Bars have been the main place for everyone for many years, and the industry is massive, with billions of dollars spent on it every year.
Because of this industry trend, opening a bar as an entrepreneur either to expand your portfolio or as a first-timer might look attractive.
They are generally lucrative businesses, providing quite a lot of revenue if you manage them well.
If you want to open a bar, the first question that pops up in everyone’s mind is, how much do bar owners make?
This is a question with no fixed answer, and you can see all kinds of ranges. However, you can have some sort of expectation from average numbers.
In this article, we’ll talk about the average income of bar owners, what affects the income, and all other details surrounding the economics of a bar.
Average Income of Bar Owners
A normal bar generally makes between $25,000 to $30,000 per month or $300,000 to $360,000 annually.
These numbers are only estimated average numbers based on the prices of the bar, but they change quite a lot.
There are a lot of factors deciding a bar’s income in any given month or year. Even seasonal changes could affect your income.
Of these $300,000 to $360,000 annual income numbers, a bar owner generally nets a profit of $60,000 to $120,000 annually.
Compared to the other industries, bars generally have higher net profit percentages because of the variety of products and customers they have on a daily basis.
Average Profit Margin
The average profit margin for most bars is anywhere between 50% to 80%, a huge number compared to any other industry.
The most frequent margin is between 70% to 80% in bars, but there are also some with lower profit margins, depending on the type of products they serve and the location.
The reason why the profit margin is so high is that the revenue from alcohol is quite high. For example, beer has a 24% profit margin, and wine has a 28% profit margin.
The industry standard of other industries is between 15% to 25%. A bar is not even close to these levels, making it an extremely lucrative business.
Average Money Bar Employees Earn
Bars could have a variety of different employees, such as chefs, bartenders, security employees, and some others.
That’s why the salary range could also be very different from one role to another. The average bar staff salary in the United States is $12.70 per hour or close to $30,000 annually.
The higher end of this scale goes as high as $40 an hour or about $100,000 a year, depending on your experience, role, and location.
There are also those earning about $16,000 a year or $7.25 an hour, depending on their roles.
Factors Affecting Bar Owners’ Income
As we mentioned, bars come in a variety of shapes which also affects income because of many factors.
But what are these factors, and how can you play with these factors to make it something positive? Here are some of the factors that affect your income.
Type of products you sell
Some bars sell only alcohol, and some bars add some extra stuff to their menu, such as snacks, dinner, or other types of food.
The food industry’s profit margin is way lower than that of alcohol, so adding food could potentially affect your overall income since the profit margins will be lower.
Additionally, each alcohol has different profit margins. Choosing which alcohol to sell is also an important factor, as your income will vary depending on that.
That’s why you should focus on a balance of products to make sure you attract everyone while keeping your profit margins at the desired level.
Location of the bar
Bars in the city center or crowded areas get more customers than those that are away from the spotlight.
However, when you are in a more crowded and central location, your expenses, such as the rent, will also go up.
That’s why where you choose to have your bar is one of the most crucial aspects of your income.
The more customers you have, the more income you will have, right? Though your expenses will also go up with bigger sizes, it will be easier to navigate your income by making more sales.
However, make sure that your area is capable of attracting enough people to fill in your bar.
Bars could be in many different atmospheres depending on what type of bar you exactly want. Luxurious, mid-level, or low-level. The atmosphere changes the type of people that comes to your bar, as well.
Luxurious bars can have premium prices because their customers will be able to afford those prices, whereas low-level bars should focus on cheaper drinks but higher in quantity for customer numbers.
How Much Does a Small Bar Make a Night?
If this is going to be your first entrepreneurship journey, you are probably going to start with a small bar and try to gradually make your way up.
This is the route that most people take, and the income of a small bar is not very different from the average income of other bars.
The thing with a small bar is that your income will be lower than most bars, but your expenses will be equally lower, so the profit in between generally stays close to each other. On average, a small bar makes about $900 to $1,000 a night.
However, note that the factors that we mentioned above still play a crucial role in these numbers. They might be lower or higher depending on those factors.
How Much Does a Bar Cost to Open?
The costs to open a bar depend mostly on the size of the bar, its location, and what kind of bar you want to open.
On average, the first startup costs of any bar can range anywhere from $100,000 to $850,00.
The startup costs include things such as real estate, documentation, permits, insurance, and supplies. These costs are also not recurring most of the time and are only one-time fees.
Depending on what exactly you want from your bar, it could be way less or way higher.
For example, a small bar with not a lot of alcohol options could potentially cost under $100,000, and a franchise bar will cost you close to $1 million or higher.
What Permits Do I Need to Open a Bar?
Before starting to serve your customers as a bar, you need to get certain permits and certifications.
If you don’t get these permits, your business can’t legally operate, and you face the risk of fines or closure of your business.
The exact permit requirements vary from state to state, but there are very common permits that all bars generally need to get.
- Business License
- Music License (if your bar will have music or a live DJ)
- Signage Permit
- Resale Permit
- Employer Identification Number
- Live Entertainment License (if you are going to have live games, music, or anything similar)
- Certificate of Occupancy
- Liquor License
- Food Service License (if you are going to offer food or snacks)
- Food Handler’s Permit (same as food service license)
- Building Health Permit
- Seller’s Permit
- Pool Table License (if you are going to have a pool table in your bar)
- Fire Department Permit
Bars are one of the most lucrative businesses compared to all industries, with close to an 80% profit margin.
They are also fairly easier to run, depending on their size and what kind of products you offer. The operating hours are way different than a normal business, but the income is equally rewarding.
A bar makes an average of between $300,000 to $360,000 annually. Of these numbers, the net profit could be anywhere between $60,000 to $120,000 annually, depending on factors such as location, size, and the type of products you sell.
If you are thinking of owning a bar, it could be a great choice if you think you can handle the long hours and get all the necessary permits.
Are bars the most profitable business?
There is no doubt that bars are extremely lucrative businesses. When we compare it to the food industry, bars are the most profitable businesses out there when we look at the profit margins.
Compared to all industries, they are not the most profitable ones, but they are still at the top level.
How easy is it to run a bar and make a profit?
Depending on what kind of bar you own, it could be hard to maintain and run it. Complex bars such as those located downtown, big and busy most of the time, are the hardest to run but easier to make a profit. Small ones are easier to run but harder to find customers and make a profit.
Can I fail with a bar?
Just because bars have high-profit margins doesn’t mean that you can’t fail with a bar.
If you can’t manage the establishment well, do good marketing, and find customers, you will not make a profit.
A business that doesn’t make a profit will go bankrupt, and that includes bars, too.
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.