A 10-step guide that proves bar owners are crazy and that opening a bar is probably not for you.
By Christopher Schutte
It’s happened to all of us. You’re sitting in the corner booth at your favorite bar with a few friends. After a few drinks, the juices start flowing. Everyone’s laughing, having a great time and shooting the shit. You look around and don’t want all the fun to end. Then the idea hits you: We all hate our jobs. This is fun. Let’s open a bar!
Open a bar, huh? I’m assuming you really like to drink, because this could be important.¹ And you like to hang out with your buds, no doubt, so the place needs to be cool.² I bet you’ve got a great name you came up with at the tail-end of an all-nighter — something clever, yet funny.³ It’s a given this is going to be a GREAT place for you to pick-up girls … maybe even a hot bartender or hostess.⁴ Looks like you’ve got the whole thing wired. Unless, maybe, you don’t.
Here’s the thing: opening a bar is almost the same as opening any other business. It’s almost the same except for the underage drinkers, the liquor control board, the health inspector and the unruly drunks turning your place into the Octagon. Starting a bar requires not only a tolerance for risk, but also a fair amount of capital and an understanding of how to market your product.
Just to be clear, while I’ve owned a number of businesses including a cigar store, which kind of doubled as a bar on the weekends, I’ve never actually owned my own bar. I’ve helped manage a few, created brand campaigns and names for some and have spent my fair share of time bellied-up to some of the best bars in the country — from Campbell Apartment in NYC and jazz bars in Chicago, to Atlanta’s Highland Tap and every college dive with a good jukebox. I’ve certainly come close a few times, but for me the risk always outweighed the reward. To help you navigate through these beer-goggled waters we’ve enlisted the help of some of our favorite local bar owners in creating this handy guide to explain some things you probably didn’t think about.
 Oooh…strike one. Most successful bar owners enjoy a cocktail, or two, but draw the line at Jager-bombs, body shots and puking on the booth they just paid to have reupholstered.
 Friends hanging out at your bar don’t always work like you planned. You’re either the asshole who makes them pay for drinks, or you’re the former bar owner.
 Naming your bar is one of the most critical marketing decisions you’ll make. Have one too many Cuervo’s and you’ll begin to think calling your place “Nadds” is an awesome(!) idea. True story, look it up.
 We’re told dating the help is an epically bad idea. Bad like sexual harassment, restraining order, lawsuit, lose your bar kind of bad.
1. Work at an existing bar.
If you’re looking at starting your own bar, chances are you’ve spent a fairly considerable amount of time frequenting various drinking establishments. But have you ever actually worked in a bar? Getting just a little first-hand experience before you go out on your own can be invaluable as you begin to develop your plan.
Drew Trick, owner of the newly opened Lucky’s Taproom and Eatery in the Oregon District, has been in the bar business for 22 years as a bartender, bar manager and general manager. “The bar business is in the family blood,” said Trick.
In fact, 20-something years in the bar business is almost the industry standard when it comes to owning or being the general manager of a successful bar, especially in Dayton.
“Let’s see, 20 years,” said Shaine Sullivan, general manager of South Park Tavern, which is celebrating their fourth anniversary this year. “I started off bartending, then went into somewhat managing.”
Sullivan learned the ropes of managing a bar when he worked at Kramer’s, near UD’s campus.
“There were nights where I’d open up and I was the server, the bartender and the cook at Kramer’s,” said Sullivan. “I can bartend. I can cook. But I’d rather sit back and come up with more ideas.”
2. Develop a business plan.
According to manageyourbar.com, new bars fail at alarmingly high rates (57 percent) during their first three years. Most of these bankruptcies can be attributed to poor management. Before you become too enamored with the idea of starting a bar, a solid business plan is key. It should include all build-out and start-up costs such as renovations, fixtures, furniture and equipment. Don’t forget allowances for signage (which can be pricey), promotions, advertising and marketing. Factor in your monthly obligations including rent (or mortgage), utilities, projected payroll, insurance and other expenses. Then compare that to your projected revenues.
If this sounds like too much work, you should bail now. This is only the beginning.
Shane Juhl is co-owner of Toxic Brewing Company, a brewpub set to open in the Oregon District in 2012. Juhl took a bit of a different approach when looking at his finances with partner Jason Hindson. He believes having the dream and passion to start is first.
“… then you have to work all the angles together — concept, business plan, financials, etc,” said Juhl. “They each play off one another and add to the final plan.”
3. Arrange your financing.
Unless you’re a trust fund kid, chances are you’ll need to speak to a bank about a business loan. This experience can be made less unpleasant by presenting a solid business plan, listing local references, having some existing capital to invest and potentially considering a cosigner on your loan (such as a parent) to provide the bank with some added security.
Bars are a moderately risky business proposition as it is – all your shot glasses need to be in a row.
“The most difficult part of opening an establishment is financing,” said Trick. “The banks and places which offer small business loans are not easily sold on the idea of financing such an endeavor.”
Lisa Mendenhall, co-owner of Blind Bob’s (celebrating their third anniversary next week) with her husband Bob, thought financing was the first and most important step, but also the step where you run into the most headaches.
“We couldn’t get loans because we had no experience and it’s a high-risk business,” said Mendenhall. “We finally did the deal by assuming the prior owner’s loan and getting a home equity loan against our home.”
4. Location, location, location.
I realize it’s a trite expression, but it’s true. Nothing dooms a fledgling bar quicker than opening in the wrong location. You can literally do everything else right and fail based on this one decision. I’d like to tell you there’s a foolproof formula for selecting the right location, but there just isn’t. Site selection is part gut feeling, part demographic study, part observation and part local knowledge.
Generally speaking, history doesn’t lie. If two other bars failed in the same location you’re looking at, chances are it’s just not a good location.
When Trick found the location for Lucky’s, he jumped on it. “When I found that this building was available I knew it would house my ‘dream’ bar, a nice shotgun hole in the wall …” said Trick.
If anyone is the poster bar for success despite location, it’s King’s Table. After all, it is housed in a half vacant strip mall.
“Obviously I don’t think I have a great location,” said Liakakos. “Everyone says, you know, location, location, location, but I look at a place like Buckhorn Tavern and I say, Buckhorn Tavern, Buckhorn Tavern, Buckhorn Tavern … honestly, I think it’s luck.”
5. Acquire a liquor license, other business licenses.
Depending on your exact location, this first step can range from very simple to nearly impossible. Many areas have maxed out on liquor licenses for on-site consumption, meaning that you may be faced with the very expensive scenario of buying an existing license that is most likely attached to the license holder’s bar. This step may also dictate your location to a large degree.
But you’ll need more than just a liquor license to open your doors. Be sure to apply for municipal, state and federal business licenses. The exact combination of permits will vary depending on your location. Be safe and have all of your licensing in place before you sink money into a location.
6. Market research.
Check out potential competitors, spend some time in the neighborhood, request some demographics from the local chamber of commerce, or small business development council.
You’ll very likely find out a few things that will shape your remaining decisions.
“I don’t think we would have opened this place anywhere but the Oregon District,” said Mendenhall. “Having the variety of bars, restaurants, art galleries and retail shops makes it a great place to be.”
Sullivan agreed, “Starting off, you need the help of your community, absolutely. Then they’ll give back. When we first started off, that was the true and only business we had; the community of South Park.”
7. Decide on your theme.
You’ve likely had a direction in mind from the very beginning of the process, but now’s the time to flesh it out. Sports bar? Cigar bar? Classic cocktails? Neighborhood pub? The options are virtually endless. Just keep in mind there’s a considerable difference in investment and marketing plan for something like an upscale English pub and a neighborhood sports bar with wings and pool tables. There are also significantly different target audiences for different types of bars. Make sure yours matches your local demographic, or can be minimally marketed to the right target audience.
“We knew we wanted to have good beer, good food and provide music,” said Mendenhall. “We were also two generations working on this (with our son, Nate) so we wanted it to be a place a variety of people could enjoy. I’m not sure who came up with “American tavern” but that seemed to fit well.”
South Park Tavern felt it necessary to find their niche and stick to it, said Sullivan. “Ours is craft beer and craft pizza.”
While South Park Tavern definitely has a “neighborhood pub” feel, Sullivan agrees they’ve worked hard on drawing in different crowds.
“What I tried to do was build off of that,” he said. “So we put in TVs for the sports fans, so now we have them. Then we switch over at night after the dinner crowd is over to grab the music crowd … it takes a long time to grab each crowd.”
8. What’s in a name?
In this case, quite a bit. A great name can succinctly capture everything from brand identity and décor, to your target market and socio-economic status. Take the bar name Luxe, for instance. This name immediately conjures images of an upscale martini bar, sleek modern décor, tasteful electronic lounge music and a generally well-heeled clientele. Now let’s look at Bones & Buckets. Chicken wings, peanut shells on the floor, buckets of beer, lots of TVs, shot specials and reasonable prices. In each case, the name creates an expectation level for the customer before they’ve even stepped in the bar. If your bar’s name has some personal significance – like Blind Bob’s (owner Bob has a genetic eye disease that has caused him to gradually lose most of his sight), which I love – that’s even better. A great name can be the first piece of a great marketing plan.
So, where did Lucky’s get its name? “The bar is actually named after my Dad,” said Trick. “His nickname at work was Lucky. There are so many influences of his in this joint that you could say it is a tribute to his love to entertain.”
The name King’s Table has been in the Dayton area since 1958, but came into the Liakakos family in 1978. King’s Table was a popular hangout for lawyers, judges and prosecutors back in the day, especially the ‘90s. Dayton’s kings indeed.
9. Hire your staff.
The key to your long-term viability is staffing. Good workers can elevate an otherwise mediocre bar to a good bar, and a good bar to great. You’ll want your key people to be experienced bar professionals (they do exist) and you can’t be afraid to poach experienced talent from your competitors. Good employees will want to be paid accordingly – remember that.
“The most difficult part of running the day-to-day operations is to find a trustworthy staff,” said Trick about Lucky’s. “I am very lucky in the fact that I know many in the field and have had great success in hiring.”
Sullivan said of his employees at South Park Tavern, “They have to share the dream with you.” Sullivan’s success with South Park has prompted him into opening another place and bringing many of those trusted employees with him.
“I’m going to open up another place and the whole time, I’m going, ‘guys stick with me,’” he said. “It’s going to happen. At South Park, we’re packed, so I want to take the run-off business elsewhere.”
10. Be prepared.
Everyone knows that bars are, most of the time, pretty relaxed and laid back, but sometimes can be the breeding ground for customers to stir up trouble. The Dayton Police Department, along with several community partners around Dayton, are unfortunately used to dealing with unruly bars that don’t know how to handle their patrons.
“So many people don’t have the experience to run a bar,” said Major Larry Faulkner of the Dayton P.D. “They think that they do because everyone thinks, ‘Hey, wouldn’t it be great to run a bar?’ But they have no idea of the complexity that is involved.”
Faulkner cited outside promoters bringing in events to many of the 81 bars in downtown Dayton as one of the main problems both the police and the community have to deal with.
“A promoter will have a big event [at a downtown bar] … and they’ll take over the bar,” he said. “They’re not responsible for the facility, they’re not responsible for the liquor license and they’re not responsible for community relations. So before everyone leaves, we have large-scale chaos. We have big fights and disturbances, and even if they have their own security, it still doesn’t matter. We end up there because either the community calls us, or the bar has to call us for help. The problem with that is, we’re taking a private club that’s making money and we’re using public resources to run it. That’s simply not going to work.”
The Dayton P.D. offers training courses for bar owners and their staff on how to deal with their patrons, dealing with crowd control and managing a bar properly. The department has recently been invited to the Center for Problem Oriented Policing Conference this year to do a presentation on how they deal with bars.
“There are 81 bars downtown and they’re all competing for the same dollars,” said Faulkner. “If you think you’ll open your doors downtown and you’ll get a big chunk of money, you’re kidding yourself. You have to create an environment that people will come to and it doesn’t involve a bar with disturbances and people fighting.”
So, what do you think? Ready for that grand opening yet?
The bottom-line is that starting your own bar can be a daunting proposition. But it can also be a rewarding career choice if you can minimize the risk, be diligent enough and really know what you’re doing. On the other hand, if you do all of those things, you can earn maybe what is the greatest thing about owning a bar: being your own boss.
“There’s no one watching you, no one telling you what to do,” said Sullivan. “It’s nice. It’s your own place. You’re not stuck in an office. I mean I’ll go to Sam’s Club (for a work errand) and stop off at Hooters for a beer on the way back.”
Chris Schutte is the former owner of Match [Striking Vintage Goods] with locations in Hilton Head, S.C., Savannah, Ga. and Buckhead in Atlanta, Ga. He is available any time to consult on your bar plan, scout potential sites or sample a cocktail. Reach DCP freelance writer Christopher Schutte at ChrisSchutte@DaytonCityPaper.com.