How to open a bar
Opening a bar starts with three decisions: what kind of bar you want, how you'll pay for it, and where you're allowed to open it. Once you've found a suitable space, the work overlaps.
You'll be dealing with the liquor license, construction, suppliers and hiring at the same time. The trick is knowing which decisions depend on which approvals. A delay in licensing or construction can move your opening date and leave you paying rent before you've sold a drink, so count that rent when you work out what the opening costs. This guide follows the work from the concept to the first stock count. The rules and costs here are US examples.
What order do you open a bar in?
Before you sign anything, three things should be true. You know what the bar is. You know roughly what it will cost and how you will pay for it. And you have found a space where the city and the state will let you sell alcohol.
Once you've found the space, the work splits into three tracks that run at the same time: the liquor license, the build and the team.
| Track | Starts when | Finishes when |
|---|---|---|
| Liquor license | You have a signed lease, or a signed letter of intent (a short outline of the lease terms). Either one lets the application name the space. | The license is issued |
| Build | The city checks and approves the drawings (plan review), and you get the building permits | Final inspections pass, and you receive the certificate of occupancy: the city's permission for people to use the space |
| Team | You have a firm opening date. Count back from it, starting with the manager. | Training ends with a full mock service |
Use the three tracks to plan the work. Build some time into the schedule for failed inspections, equipment problems and retraining. The opening date should be the result of the plan, not an assumption the plan has to meet.
The concept and the money
Before you look at any space, write the concept as one sentence: who the bar is for, what they drink and how it feels at 11 p.m. on a Friday. For example: "A 40-seat cocktail bar for the neighborhood, eight house drinks and a short spirits list." That sentence gives your designer and contractor a starting point. The menu, projected sales and busiest service periods will tell them much more about the equipment, storage and working space you need.
The menu style decides what the space needs. Cocktails with fresh juice need prep space, a juicer, a deep underbar and more ice than a beer bar. If beer is a big part of the menu, you need a walk-in cooler and draft lines. Wine by the glass needs temperature-controlled storage and a glass washer that keeps up with stemware.
The money is two documents: a budget for everything up to opening day, and a forecast of the first two years.
For an SBA 7(a) startup loan, the lender looks at how much of the project the owners are funding and whether the business is likely to repay its debt.
A typical startup must contribute at least 10% of the project cost, although the lender may require more. That total is every cost of getting ready to open, not only the costs you pay yourself. For a $400,000 project, at least $40,000 comes from you (400,000 × 0.10 = 40,000).
The lender also tests the forecast against the business's debt payments. For example, at a coverage ratio of 1.15, $4,000 in monthly debt payments would require $4,600 in qualifying operating earnings for the same period (4,000 × 1.15 = 4,600).
That's a simplified example. The formal calculation uses the business's relevant debt obligations and the lender's required cash-flow measure. The SBA's 1.15 minimum applies to 7(a) loans over $350,000, and the forecast must reach it within two years.
Build the forecast from drinks per week, not from a sales total, so the lender can check your assumptions.
Where can you open a bar?
A space can be a bar only if both the state and the city agree, so check both before you choose one.
Start with the state. Some states limit the number of full liquor licenses. California is one: each county's population sets how many it can have. When new priority licenses are available, applicants can apply during the state's designated registration period. If more eligible applicants apply than licenses are available, the state holds a drawing. Another route is to acquire an existing license of the appropriate type, subject to the transfer rules.
Then the city. Its zoning decides where a bar is allowed. Some cities also require a conditional use permit, with a public hearing, on top of the state license.
Neighbors get a say too. In California, you post a public notice at the space for 30 days, and anyone who objects can file a protest in that time. A protest that goes to a hearing adds time.
Next, look at what is already built. A second-generation space was a bar or restaurant before. It usually has floor drains, plumbing, restrooms and an occupancy rating (the number of people allowed inside) close to what a bar needs. A raw shell is an empty unit with nothing built in, so all of these go into the build-out budget.
Don't assume the previous tenant's approvals automatically cover your new layout or use. Have the relevant departments confirm what can stay and what needs to change.
Before signing, have a commercial real estate attorney help you negotiate these protections where possible:
- A contingency: you can walk away if the liquor license or the permits are refused.
- Rent that starts when you open, or a set number of months after you get the keys, not on the day you sign.
- A clear split of who pays for which improvements. Put any tenant improvement allowance (money the landlord pays toward the build-out) in writing.
- A lease that runs at least as long as the loan that pays for the build-out, counting your renewal options.
Make sure the permitted use in the lease matches the alcohol license and the kind of service you intend to run.
What licenses do you need to open a bar?
Opening a US bar involves several layers of registration, licensing and local approval. They aren't all alcohol licenses. A retail alcohol dealer registers with the federal Alcohol and Tobacco Tax and Trade Bureau (TTB), the state issues the license that allows the business to sell alcohol, and the city or county may require other approvals, depending on the premises and the business.
| Level | What you need | Who issues it |
|---|---|---|
| Federal | Registration as a retail alcohol dealer, before you start trading, for each location | Alcohol and Tobacco Tax and Trade Bureau (TTB), through Permits Online |
| State | A retail on-premises license: beer and wine only, or full liquor | The state's alcoholic beverage control board (ABC). Some states use another name. |
| City or county | Depending on the premises and the business: zoning approval or a conditional use permit, building permits, health permits, a certificate of occupancy, sometimes an entertainment or late-hours permit | Planning, building and health departments |
File for the state liquor license as soon as your lease or letter of intent lets the application name the space. California's regulator advises you not to plan a grand opening until the license is issued.
Fees vary widely by state. In New York, a two-year on-premises liquor license costs $1,792 to $4,352, depending on the city. In Texas, the permit to serve spirits by the drink (a mixed beverage permit) costs $5,300 for two years. In California, a new full liquor license won in the state's drawing has a $19,840 application fee, plus a yearly license fee.
Check the health department's requirements even if you don't plan to serve food.
Ice, garnishes, juices and other drink ingredients can bring a bar within local food-safety rules. Depending on the jurisdiction and what you prepare, you may need a food-establishment permit, a plan review or specific equipment and handling procedures.
The FDA Food Code is a model used to help develop those rules. Your state or local health code determines what applies to your bar.
The business itself needs a federal employer identification number (EIN), a state sales tax permit, workers' compensation where your state requires it, and liability insurance. When your broker quotes the insurance, ask about liquor liability insurance, sometimes called dram shop coverage. It can cover certain claims arising from the sale or service of alcohol, subject to the policy's terms, limits and exclusions. Put the quotes in your budget before you sign the lease.
If you plan to play recorded music, use a DJ or host live music, work out the public-performance licenses you'll need before opening.
For copyrighted music, bars generally need permission through the appropriate rights holders or licensing organizations. Some uses of licensed radio or television broadcasts can qualify for statutory exemptions, depending on the establishment and equipment.
Don't assume a personal streaming subscription covers music played commercially.
Building out the bar
Once you've confirmed that the space can be licensed and you've agreed on the lease protections, the next job is turning the room into a working bar.
The drawings need to satisfy the building and health departments, but they also need to work for the bartenders who'll spend every night there.
The build-out covers plumbing, drains, electrical, the bar, the The shelves behind the bar where the open bottles are kept., coolers, lighting, restrooms that meet code, and the finishes guests see.
Draw the bar's working layout before you design the look of the room. A good station should let the bartender make the drinks they serve most often without leaving it. Ice, the well, the speed rail, the sink, A small measuring cup for pouring exact amounts of spirits and other ingredients. and tins, glassware and the garnishes used during service should be close to hand. Your busiest hour decides how many stations you need.
Bar equipment list
| Equipment | What decides its size |
|---|---|
| Ice machine and bins | Ice used in the peak hour, with the machine sized above it. Running out of ice stops service. |
| Underbar sinks, hand sink, three-compartment sink | Your county's health code. The drain locations fix where the bar can go. |
| Underbar and back-bar coolers | The bottled beer, wine, juices and pre-batches held at each station |
| Walk-in cooler and draft system | Kegs and lines, if beer is a real part of the menu |
| Glass washer | Glasses per hour at the peak. If you own fewer glasses, you need a faster washer. |
| Speed rails, ice wells, drainboards | One set per station |
| POS terminals and printers | One per station, plus a terminal for servers, with network and power where the drawings put them |
| Smallwares and glassware | Every drink's tools at every station, and glassware for the peak, allowing time for washing |
Which suppliers does a bar buy from?
A bar buys alcohol from licensed wholesalers. They are the middle of three tiers: producer, wholesaler and retailer.
In control states, the state itself sells spirits at the wholesale level, so you order spirits through the state's system. Seventeen states work this way, plus parts of four others. Some states also let producers sell to bars directly. Your state's ABC lists which producer licenses allow this.
In California, you can't buy the bar's alcohol at a liquor store or a warehouse club (a membership store that sells in bulk). You may buy alcohol for resale only from a wholesaler the state licenses, and the state counts warehouse clubs as retailers.
While the license is pending, meet the sales reps of every wholesaler that carries what your menu pours. Fill in their credit applications, and learn their order cut-off times and delivery days. Find the other suppliers too: produce, ice if you buy it, CO2 for draft and soda, and glassware. Then plan the opening order for the days after the license is issued.
Use the opening menu and sales forecast to estimate how much of each product you'll need before the next delivery.
Start with a conservative order, then adjust for delivery days, supplier minimums and the bottles you need to offer the full menu.
A slow-selling amaro may still need a full bottle on opening night. Your house gin may need several cases.
Once the bar is trading, use the counts and sales to set proper par levels, ideally once you have 6 to 8 weeks of counts. Until then, the opening order is a forecast, not a proven par.
Any bottle you don't need yet is cash on a shelf, in the months when you need cash most.
Who to hire first
A finished bar still needs people who know how to run it. Bring the manager into the project early enough to help choose the team, test the setup and prepare the opening systems.
Hire the manager first, early enough for them to hire everyone else. A manager who starts two weeks before opening gets a team and a menu that someone else chose.
Interview for judgment and hospitality, with questions that test both. Pay candidates for a trial shift. Before you open, run the trial shift as a timed test. Use your own station if it is built, or another bar that will host it.
Make sure the trial is lawful, paid where required and covered by appropriate workplace arrangements. If the venue isn't licensed or approved for alcohol service yet, use a skills assessment that doesn't involve serving alcohol to guests.
Write the tip policy down before the first shift. Federal and state law decide who can share in a tip pool, and whether managers can. The policy is hard to change once the team has started.
Training needs the finished bar. Give the team the A drink's exact recipe: each ingredient and how much of it. book (your recipes with exact measures) and taste every drink together. Then run mock services: practice services for invited guests on the real Point-of-sale system: the register or software that records every sale.. That is where you find a station laid out wrong or a printer in the wrong place.
In some states, server training is part of the license. In California, servers and their managers at on-premises bars must be certified in Responsible Beverage Service within 60 days of their first day of work.
The systems to have running before the doors open
On opening day, every drink is in four places: the menu, the POS, a costed recipe in the spec book and the stock it pours from. Without all four, you can't read the first month's numbers. Those four places depend on five systems. The table below lists them and when each one is ready.
| System | Ready on opening day when |
|---|---|
| POS | Every menu item has the correct button and price. Comps, discounts and voids are recorded with an appropriate reason and manager authorization. |
| Recipe costing | Every drink has a written spec and a cost from current supplier prices. |
| Stock counts | Every product has a count unit, a par and a place on a count sheet in shelf order. |
| Ordering and receiving | Deliveries are checked against the invoice before anyone signs. |
| Sales reporting | You can see sales by item for any night. |
Costing gives each drink its pour cost, which tells you before you open whether the menu prices work.
Inspections, soft opening and the first count
The last weeks are a series of approvals: building and fire inspections, the health inspection, the certificate of occupancy and the issued liquor license. Each department sets its own dates. So book each approval as early as the department allows, and keep the contractor on site until the last one passes.
After the mock services comes the soft opening. Mock service is practice. The team works through real orders, but you aren't yet serving paying guests.
A soft opening is different. Once the required licenses, permits and inspections are in place, invite a smaller group of guests to try the real menu.
Run the service on the actual equipment and POS. Keep the menu manageable and give the team room to identify problems before the public opening.
Whether guests pay for drinks or get them free, make sure the service is permitted under the applicable alcohol and health rules. Open to the public only when a full night has run without the manager stepping behind the bar to rescue it.
Count all the stock before the first service: every bottle, keg and pre-batch, in storage and behind the bar. Record any deliveries after that count separately. This gives you the starting stock value for the first trading period. At the next count, you'll be able to work out actual usage and compare it with the drinks sold and other recorded movements. Without that starting count, the first period's actual pour cost and stock reconciliation will be much harder to establish. The count is the first of the routines that start that day. Each day before you open, work through an opening checklist. After the first month, compare that month's sales and costs with the plan your lender approved.
Questions
How much money do you need to open a bar?
Enough for the build-out, equipment, the liquor license, deposits, opening stock and payroll before opening, plus cash for the first months while sales build. From October 2019 to June 2026, the median SBA 7(a) loan to open a bar was $300,000, across 766 loans. Half the loans were smaller. About 1 in 5 had a term of 20 years or more, which the SBA generally associates with financing real estate, so some of those projects may include a building purchase. Those are approved borrowing amounts, not complete startup budgets. They don't include a consistent measure of owner equity, and the data doesn't cover bars opened entirely with other funding. Use the figures as context, then build the budget for the specific space and concept you're considering.
What percentage of new bars close?
There is no federal figure for bars alone. The Bureau of Labor Statistics tracks the wider sector, accommodation and food services. Of the establishments that opened between April 2014 and March 2015, 88.2% were still open a year later and 41.6% were open ten years later. An establishment is one location, so a chain's new site counts as one.
Do you need bar experience to open a bar?
SBA lending rules tell lenders to weigh how much experience the management has in the industry. If you haven't run a bar, hire a manager who has, and name them in the business plan.
Is it cheaper to buy an existing bar?
It can be. The plumbing, the bar and the coolers are already there. In states that cap licenses, buying a bar may be the practical way to get a liquor license. You take on the lease, and moving it to your name usually needs the landlord's consent. You take the equipment at whatever age it is, so have each piece inspected before you agree on a price. You also take the team if you keep it, and the reputation. Before buying, review the lease, equipment condition, licensing history, stock, financial records and any outstanding liabilities. Have the appropriate professionals check what you're acquiring and what obligations come with it. In California, you can't sell alcohol until the license is issued in your name. The exception is a temporary permit, available for qualifying transfers at the same premises: the seller authorizes it and the department approves it, so you can trade while the transfer is investigated. Ask for it in the purchase agreement.
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).
- Alcohol and Tobacco Tax and Trade Bureau (TTB), Beverage Alcohol Retailers.
- California Department of Alcoholic Beverage Control, New Applicant Information (ABC-520).
- California Department of Alcoholic Beverage Control, Information regarding alcoholic beverage license applications and protests.
- California Department of Alcoholic Beverage Control, Priority registration drawings: frequently asked questions.
- California Department of Alcoholic Beverage Control, Responsible Beverage Service (RBS) training.
- Texas Alcoholic Beverage Commission, Know your role as a brewer: Brewer's License (BW) and Self-Distribution License (SD).
- National Alcohol Beverage Control Association, Control state directory and info.
- U.S. Food and Drug Administration, Food Code 2026 (the preface on adoption by the states, the definition of food, and plan review).
- Minnesota Office of the Revisor of Statutes, Minnesota Rules 4626.1720, Plans; review required (the state adoption of the Food Code plan review rule).
- Legal Information Institute, Cornell Law School, 17 U.S. Code § 110(5), limitations on exclusive rights: exemption of certain performances.
- Cushman & Wakefield, U.S. Shopping Center MarketBeat, Q2 2026.
- U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2025: national industry-specific estimates, NAICS 722400 drinking places. Median food service manager (11-9051) $67,320 a year; median bartender (35-3011) $16.01 an hour, tips included.
- 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', October 2019 to June 2026; median $300,000; 166 with a term of 240 months or more.
- New York State Liquor Authority, Schedule of retail license fees (revised June 12, 2026).
- California Department of Alcoholic Beverage Control, Application fee schedules (effective January 1, 2026).
- U.S. Bureau of Labor Statistics, Business Employment Dynamics: establishment survival, accommodation and food services (Table 7).
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.