How to write a bar business plan
A bar business plan is the document a lender or partner reads before backing your bar: the concept, the opening costs and two years of monthly numbers. Start the numbers from how many drinks you expect to sell each week.
The written plan explains the bar you want to open. The forecast shows whether it can make money.
A lender can question a sales target, but it's much easier to test a forecast built from drinks sold, average selling price, seating capacity and opening nights. So start with those numbers, work through the costs of running the bar, then check whether there's enough left to repay the loan and survive a slower opening.
What goes in a bar business plan
Lenders, investors and landlords ask for a plan. Lenders and investors often ask for the "traditional" plan from the US Small Business Administration (SBA).
| Section | What a bar puts in it |
|---|---|
| Executive summary | One page, written last: the bar, location, owners, amount asked for, year 2 numbers |
| Company description | Concept, seats, hours, type of company, who owns what |
| Market analysis | Who goes out in the neighborhood and when, nearby bars and their prices, foot traffic, local demand, and why guests would choose yours |
| Organization and management | Who runs the bar each day and their experience, opening team, accountant, attorney |
| Service or product line | Menu, prices, each drink's cost from a costed spec |
| Marketing and sales | How first guests hear about you, why they come back, the budget |
| Funding request | How much, from whom, on what terms, what it pays for, the loan's fees |
| Financial projections | Monthly for 2 years, yearly to year 5, every assumption written down |
| Appendix | Lease or the landlord's proposed terms, license status, builders' quotes, floor plan, menu, resumes |
The plan should also name who runs the bar when the owners aren't there, and what that person ran before. SBA rules ask lenders to describe both.
Free bar business plan template
The template is an Excel workbook with a Read me sheet and four working sheets:
- the sections above, with a column for your notes
- a startup budget, with every cost of opening
- a 24-month forecast with sample numbers
- the same forecast, blank, for your bar
Yellow cells are inputs, and the rest calculate.
The sample forecast also comes as a CSV file.
The workbook gives you a starting point, with a startup budget and 24 months of projected sales, costs and cash balances. It isn't a complete lender application. Depending on your lender, you may also need projections through year five, a balance sheet and a fuller cash-flow statement (see the questions at the end). Use the workbook to build the assumptions, then have your accountant check the completed financial package.
Forecast sales from drinks, not a total
Take 1,000 drinks a week at full pace (as busy as you plan to be), at $15 each. That is $15,000 a week, $65,000 a month and $780,000 a year at full pace. Later, you check that these sales can repay what you borrow for the opening budget.
Monthly sales = drinks per week × net sales per drink × 52 ÷ 12
Our opening guide shows the order you open a bar in. Month 1 starts when the license, the build and the team are all ready. From month 1, sales climb toward full pace. This climb is the ramp:
| Months | Share of full pace | Sales per month ($) |
|---|---|---|
| 1 to 3 | 60% | 39,000 |
| 4 to 6 | 75% | 48,750 |
| 7 to 12 | 90% | 58,500 |
| From 13 | 100% | 65,000 |
That means year-one sales in this example are $614,250 ($39,000 × 3 + $48,750 × 3 + $58,500 × 6), not $780,000. The larger figure is what a full year brings in once the bar reaches its planned pace. The ramp matters because the bills start arriving before the room is consistently full.
Test the pace against the room too. If you open six nights a week, 1,000 drinks a week is about 167 drinks a night. If you have 60 seats, think through how many seatings you can realistically manage, how many drinks each guest will order and how busy each night needs to be.
Use an average price per drink after discounts and across your real mix of drinks, not the menu price of one cocktail. Forecast any food or event sales separately.
From sales to a profit and loss forecast
Some costs arrive whether the bar is busy or quiet. Rent is usually one of them, and you'll need a core team from opening night. Other costs move with sales: more drinks mean more liquor, garnish and card fees. Labor sits somewhere in between. You may be able to adjust some shifts as trade builds, but you still need enough people to open and run the bar properly. To keep the forecast easy to follow, this example keeps labor and rent fixed and lets other operating costs move with sales; a proper budget separates fixed, variable and mixed costs. The percentages below are the middle case from our bar profit margin guide.
| Line, at full pace | Per month ($) | Share of sales |
|---|---|---|
| Sales | 65,000 | 100% |
| Drink cost | 13,000 | 20% |
| Labor | 20,800 | 32% |
| Rent | 3,900 | 6% |
| Other operating costs | 15,600 | 24% |
| Operating cash flow | 11,700 | 18% |
The $11,700 is what's left from monthly sales after the operating costs in this example. It is not net profit or cash available to the owner: the bar still has loan payments, taxes and other cash needs. For the lender's coverage test, this simplified operating figure stands in for earnings before interest, taxes, depreciation and amortization, called EBITDA.
Other operating costs are card fees, utilities, insurance, repairs, music licenses, marketing and supplies. Labor is wages plus payroll taxes, insurance for staff hurt at work, and benefits. Across US accommodation and food services, a broad group rather than bars alone, those extras added 23.8% to wages in June 2026. If you will live on a salary from the bar, count it in labor too.
Costed specs give your best-case drink cost. Forecast your drink cost percentage a little above that, then price each drink so it stays at that percentage.
Then replace each assumed figure with your own: labor from a written staff schedule, the rest from the lease and quotes. After that, compare them with other operators. Australia's tax office publishes ranges for pubs, taverns and bars, 23 to 32% of sales on labor and 6 to 10% on rent, but these include businesses with different food, entertainment and staffing models. Treat them as a useful comparison, not a target your cocktail bar must hit. The example's 32% labor also applies only at full pace: in months 1 to 3, the same $20,800 of labor is 53% of the $39,000 of sales.
Will the bar cover its loan payments?
A profitable-looking bar can still struggle to repay its loan. The lender wants to know how much the business earns before debt payments, and how that compares with the payments due each year.
That's what debt service coverage measures. A ratio of 1.15 means the bar generates $1.15 of operating cash flow for every $1 of loan payments due in the year. Count the payments on all the bar's loans, not only the SBA loan.
Debt service coverage = operating cash flow for the year ÷ payments on all the bar's loans for the year
Say your project costs $500,000 and you use an SBA 7(a) loan. You put in at least 10% yourself: $50,000. You borrow the other $450,000. For the example, use the highest variable rate the SBA allowed for this loan in October 2026, prime at 7% plus 3 points, and the longest term: 10.00% over 10 years. That's a dated assumption, not a quoted offer, and a variable rate can change. The payment is about $5,947 a month, or $71,361 a year.
The target is cash flow at least 15% above the loan payments, a coverage of 1.15. On a 7(a) loan over $350,000, like this one, you must reach it within 2 years. For a build-out, those 2 years generally start when the loan is funded or the construction is finished, which isn't necessarily opening day. Show the months before opening separately, and ask your lender which date applies.
Then test a slower case, 15 percentage points lower every month: 45% of full pace at first instead of 60%, and 85% from month 13 instead of 100%.
| Case | Year 1 | Year 2 |
|---|---|---|
| Forecast | 0.67 | 1.97 |
| Slower case | −0.25 | 1.05 |
The forecast falls short of 1.15 in year 1, and the cash reserve (below) covers the gap. The main forecast passes in year 2; the slower case doesn't. That means the lender will want convincing evidence that the bar can reach its planned sales, so be ready to defend your drinks a week and your ramp. Passing this calculation does not guarantee approval. The lender will also assess the owners, the money being invested, the project costs and the assumptions behind the forecast.
Two loan costs also go in the startup budget. The SBA guarantees 75% of a loan this size, which protects part of the lender's exposure if the bar can't repay. You still owe the whole loan. The first cost is the SBA's fee for the guarantee, up to 3% of the guaranteed amount: $450,000 × 0.75 × 0.03 = $10,125. Some loans have no upfront fee: in fiscal year 2027, loans of $700,000 or less to businesses in rural areas are among them, so ask your lender. You may pay it from the loan. The second is interest on a loan drawn during the build, which can start before your first sale.
Break-even and the cash you need on opening day
Break-even is the monthly sales that cover every cost. Labor and rent are fixed at $24,700 a month. After drink cost (20%) and other operating costs (24%), each dollar of sales keeps 56 cents. So before the loan, break-even is $24,700 ÷ 0.56 = $44,107 a month, about 68% of full pace.
Break-even sales per month = fixed costs per month ÷ (1 − drink cost % − other operating costs %)
Months 1 to 3, at 60%, lose money even before the loan. Add the $5,947 loan payment to fixed costs, and break-even rises to $54,726 a month: 84% of full pace, or about 840 drinks a week.
To size the reserve, start the forecast with $0 in the bank on opening day. Each month, add the operating cash flow and subtract the loan payment. The lowest balance is the biggest shortfall.
| After month | Forecast ($) | Slower case ($) |
|---|---|---|
| 3 | −26,420 | −42,800 |
| 6 | −36,461 | −69,221 |
| 12 | −23,781 | −89,301 |
| 24 | 45,257 | −85,783 |
The slower case's biggest shortfall is $89,301, about two and a half times the forecast's, using the original loan payment. So $90,000 is a starting estimate for the reserve, not necessarily the final amount you'll need.
Add the reserve to your startup budget, update the total project cost, and recalculate the loan, your own contribution and the repayments. Then rerun the cash forecast. Keep adjusting until the borrowing and the reserve agree with each other.
| Original | With the $90,000 reserve | |
|---|---|---|
| Project cost | $500,000 | $590,000 |
| Your 10% | $50,000 | $59,000 |
| Loan | $450,000 | $531,000 |
| Monthly payment | $5,947 | $7,017 |
| Year 2 coverage, forecast | 1.97 | 1.67 |
This is a simplified reserve. A full cash forecast also covers the timing of payments, loan draws, deposits, taxes and equipment spending.
Questions
Do I need a business plan to open a bar?
No law requires one. But anyone who lends you money or invests in the bar will ask for one. An SBA lender has to base a new bar's loan on projections and the assumptions behind them. Writing the plan also makes you answer the questions a landlord and a contractor will ask anyway.
How long should a bar business plan be?
As long as it takes to answer a lender's questions. The SBA says a traditional plan can be dozens of pages long. For one bar, keep each section to what a lender needs to decide, and put the quotes, the lease and the resumes in the appendix.
How many years of projections does a bar business plan need?
The SBA suggests five years, with the first year by quarter or by month.
Does a lender want a balance sheet too?
A lender may ask for a projected balance sheet (what the bar will own and owe), because the SBA lists balance sheets among the projections. The template gives the profit and loss forecast and the cash balance month by month. Your accountant can build the balance sheet from the same numbers.
Sources
- U.S. Small Business Administration, Write your business plan.
- U.S. Small Business Administration, SOP 50 10 8.1, Lender and Development Company Loan Programs (effective October 1, 2026).
- Federal Reserve Bank of St. Louis (FRED), Bank prime loan rate (DPRIME), from Federal Reserve H.15.
- U.S. Census Bureau, 2022 Economic Census, Accommodation and Food Services: summary statistics for the U.S. (EC2272BASIC), NAICS 722410 drinking places.
- U.S. Census Bureau, 2022 Economic Census, Selected Sectors: sales size of establishments for the U.S. (EC2200SIZEREVEST), NAICS 722410 drinking places. Establishments operated the entire year: 34,502; under $500,000 of sales, 17,536; under $1 million, 25,645.
- Australian Taxation Office, Small business benchmarks: pubs, taverns and bars (2023 to 24 income year, updated March 16, 2026). Ratios are of turnover excluding GST; labor and total expenses leave out payments to associated persons (owners and their families).
- U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation, June 2026 (Table 4, private industry workers by occupational and industry group). Accommodation and food services: total compensation $20.03 an hour, wages and salaries $16.18, benefits $3.85 (paid leave, supplemental pay, insurance, retirement and legally required benefits).
- U.S. Small Business Administration, 7(a) & 504 FOIA: 7(a) loan data, fiscal year 2020 to present (data as of June 30, 2026). 766 loans to NAICS 722410 drinking places marked 'Startup, Loan Funds will Open Business', approved October 2019 to June 2026; 526 under $500,000.
- Internal Revenue Service, Topic 751, Social Security and Medicare withholding rates.
- Cushman & Wakefield, U.S. Shopping Center MarketBeat, Q2 2026 (asking rents, preliminary).
About the authors
Before Jery, Jason was general manager and partner at a company that built bars for some of the world's best cocktail programs, with more than 400 projects across 45 countries. He holds an MBA from Alliance Manchester Business School.