How Much Does It Cost to Open a Bar

Whether you call it a nightclub, a dive bar, a sports bar or pub, a wine bar, or a cocktail bar, the principles behind it are quite similar. Essentially, this business primarily serves drinks as its main source of income, and it requires a lot of prior preparation before you get started. One of these considerations is the cost, and we are often asked how much does it cost to open a bar in the UK. 

Although the answer to this question is highly specific to every individual case and depends on the nature of the establishment and its location, there are some average bar startup costs that you need to consider before you get started. 

With this in mind, in this article, we explore how much does it cost to open a pub and what the main costs you need to consider are. Let’s take a closer look.

The main costs associated with opening a bar in the UK

Opening a bar in the UK may seem like a straightforward thing to do. You have a bar or pub concept in mind and you’d like to implement it. But before doing this, you must be prepared for the costs. The reasons for this are simple. Spending too much on your bar can cost you over the long run, and you may end up failing. 

On the other hand, spending too little can make your establishment seem unworthy to your patrons, and once again, you risk business failure. But how do you achieve this fine balance? The answer lies in being prepared with your costs and finances. 

Below is a list of some of the biggest operating costs you can encounter when opening a bar in the UK and becoming official bar owners.

It’s important to note that the opening costs and operational costs outlined below can be described in detail as part of your bar business plan.

1. Location

The UK is a large geographical area, and the costs for the venue are high, especially if you’ve relocated to an out-of-town community. In addition to this, there are also city taxes involved in terms of serving alcohol and running a business in a particular location. These taxes vary significantly depending on multiple factors and can range from £3,250 to £6,500 annually. They are also selected and will vary depending on where you would like to open your bar in the UK and the square foot size of the selected property. 

For example, a high-traffic city centre pub or bar will cost a lot more than a neighbourhood bar located in an out-of-town community. In addition to this, there are also city taxes involved in terms of serving alcohol and running a business in a particular location. They are also location-dependent.

Apart from these city taxes, you also need to consider whether you will be building the venue from scratch or whether you will simply be remodelled. In either case, you can expect to pay anywhere from £52,000 and £97,500 for this purpose. 

Finally, there is the issue of rent, which is the case for most bar business owners. Many bar tenants opt to pay a monthly rent for the premises that they will be utilising, and this rent can fall in the region of £6,500 a month or £6,500 a year, depending on the location once again.

2. Type of bar

Before you become a bar owner, it’s key to have an idea about the type of bar you want to create. After all, the bar industry is colourful and vibrant, meaning that there are plenty of options to choose from. 

The type of bar you choose to open will also play a crucial role in answering the question of how much does it costs to open a bar. You can choose from several types of bar concepts that you can choose from, and each one will have different associated costs.

These include:

• Dive bars
• Wine bars
• Sports bars/pubs
• Cocktail bars
• Nightclubs

In each of these cases, you must consider the size of your venue or premises to accommodate the right number of patrons. 

Based on the type of bar you choose to grow, you’ll need to research the alcohol inventory that you must have to offer some of the best drinks, cocktails, and other products. 

You’ll also need the right business license and insurance (for more on this, see below), find out what rental costs you’ll need to pay (if this is the route you’re taking as opposed to building from scratch) and others.

3. Licenses and insurance

Opening a bar or a pub in the UK requires licensing and insurance. With regard to getting your business license, you need to ensure that you set aside additional funds for registering your business first.

To get them you will need to choose a business structure and then pay the necessary costs for licensing your business. But apart from this, there are also costs associated with obtaining a license for serving alcohol (like liquor license costs), playing music, showing sports games and other entertainment licenses. 

Liquor licenses are perhaps one of the most important things to start with, as this permit differs dramatically from other business-related licensing. 

Even if you only sell non-alcoholic beverages, there are still specific bar licenses that you must have in your possession. 

Insurance is a must if you want to protect yourself from liabilities in the event that something goes wrong. 

Examples of insurance that you might get include employer’s liability insurance, public liability insurance and others. On average, you can expect to pay anywhere in the region of £5,200 and £7,800 a year.

4. Inventory and equipment

You may think that your main inventory for your dream bar or pub concept will be your alcohol. 

However, there are many other factors to consider, starting with the actual bar. Will this need to be built from scratch, or will you be refurbishing part of the existing bar?

Other factors to consider include:

• Refrigerators to keep the drinks cold;
• Kegs for the drinks;
• A draft system in place for pouring beer;
• Kitchen equipment (if you will serve food);
• Point-of-sale systems to accept payments;
• Software for ordering food and drinks.

For an average-size bar, inventory and equipment costs (including renovation costs) may range from £32,500 and £65,000 and do not include the actual alcohol and food that you will need to buy to ensure that your establishment is well-stocked with supplies. 

These also need to be sourced fresh from your suppliers, and sometimes, you can work out good deals with them if you purchase stock and inventory from them in bulk.

5. Staff

It’s highly unlikely that your bar or pub will be a one-person operation. You will need a manager (or two who take different shifts), kitchen staff (if you have a kitchen), bartenders and servers. 

Although you should take on some responsibilities yourself by running your bar in the first few months to save on some staff costs, likely, this won’t be possible because you will have many other responsibilities to ensure your bar takes off. 

It’s also advisable to list all the staff members you will need on your team and prepare six months’ worth of salaries in advance. That way, you can pay your team on time and ensure that they are committed to your operation and loyal to the establishment. 

Also, don’t forget about implementing a reliable training program that can help your employees perform at their best and win the hearts of customers. You can consider additional professional fees, like consulting fees, for educating your staff or helping you unleash the full potential of your brand as a team. 

As such, you are looking at labour costs that range in the region of £32,500 to £48,750 on average, depending on the size of your team.

6. Marketing

And, of course, the final but not least important aspect of opening your bar venture is the costs associated with marketing and advertising your business. This often comes up when the question of how much it costs to open a pub in the UK is asked and needs its own separate discussion.

With marketing, you’ll first want to sort out your bar’s physical signage. This will incur costs such as lighting and creating your bar name on metal or fluorescent materials.

Once the signage is taken care of and you have a logo and brand that you want to portray to your patrons, you will want to create a website. Your website should be detailed enough to offer your audience a list of the items on your food and drinks menu. 

It should also feature customer testimonials, a map to help your customers easily find the location, contact details for group events and bookings, as well as the option for takeaways (if you plan on offering this). Depending on your service provider for hosting and designing your website, you may end up spending a couple of thousand pounds on this activity.

There are simple solutions for creating a website, such as myPOS online – a website builder that offers various templates and features.

But this isn’t all that there is to it. In an age where social media proliferates every aspect of our lives, you will also need to create social media channels for your business. In addition to organic marketing, you may also wish to make use of paid adverts to get greater visibility for your bar and more footfall in your venue. 

Ideally, since you might not be able to manage this aspect all on your own, you may wish to hire the services of a professional marketer or a team of marketers. That way you can ensure that your bar business is always top of mind for your patrons.

These services can also add up to a few thousand pounds, and it’s worth noting that instead of a fixed sum, you should set aside a percentage of your total revenue for marketing and advertising costs. In general, you should aim to spend between 3% to 6% on your marketing efforts.

Naturally, there is an aspect related to physical marketing materials. These may be coupons with discounts, flyers, brochures, pamphlets, etc. You may even wish to advertise your bar’s soft launch in the local newspaper or a local magazine or even advertise it on a local radio station. These costs add up over time, and you should be prepared.

All of these marketing techniques will help you build a solid customer base, no matter whether you’re running a small bar or a large startup. 

Keep in mind that some of these expenses fall under the ongoing costs category and will be recurring all year round. On the other hand, there are also variable costs associated with running your own bar. These will fluctuate based on different factors, like seasonality. 

Overall, all the startup costs discussed above will vary greatly based on numerous factors. The average startup costs are more than a few hundred dollars. However, this can turn into a profitable venture worth investing in. 

How profitable is a bar?

No matter whether you’re planning to set up a brand new business or running an established bar, financial management is a must. 

To make accurate predictions, it’s fundamental to properly understand the average profit margin of this business type. In the UK, this margin is between 10% and 15%. However, keep in mind that the exact figure will depend greatly on the type of bar, the drinks served, the location, the size, and other factors. 

When it comes to profitability, there are several factors to address as they can influence your bar’s performance:

• Sales volume – the foot traffic volumes that you are able to secure will ultimately affect your sales. Bars located in dynamic and busy areas are usually the ones associated with reputation and popularity.
• Cost control – effective financial management, such as advanced inventory control, waste management, and supplier deals, can also lead to greater profitability in the long run. 
• Pricing – your pricing strategy is another key component that will dictate how much your bar earns. The higher your margins, the better your performance. 
• Operational efficiency – efficient operations are crucial for a successful bar, no matter its size. Using a reliable POS system, for example, can help boost efficiency dramatically.

It all comes down to creating a balance between earnings and cost management, just like in any other business.

What are the challenges of opening a bar?

Although a lucrative and tempting opportunity, running your own bar can also go hand in hand with serious challenges worth considering in advance. 

Startup costs

As we discovered earlier, setting up your own bar can be an extremely pricey endeavour. 

The startup costs associated with this project are significant, featuring costs for leasing property, investing in renovations, purchasing equipment, and more. 

Assets like pool tables, kitchen appliances, and others only add to the original financial burden.

Regulatory compliance 

It’s important to understand that bars are vulnerable as they must abide by specific regulations. This includes receiving all of the fundamental licences and permits to start a business and sell alcoholic or non-alcoholic beverages. 

Compliance with local taxes is also a must and can be time-consuming and complicated, especially for those with less experience. 

Operational obstacles

Running a bar may sound like a simple task, yet it involves long hours of management and obstacles related to inventory, staffing, and customer services.

Although these obstacles are present in any other business, with bars, they prevail due to the dynamic nature of the business type. 

Keep in mind to consider methods of accepting payments and the use of a card machine. This may include additional fees and costs.

In conclusion

The often-asked question – how much is a bar – is not an easy one to answer. This is because so many variables go into the equation. Since every bar is different in nature, concept, location, food and drinks served, atmosphere and ambience, it’s critical to plan carefully while keeping the above six critical and major costs involved in opening a bar in the UK. 

Overall, when it comes to how much it costs to open a bar in the UK, you are looking at anything ranging from £97,500 to £325,000. Of course, these amounts can be lower or even higher, depending on your unique bar concept and circumstances. 

If you are well-prepared with your bar costs, the chances of your bar concept succeeding are that much higher and will be beneficial for your business going forward.