can, however. Once you start bringing in new customers, you’ll go through your food and drink a lot more frequently. 

Average Cost to Open a Bar and Keep it Open 

Have you always enjoyed creating mixed drinks? Do you like meeting interesting people? You might have fun owning a bar.

The average cost to open a bar might set you back. Between licenses and rent, it’s not cheap. We hope that this price guide has helped you figure out how much money you need to save up. 

Are you looking for more ways to budget for your business? Check out our blog daily for all the latest financial tips.