myPOS blog Tips

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 is a business that 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 is dependent 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 you do this, you need to 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 not seem worthwhile to your patrons and once again, you risk business failure. But how do you achieve the fine balance? The answer lies in being prepared with your costs and finances. Below is a list of some of the biggest costs you can encounter when opening a bar in the UK.

1. Location

The UK is a large geographical area and costs for the venue you’ve selected will vary depending on where you would like to open your bar in the UK. For example, a high-traffic city centre pub or bar will cost a lot more than one that is located in a community that’s out of town. 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 can range from £3,250 to £6,500 annually and are 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

The type of bar you choose to open will also play a crucial role in answering the question how much does it cost to open a bar. There are 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 will need to consider the size of your venue or premises to accommodate the right number of patrons. You’ll also need the right licenses 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 licensing, you need to ensure that you set aside additional funds for registering your business first. 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, playing music, showing sports games and more. 

As for insurance, this 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 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 an existing part of the location?

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, these 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 are purchasing stock and inventory from them in bulk.

A man paying by card using a card machine in a bar

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

It’s also advisable that you make a list of all the staff members you will need on your team and prepare six months’ worth of salaries in advance so that you can pay your team on time and ensure that they are committed to your operation and that they are also loyal to the establishment. As such, you are looking at 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 does it cost to open a pub in the UK is asked and needs its own separate discussion.

With marketing, you’ll first want to start out by sorting out the physical signage of your bar. This will incur costs such as lighting and the actual creation of your bar name on metal or fluorescent materials.

Once the signage is taken care of you 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 with a list of the items on your food and drinks menu. It should also feature customer testimonials, a map to help your patrons easily find the location, contact details for group events and bookings, as well as the option for take aways (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.

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 to 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 be setting aside a percentage of your total revenue towards your marketing and advertising costs. In general, you should be aiming to spend between 3% and 6% on your marketing efforts.

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

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 ambiance, 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.

Related posts