With the proper planning, any bar can be successful. But it’s not all fun and games. Being a bar owner is more about grit than glamour, so be prepared to work hard and strive for excellence every single day.
With that in mind, here is the advice I would give any new bar owner on how to bring their idea to fruition, and how to succeed where so many others have failed.
The Idea Stage
- New vs. Existing Bar: When you open a new bar, you’re creating your own but at least you know what you’re stepping into. An existing bar? Not so much. Speak to the previous owner to find out if there are any problems you should be aware of. Be careful, because you could be entering into a situation that’s more trouble than it’s worth.
- Business Plan: The least exciting aspect of the bar planning process is also the most crucial. This is your success roadmap, operations guide, and training manual all rolled into one. A good business plan will keep everyone on the same page, including your business partners.
- Liquor Licensing: You’ll want to start this process now, as it could take 3-6 months to be approved. Start your research early, and be wary of zoning laws and restrictions. Above all, be prepared for the expense.
As an added tip, form a relationship with the state and your vendors, and ask plenty of questions. Everyone will be willing to help. After all, when you make money, they make money, and everyone wins.
- Pour Costs: Figure out how much profit you want to make, then figure how much it costs to make each drink you plan to offer, and mark up accordingly. But don’t forget your Q-factor – the coasters, garnishes, and even the napkins you’ll be using. The cost of your drinks don’t just depend on what’s in the glass, but what’s around it as well.
- Profit Forecasts: All things considered, you should expect to make a profit of around 10%. Use this information to figure out how long it will take you to earn a return on your original investment.
- Invest In Your Business: Figure your weekly operating costs, then keep 2 to 4 times that amount in an account for emergencies. This is your rainy day fund. You should be investing in your business if you expect it to grow.
Familiarize yourself with all costs associated with opening and create a financial model to help guide your business decisions.
- Target Demographic: Research your target market before you open and continue to do so as your business expands. Your brand should speak to that audience through setting, ambiance, the music you play, and the food and drinks you serve. Then maintain that tone on all communications, including marketing materials.
- Lifetime Value: Don’t focus on providing that once-in-a-lifetime experience, work on lifetime value and creating brand loyalty. The fact is, fewer than 50% of people who visit your bar for the first time will ever come back. If they do return, there’s a 50% chance they’ll return for a third visit, and a 70% chance they’ll return after that. The lesson? Don’t focus on giving a good first impression, but be consistent and focus on a good third
- Simplified Menu: People get overwhelmed when there are too many food and drink items on a menu, so pare down your selection. Instead of having dozens of items, present variations of the same product, such as your signature burger with choices of toppings and sides. Bundle offerings into packages and rotate in new products, such as limited edition specials. This gives your customers incentive to return for special events, promotions, and to see what’s new on the menu since the last time they visited.
Build a Strong Team
- Staffing: Hire staff with great attitudes, plenty of spirit, and have the same vision and goals as you. You will have to work through some pretty stressful situations and having a strong core team will help you be successful in the long run. Be assertive, and don’t settle for anything less just to fill positions.
- Teach, Don’t Train: Training is behavior modification. You don’t have time for that. When you teach, you show your team how to carry out specific tasks. You encourage them to add their personalities to the role to make it come alive. That way, you don’t need to control every aspect of your business (as many entrepreneurs are prone to do). Do this correctly and your workforce will be happier (and more energized).
- Fight for Excellence: Your employees are not your family. When a team member doesn’t perform up to par, don’t coddle the person. Push them to do better by hitting them where it hurts – pride. Use the rest of the team to make the person WANT to do better. If that doesn’t work, use fear. “Step up to bat, or you’ll be eliminated.” Encourage your winning team members and your weaker players will find themselves pressured to improve.
Strive for Innovation and Growth
Your bar must continue to grow to survive. When it comes to innovation, listen to your customers and never deviate too far from the comfort zone that made your bar successful in the first place. Your aim should be to expand consistently without alienating your loyal customers. That’s what makes a bar – new or existing – great. Follow these principles and I’ll never have to meet you on a future episode of Bar Rescue.