After a challenging few years during the COVID pandemic, the UK bar and pub scene is now thriving. In fact, more and more entrepreneurs are considering opening their own venues.
While opening a bar in the UK takes dedication and hard work, it can be hugely rewarding – both personally and financially. In this in-depth guide, we explore what it takes to open a bar and describe the main hurdles you’ll need to overcome to achieve your dream.
Set out your vision
The first step when opening a bar is figuring out the bigger picture. You’ll need to understand what type of bar you want to open, what theme or aesthetic you’re aiming for and what clientele you hope to attract. This is the stuff that would-be business owners love doing. It’s what happens when we build our dream business in our minds. And it’s not about the details – we’ll get to those later.
Begin by establishing what style of bar you’re interested in running. For instance, you may want to open one of the following:
- Cocktail Bar – serves speciality cocktails and high-end drinks to a generally more upmarket crowd. The location will be important, as will your ability to produce high-quality drinks and establish the right atmosphere.
- Sports Bar – focuses on screening a wide variety of sports to a typically younger crowd. Being able to offer cheaper drinks and food is essential, and you’ll usually need a larger premise to run a successful sports bar.
- Pub – the UK’s traditional drinking venue and popular amongst a diverse range of people. While pubs were historically cosier and more informal bars, they have diversified in recent years and are now much more varied.
- Wine Bar – specialises in wines from around the world, often paired with food or small bites. They tend to attract a wealthier clientele and are usually concentrated in cities. However, they’re becoming increasingly popular in smaller towns across the country.
Understand licencing arrangements
The type of bar you want to run will impact the licences and permits you require. Understanding how licensing arrangements work will help you establish if your initial idea is viable and whether there are any obstacles to opening your dream bar.
Licencing regulations vary considerably, so you’ll need to conduct extensive research. However, a few of the most common licences include:
- Personal licence – A personal alcohol licence allows you, the business owner, to sell alcohol. You’ll receive your personal licence from your local council once you have passed a CRB check and participated in the necessary training course.
- Premises licence – As well as a personal licence, you’ll require a licence for the business premises. All businesses that sell alcohol require one and they’re issued by the local council.
- Music licence – If you want to play music in your bar, you’ll need a music licence from the Phonographic Performance Limited and Performing Rights Society (PPL/PRS). Previously, these were two separate licences. The organisations have now collaborated to create TheMusicLicence – a single licence that covers all music played by businesses.
- TV and sports licences – to broadcast sports in your bar, you’ll need a valid TV licence and a commercial subscription from the relevant broadcasters. This is particularly important for sports bars. In recent years, law enforcement has clamped down on illegal broadcasting and punishments are heavy.
- Food and Hygiene certificate – If you plan to serve food in your bar, you’ll need a Food and Hygiene certificate to demonstrate that you know how to store, prepare and serve food safely.
Exploring business costs
Before you get too far into your business planning, it pays to ensure that you’re pursuing a financially viable venture. The best way to do this is to calculate your expected business expenditure and see if the figures add up.
While all businesses spend money on slightly different things, some of the most common expenditures include:
- Property – either leasing a premises or buying one outright.
- Utilities – your energy and water bills, plus any other related outgoings.
- Licencing – the cost of the licences you require to conduct your business.
- Stock and inventory – the products you need to run the business.
- Equipment – the appliances and tools you’ll use daily.
- Staff – your outgoings on wages and other staff-related expenses.
- Marketing – the money you invest in publicising your new business.
- Business insurance – expenditure required to protect you and your business from unforeseen accidents and incidents.
Researching the industry and competition analysis
As well as thinking about your own business, you need to consider the competition and wider industry. You may think of a brilliant idea for a bar, then find out that other entrepreneurs have tried it and failed. Understanding why they failed enables you to make better decisions for your own business or pivot to a different, more realistic business idea.
When researching the competition, consider the following:
- What are other businesses doing well? Where can you improve on existing businesses?
- How many customers are your competition attracting? When are they busy? When are they not?
- How are other businesses turning a profit? Is their profit primarily derived from drinks, food or a combination of both?
- What steps are other bars taking to attract customers?
In terms of the wider industry, you’ll need to look at performance and market statistics. Are bars in your niche doing well? Is the number of bars in the local area and across the UK increasing? How are customers spending their money? Finally, examine industry trends. What types of bars are performing well? How can you fill a gap in the market and distinguish yourself from the competition?
Find a location
As your understanding of the industry improves, you’ll gain a deeper insight into what kind of business location suits your bar best. An enormous range of factors will dictate whether a premises is right for you. It can be one of the most challenging aspects of opening a bar. For this article, we’ve identified three key areas you need to focus on:
The building itself
The type of bar and style of business you want to open will play a big role in determining the business premises you need. For instance, a trendy wine bar does not require that much floor space but a multi-screen sports bar will. If you want to serve food, you’ll need a dedicated kitchen space, while live music events may necessitate soundproofing. Draw up a list of must-have features and begin your search from there.
The geographical location
Where your bar is located matters. It affects the amount of passing trade you attract, who comes to your bar and, to a certain extent, what you can charge your customers. The amount customers in central London are willing to pay will make customers from smaller, suburban towns turn and head straight for the door. Perhaps most importantly, your location determines zoning restrictions. This can influence your opening hours and the entertainment you can put on.
Unless you’re running a non-alcoholic bar, most customers will come to your bar to enjoy a drink or two. This means many will not be able to drive and will depend on alternative modes of transportation. How well-connected your bar is (can people walk to it or is it close to public transportation?) will influence how successful it is.
With bars in less accessible areas, you’ll need to accommodate drivers with parking facilities and recognise that drink receipts may not make up as large a portion of your income as bars in better-connected locations.
Creating a business plan
With the basics in place, it’s time to create your core business plan. Usually, a business plan brings together many of the decisions we have already discussed and merges them into a single document. To create a comprehensive business plan for the opening of your bar, start with the following structure:
- An executive summary – the initial section should offer an overview of your business, what it sells and what you hope to achieve.
- Market analysis – this section details your target market and incorporates information about your target demographics and how they relate to your business. It will also include your competitors’ analysis.
- Marketing strategy – explains how you intend to brand and market your business and appeal to your target demographic. This includes elements such as brand aesthetics, advertising, social media use and product promotions.
- Financials – features all your financial projections and demonstrates that your business can make a profit if all goes to plan. It describes your start-up costs, regular expenditures and ongoing investment costs, and balances them against your expected income.
- Business team – the final section discusses your management team and details their experience and any relevant qualifications they may hold.
Financing your bar
Bar owners finance their ventures in many ways, often combining several methods to find the investment they need to start their businesses. How you acquire the initial capital required to launch your bar will depend on your personal circumstances. A few of the possible options include:
- Savings – If you’ve managed to save enough to launch your own business, it can be a great way to get your business off the ground. However, it’s important to note that there are risks involved in opening a bar. You need to be prepared to lose those savings should things not work out.
- Loans – You can also request a business loan from a bank or similar financial institution. If you do so, you’ll need a strong business plan and a healthy credit score.
- Private investment – If you have access to people who can invest in your business in exchange for an ownership share, you can generate the start-up funding required without borrowing.
- Crowdfunding – Some entrepreneurs have had success raising capital via crowdfunding sites such as Kickstarter. That said, it’s rare for business owners to raise the investment required to start a new bar on such platforms.
Finding business insurance
Almost all bar owners take out some form of business insurance. If they employ people to work in their bar, they certainly do because Employers’ Liability insurance is a legal requirement.
At Park Insurance, we provide bespoke insurance policies to bar and pub owners looking for total peace of mind. We can tailor a policy to your particular needs and offer cover that reflects your commercial reality. As well as Employers’ Liability insurance, you may want your policy to include:
- Buildings insurance
- Contents insurance
- Stock insurance
- Door supervisor cover
- Business interruption cover.
Finding the right staff for your business
As a bar owner, building a competent team that helps you maximise profits is always a challenge. The hospitality industry is renowned for its high staff turnover and many bar staff move between jobs regularly. Finding the right staff will mean working out exactly what you want from team members and searching for individuals with the right skills and qualities.
You can also increase the likelihood of a new staff member working out by ensuring you have a comprehensive onboarding and training process. If you instil a specific way of working early on in the process, employees are more likely to perform and behave in the way you want.
Marketing and attracting customers
Finally, consider how you’ll get customers in through the door. Your marketing strategy is crucial to getting your brand out there and creating hype. Leveraging social media and influencers to build your reputation is a great way to start.
You also need to make sure that visiting your bar is an attractive proposition. Typically, this means putting on promotions and special offers. This can include two-for-one drinks offers, pay-to-play bar games where customers can win prizes, and special food nights – think curry Thursdays or tapas Tuesdays. Opening a bar is just the first step. Driving footfall and repeat customers is just as important.
What next? Park Insurance is here to help.
At Park Insurance, we have more than 30 years of experience working with bars, pubs and a whole host of other businesses in the hospitality sector. We understand the challenges you face and provide bespoke insurance policies that protect your interests. Our cost-effective cover and hassle-free claims process make us a sensible, stress-free choice for your business insurance provider.
Want to learn more about our bar insurance cover? Fill out our contact form, drop us an email or call 0117 955 6835 to speak to one of our expert advisors.