How do you buy a bar? Do you think of purchasing an existing bar or joining the bar and restaurant industry by opening your own bar?
In this article, we will provide a step-by-step guide to buying a pub, cocktail bar, or sports bar. We’ll explore various crucial aspects of the bar, including its location, financial health, reasons for sale, finalizing the purchase agreement, and additional considerations.
If you are considering opening a bar, you have two options: build your bar business from scratch or buy an existing bar.
Acquiring an existing bar can provide both time and cost advantages. For instance, a well-established bar often has necessary permits and licenses, such as liquor and food service permits.
However, evaluating potential issues like poor customer reviews or outstanding debts is essential, which may require repayment upon purchase.
Pros and cons of buying a bar
Buying an existing bar can have several advantages and disadvantages.
Pros of buying a bar
- Established customer base: An existing bar often comes with a loyal customer base and recognized brand, sparing you the effort and time required to establish it from scratch.
- Known location: The bar’s location is already established, potentially reducing marketing costs and attracting existing foot traffic.
- Operational infrastructure: Many established bars already have systems, including staff, suppliers, and an online ordering system, streamlining the transition process.
- Immediate cash flow: With an existing business, you can start earning revenue immediately, bypassing the initial period of low income.
- Reduced risk: Unlike starting from scratch, buying an existing bar comes with a proven business model and revenue potential, minimizing the risk of failure.
Cons when buying a bar
- Higher initial investment: Purchasing an existing bar often requires a larger upfront investment than launching a new one.
- Limited creativity: Existing bars may have restrictions on making significant changes to the concept, layout, or theme.
- Hidden issues: Undisclosed problems, such as debts, legal issues, or structural flaws, may affect profitability.
- Integration challenges: Adapting to existing staff, systems, and culture may present integration hurdles that require careful management.
- Brand reputation: Addressing negative reviews or a damaged reputation can pose challenges in rebuilding trust and attracting new customers.
Deciding whether purchasing an existing bar aligns with your objectives hinges on various factors, including your budget, risk tolerance, and capacity to navigate challenges while leveraging opportunities.
How much does it cost to buy a bar?
The cost of buying a bar can vary widely depending on various factors such as location, size, reputation, equipment, licenses, and lease terms. Generally, the purchase price for a bar can range from tens of thousands to several million dollars.
Thorough research and due diligence are crucial to understanding the costs of acquiring a bar and budgeting accordingly. Future bar owners should also consider expenses like renovations, inventory, staffing, and operational costs.
Consulting with industry experts can offer valuable insights into the potential investment required.
Here’s a streamlined step-by-step guide for acquiring a bar. This concise roadmap will assist you in smoothly and effectively navigating each critical stage of acquiring your new business.
Step 1. Define your bar concept
Prospective bar owners should initiate the process by defining their bar concept and establishing clear restaurant goals. Consider whether you are more interested in sports bars, wine bars, or others.
To facilitate making a decision, consider the following guiding questions:
- What is the primary focus of your bar? (e.g., cocktails, beer, wine, spirits)
- Will your bar specialize in a specific type of beverage or offer a diverse selection?
- What atmosphere do you envision for your bar? (e.g., casual, upscale, cozy, trendy)
- What theme or concept will your bar embody? (For example, a sports bar, speakeasy, tiki bar, or wine bar.)
- What type of entertainment, if any, will your bar provide? (e.g., live music, DJs, karaoke, trivia nights)
- What is your target demographic? (e.g., young professionals, college students, families, tourists)
- Will your bar serve food, and if so, what type of cuisine? (e.g., pub fare, small plate)
- How will you differentiate your bar from competitors in the area?
- What will be your bar menu pricing strategies for drinks and food items?
- Do you want to incorporate specific trends or themes in your bar? (For inspiration, check these bar ideas and concepts).
- How do you plan to use technology in your bar operations? (e.g., an online ordering system, QR code menu)
- How will you design the layout of your bar to optimize customer flow and experience?
- What is the bar’s current reputation and customer perception, and what changes may be necessary to enhance restaurant feedback?
- What marketing strategies will you implement to attract loyal customers to your bar? (For inspiration, check out these bar promotion ideas)
- How do you plan to provide exceptional customer service and create a welcoming atmosphere?
Step 2. Conduct a market research
Before investing in a bar, comprehensive market research is crucial to grasp the dynamics of the bar industry. Here’s what you need to do:
- Analyze target market: Research demographics like age, income, lifestyle, and food preferences to identify your target audience.
- Assess competitors: Evaluate existing bars to understand their menus, pricing, branding, and customer feedback.
- Stay updated on industry trends: Stay abreast of bar industry trends, popular menu items, and consumer preferences.
- Understand regulatory requirements: Research local laws, health codes, fire safety codes mandating emergency exit provisions, and liquor license requirements.
- Estimate startup costs and revenue potential: Calculate initial investment needs, including bar setup and ongoing expenses like permits, supplies, and staffing costs.
Market analysis plays a vital role in crafting a bar business plan. It helps an average bar owner formulate an effective bar marketing plan to attract customers and ensure sustained success in the market.
Step 3. Find a bar
After completing the market analysis, the next step is to find a bar to purchase. There are several avenues to explore when searching for bars for sale:
- Online listings: Websites specializing in commercial real estate listings often feature bars and restaurants for sale. Examples include BizBuySell, LoopNet, and Restaurant Realty Company.
- Business brokers: Engaging the services of a restaurant broker can streamline the process of finding a suitable bar for sale. These professionals have extensive networks and can provide access to exclusive listings.
- Local classifieds: Check local newspapers, magazines, and online classified websites for listings of bars for sale in your area.
- Networking: Attend industry events, join bar owner associations, and network with other professionals in the hospitality industry. Word-of-mouth referrals can lead to valuable leads on available bars for sale.
- Real estate agents: Some agents specialize in commercial properties, including bars and restaurants. They can help you find suitable properties and navigate the purchasing process.
Restaurant brokers, in particular, can be invaluable resources in the search for a bar to purchase, as they can assist in various aspects of the buying process.
Step 4. Evaluate the business
The next important step is checking out the bar business you want to buy. Ask yourself, “Why is this bar for sale?” Is it because it’s not making enough money, or are there other challenges the owner can’t handle? Depending on why it’s being sold, you can decide whether to buy it or look for another bar for sale.
It’s essential to grasp the reason behind selling the bar, especially when taking over existing leases.
If the bar struggles financially, it might require rebranding or changes to its service model to enhance performance. Conversely, if the owner is retiring with a solid financial standing, you may maintain the menu, name, and brand identity intact.
When evaluating a bar before purchasing it, there are several other aspects to consider besides understanding why it is for sale. These include:
- Financial performance: Assess the bar’s financial records, including revenue, expenses, and bar profit margin, to ensure it is a sound investment.
- Location: Evaluate the bar’s visibility, accessibility, and surrounding demographics to determine its potential for attracting customers.
- Condition of assets: Inspect the condition of the bar’s physical assets, including equipment, furnishings, and decor, to identify any maintenance or replacement needs.
- Reputation and branding: Research the bar’s customer feedback and brand identity to gauge its market perception and potential for growth.
- Competition: Analyze the competitive landscape to understand other bars’ presence and offerings.
- Regulatory compliance: Ensure the bar complies with all relevant regulations, including health and safety codes, liquor license requirements, and zoning laws.
- Operational considerations: Consider the operational aspects of running the bar, such as staffing requirements, inventory management, and bar promotion ideas.
Step 5. Secure funding
Ensure you secure all your financing before making an offer. When buying a bar, you need to consider several costs, including:
- Purchase price: The amount you’ll pay to acquire the bar itself.
- Licensing and permits: Costs associated with obtaining liquor licenses, business permits, health permits, and other necessary permits.
- Renovations and repairs: Expenses for renovating or repairing the bar space, including cosmetic upgrades, equipment upgrades, and fixing structural issues.
- Working capital: Funds needed to cover ongoing expenses such as payroll, utilities, rent, and marketing during the initial months of operation.
- Legal and professional fees: Costs associated with hiring lawyers, accountants, or consultants to assist with due diligence, contracts, and other legal and financial matters.
- Insurance: Premiums for various types of insurance coverage, including liability, property, and workers’ compensation insurance.
- Marketing and promotion: Budget for advertising, promotions, and marketing efforts to attract customers and establish the bar’s brand.
- Contingency fund: A reserve for unexpected expenses or emergencies that may arise during the purchasing process or after taking over ownership.
Various financing sources are available to prospective bar owners, for example:
- Traditional bank loans: Conventional loans from banks or credit unions offer fixed or variable interest rates and repayment terms tailored to the borrower’s needs.
- Small Business Administration (SBA) Loans: SBA loans provide financing specifically designed for small businesses, offering favorable terms and lower down payment requirements.
- Personal savings: Using personal funds or savings to finance a portion or all of the bar purchase eliminates the need for external financing and minimizes interest expenses.
- Investors: Partnering with restaurant investors or seeking venture capital funding can provide the necessary capital in exchange for a share of ownership or future profits.
Develop a thorough bar business plan and financial projections to present to lenders, showcasing your venture’s viability and potential profitability.
For more ideas on where to get bar funding, check out our article on how to open a bar with no money.
Step 6. Do your due diligence
The next essential step in purchasing a bar is to conduct thorough due diligence. This involves examining all aspects of the business to understand its current state and potential risks comprehensively. Here’s what you should consider during this process:
- Financial analysis: Review the bar’s financial records, including income statements, balance sheets, and cash flow statements, to assess its financial health and identify any outstanding debts or liabilities.
- Legal and regulatory compliance: Ensure the bar complies with all relevant laws and regulations, such as licensing requirements, health codes, and zoning laws.
- Property and assets: Inspect the physical condition of the bar’s property, equipment, and furnishings to determine if any maintenance or repairs are needed.
- Inventory and suppliers: Evaluate inventory levels and supplier contracts to ensure the bar has sufficient stock and favorable supplier relationships.
- Staffing and management: Assess the qualifications and performance of existing staff members and evaluate any potential staffing changes or training needs.
- Lease and property documents: Review the terms of the lease agreement or property ownership documents to understand rental obligations, lease terms, and any restrictions that may affect the business’s operations.
- Seller disclosure: Request full disclosure from the current owner regarding all relevant information about the bar, including financial records, contracts, and permits. Ensure that any known issues or challenges are disclosed and addressed.
Step 7. Hire a business attorney for contract negotiations
The next step in purchasing a bar involves hiring a skilled business attorney to handle contract negotiations. This legal expert will play a critical role in safeguarding your interests and ensuring the purchase agreement terms are fair and favorable.
- Ask for referrals from friends, family members, colleagues, or other business owners who have undergone similar transactions.
- Bar associations often maintain directories of attorneys with expertise in various practice areas.
- Online directories such as
can help you search for business attorneys in your area.
- Contact professional networks, including industry associations, chambers of commerce, and business networking groups. Attend networking events or seminars where you can meet and connect with attorneys specializing in business law.
- Research online reviews of attorneys in your area to learn about their reputation, track record, and client satisfaction. Websites like Google My Business, Yelp, and lawyer-specific review sites can provide valuable insights.
Your attorney will review the purchase agreement and related documents, identifying risks and negotiating favorable terms aligned with your interests. They ensure compliance with laws and regulations, including licensing and zoning requirements, and verify clear title to the bar with no legal issues.
Step 8. Complete the bar purchasing
Once due diligence is completed and all arrangements are confirmed, the subsequent step in purchasing a bar is to finalize the transaction and officially acquire ownership. This entails completing the purchase process.
This typically involves signing a purchase agreement, which outlines the terms and conditions of the sale, including the purchase price, payment terms, and any contingencies.
Once both parties sign the purchase agreement, the transaction can proceed to closing, where the legal transfer of ownership takes place, and the buyer assumes control of the bar.
Step 9. Develop a plan for reopening the bar
The next step after purchasing a bar is to develop a comprehensive plan for reopening. This involves strategizing and implementing various aspects to ensure a successful relaunch.
Key considerations include:
- Assess the bar’s condition and make any necessary renovations or repairs to enhance its appeal and functionality.
- Create a menu that complies with menu engineering rules, aligns with the target market, and reflects the bar’s theme or concept. Consider offering a mix of signature cocktails, craft beers, and appetizers to cater to diverse tastes. Check out our list of bar ideas and concepts.
- If necessary, hire new staff and train them to provide excellent service and create a positive atmosphere.
- Develop a restaurant marketing plan to generate buzz and attract customers to the reopening. Use a mix of restaurant marketing tools, such as social media posts, e-mail marketing, promotions, and events, to reach your target audience.
- Implement safety protocols and guidelines to ensure the health and well-being of customers and staff, especially in light of any ongoing public health concerns.
- Fine-tune operational procedures and systems to streamline service and maximize efficiency. This includes
- inventory management,
- ordering supplies,
- scheduling staff.
- Conduct a soft opening or trial run to test operations and gather customer feedback. Use this feedback to make any necessary adjustments before the official reopening.
Step 10. Open your bar
With the bar reopening plan in place and all preceding steps completed, you are now prepared to launch your bar.
To organize an unforgettable event, check out this list of grand opening ideas for restaurants.
- Decide between existing or new bar
- Do market research
- Find a bar
- Evaluate the business
- Secure bar’s financing
- Do your due diligence
- Consider hiring a lawyer
- Complete a purchase
- Prepare a bar reopening plan
- Open a bar
Key Takeaways
- Conducting due diligence is crucial before purchasing a bar to assess its financial health, legal compliance, and market potential.
- To purchase the bar, explore various financing options, such as bank loans, SBA loans, or investor partnerships.
- Seek the guidance of a skilled business attorney to navigate contract negotiations, ensure legal compliance, and protect your interests throughout the transaction.
- Create a detailed plan for reopening the bar, including renovations, menu development, staffing, marketing, and safety measures.
- Finalize the transaction by signing a purchase agreement that outlines the ter
Frequently Asked Questions (FAQ)
How profitable is owning a bar?
Is it a good idea to buy a bar?
Whether to buy a bar depends on factors like your industry experience, financial situation, and personal goals. While owning a bar offers creative and entrepreneurial opportunities, it also entails significant challenges, such as high startup costs and regulatory requirements.
Conducting thorough research and seeking advice can help determine if buying a bar is right.
