Share This Info:  

Buying A Bar - 4 Tips Worth Reading Before You Buy Your Bar


Buying A Bar 4 Tips Worth Reading

A lot of people think buying a bar would be a fun, easy business to get into. Your job would basically be to provide a place for people to have fun, right? 

Maybe, but bars are one of the riskiest businesses to buy into. The bar business is highly competitive and it tends to rely on contemporary trends within the area. Many owners find the most difficult part in buying a bar is to sustain consistent growth beyond the "buzz" factor.

Also, the laws that ban smoking in public places have changed the game for many bars, hurting profits, but at the end of the day there is no greater markup than that of liquor so there is potential to make money in this business.

Here are a few more things to take in consideration when exploring the possibility of buying a bar from a business broker or direct from a bar business owner:

Food Or No Food?

As I said, competition in this industry is high. You are not only competing with other small businesses but also the large chains that offer both food and liquor.  True bars, establishments that don't offer food, just liquor, are becoming less profitable. Bars in good, dense, urban locations are still strong but suburban bars are struggling. The absence of a kitchen increases the risk of losing hungry customers to other venues. So, while liquor is always more profitable than food and not having the expenses of a kitchen can be good for the bottom line, not having food can also hurt, so consider this option closely.

Liquor Licenses

Regardless of whether or not you offer food, without a liquor license you lose your greatest source of revenue, if not all of it. Not having a liquor license can completely stop your access to this industry so you need to make sure that the existing owner's license can be transferred to you. Liquor licenses in certain areas where there are high concentrations of establishments within major cities have become extremely difficult to obtain, thus driving the value of those licenses very high. In some states, such as New Jersey, they only offer a specific amount of licenses. Once those are gone, they do not issue more.

Owner Involvement, Staff, Inventory Control And Your Customers

If you plan to be involved in the day to day business, be prepared for some potential headaches. Most bars are open until the early morning hours and at least 6 days a week.  With so many operating hours, you have to be adequately staffed. Not only do you have to be staffed for all those hours but you also have to make sure your staff is friendly, hardworking and most importantly honest.

This can be a difficult business to control inventory as pouring an extra drink here and there can easily go unnoticed. Given that most bars do a lot of cash business, it is also easy for dishonest employees to pocket your cash. The bar and restaurant industry is also known for having high turnover, so be prepared for staffing challenges.

Let's not forget to talk about customers. While your customers are the life of your business, they can also be your biggest headache.  When buying a bar, you will encounter customers that come in, have a few too many drinks and become unruly. You also have to worry about how these unruly customers will leave your establishment. With new drunk driving laws being introduced every day, customers like these could up being a big problem.  Not everyone will be a problem, but it's important to ask the current owner what procedures are in place should one of these customers come in.

In my opinion a high degree of owner involvement on a day-to-day basis will make a bar business most successful as it will give you the ability to contain costs and prevent "˜shrinkage. As the Owner, you must have excellent people skills. This is not a business for introverts.

Benchmarks

Successful bars and nightclubs can usually generate up to $5,000 per well on a good night. As you are reviewing financials, keep in mind that the cost of goods should be below 28% of sales in a tavern/bar with little or no food. Payroll should be less than 20%.  Look closely at the rent, it should be about 6% to 8% of gross sales. Serving alcohol should be an extremely profitable endeavor, with average pour costs running as low as 16 percent for liquor, 21 percent for draft beer, 25 percent for bottled beer, and 28 percent for wine but despite these great numbers you have to make sure you have the right management and staff in place to run the operation efficiently.

Peter Siegel, MBAAbout The Author: Peter Siegel, MBA is the Founder (of BizBen.com) & the Director Of the BizBen California Network (founded in 1994!) consisting of business buyers, owner/sellers, business brokers, agents, intermediaries, and advisors (there are over 90,000 users, and 8,000+ listings posted on BizBen.com). To join (FREE) the BizBen California Network, phone Peter Siegel direct at 925-785-3118 - get signed up for business for sale listings (Email Alerts) before they hit the market, view requests from serious business buyers - wanted notices, notices about upcoming FREE online webinars on the topic of buying and selling California small and mid-sized businesses and much more! Call 925-785-3118 to get info about bars, taverns, and nightclubs for sale in your area.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business







  Helpful Resources To Assist In Selling And Buying California Businesses
Bob Hughes, Business Broker: Coachella Valley Area

Bob Hughes is a business broker & is President of Hughes Properties. Hughes has a wide variety of entrepreneurial experience with the personal ownership & sale of numerous businesses, and has sold over 200 small & mid-sized businesses in the Riverside County marketplace. Call Bob at 760-323-8311.

Lee Petsas, Business Broker - Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

Manjit Singh, Business Broker - SF Bay Area, Central Valley

Assistance in the SF Bay Area & Valley. Contact me about buying or selling a restaurant, liquor store, gas stations, markets, and c-store businesses. If you are looking to buy or sell a SF Bay Area, Central Valley liquor store, market, c-store, restaurant, etc phone me direct at 510-417-9429 Cell.

Joe Ranieri, Business Broker: Orange, LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize in LA & Orange County high volume restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.

Bob Baumgarten, Business Broker: Southern California

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-292-2008.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

AJ Rana - Business Broker, San Francisco Bay Area

Professionals who understand the importance of world class business brokerage service and the value it can create. Specializing in assisting sellers and buyers with retail stores, restaurants, hospitality & lodging, manufacturing operations, distribution companies, e-commerce and service businesses.

Jack Oh, Business Broker: LA, Orange Counties

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Buying A Bar - 4 Tips Worth Reading About Before You Buy Your Bar Or Lounge

Four factors to consider when buying a bar. Peter Siegel, MBA (BizBen ProBuy, ProSell Programs) with BizBen discusses: The advantages and disadvantages of a bar that serves food as well as liquor. Staffing, inventory control and owner involvement as they relate to a good business are summarized.

Don't Buy A Restaurant Without Checking The Competition - Key Buying Tips

Looking to buy a restaurant business? Check out these tips first to avoid getting blindsided when you buy any type of small or mid-sized California restaurant. Peter Siegel, MBA (BizBen's ProBuy & ProSell Programs & Restaurant Purchase Financing Expert) at 925-785-3118 covers this topic for buyers.

Restaurant And Fast Food Franchises - Successful Tips From Franchise Buyers

Restaurant franchise offerings are among the most popular of the business types potential business buyers seek. What many would-be owners don't realize is that there are specific tips for buying fast food or restaurant franchises that don't necessarily apply to independent restaurants for sale.

Unreported Income: Should Sellers Disclose Unreported Cash To Buyers?

Should owners who offer a business for sale reveal to prospective buyers any income that is not recorded in the books? This is a controversial topic with arguments both for and against. Most business sales intermediaries believe if you don't pay tax on it, you can't claim it. Some sellers disagree.

Who Really Represents The Business Buyer In A Deal? Does Dual Agency Work?

Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottom line is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.

Selling Your Business To One Of Your Employees - A Good Idea? Pros And Con

After investing years of time and talent into a company, many small business owners want to feel like they are leaving their business in good hands and for that reason, some sellers opt to sell their business to an employee. Peter Siegel, MBA talks about the pros and cons to taking this route.

Financing Advice: Showing Add Backs To Get Business Acquisition Financing

When seeking business acquisition financing, it helps to review a seller's addbacks as a source of funding to service the debt service. But explain them correctly. Peter Siegel, MBA business acquisition financing expert and advisor at 925-785-3118 covers this topic on financing a business purchase.

What Is The Typical Business Broker Fee For Sellers And Buyers? Who Pays It?

Was just asked the question from a business owner what the "typical commission" amount is for a broker or agent and if upfront fees are common? Thought this might be a great Discussion topic on BizBen for both business owner/sellers and potentially for business buyers (buyer representation).


Michael Brewer, ABC License Consultant
Escrow Services Diane Boudreau-Tschetter
Chuck Post Laundromat Industry Expert
Escrow Town And Country Southern California
Facebook
Twitter
Linkedin
Vlogs and Podcasts
BizBen Blogs And Articles
New Postings Reports On BizBen Sign Up
California Educational Events Buying And Selling Businesses
Instant Email Alerts On BizBen
Advertise On BizBen

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Restaurant And Fast Food Franchises - Successful Tips From Franchise Buy...
Read More News
Don't Buy A Restaurant Without Checking The Competition - Key Buying Tip...
Read More News