How Much Does It Cost to Start a Bar?

Opening a bar costs between $174,000 and $850,000, with most bar owners spending around $425,500. That's not pocket change, but it's also not as impossible as it sounds when you know where the money actually goes.

Your exact number depends on three big factors: where you're opening (New York City vs. Nashville makes a massive difference), how big you're going (dive bar vs. sports bar), and what kind of space you're starting with. Taking over an existing bar costs way less than building from scratch.

Most aspiring bar owners get stuck on the total number and never move forward. Don't be that person. Understand the breakdown, know which costs you can control, and find the strategic places to save $50K to $150K without compromising your concept.

This guide breaks down every dollar so you can build a real budget and make your bar dream actually happen.

TL;DR: How much does it cost to start a bar?

Opening a bar costs $174,000 to $850,000 according to RestaurantOwner.com. Most bar owners spend around $425,500. Here's the breakdown:

Where your money goes:

• Location and renovations: $110K to $200K (usually your biggest expense)
• Equipment and furniture: $75K to $150K (refrigeration, POS system, bar setup, tables)
• Licenses and permits: $15K to $25K (liquor license varies wildly by state)
• Initial inventory: $10K to $15K (liquor, beer, wine, mixers, garnishes)
• Working capital: $50K to $100K (6 months of operating expenses to keep you afloat)

The reality check:

• Timeline to profit: Most bars hit profitability in 6 to 12 months
• Monthly operating costs: Plan for $20,000 on average
• Bar owner income: $50K to $120K per year once profitable
• Biggest cost driver: Renovations eat 40% to 50% of your total budget

The range explained: Small neighborhood bars start around $174K. Mid-size cocktail lounges run $300K to $500K. Large sports bars or nightclubs can hit $600K to $850K and beyond.

Location matters too. Opening in San Francisco costs 3x more than opening in a small town.

The breakdown: Where your money actually goes

Every bar needs the same basics. Here's what you'll spend on each.

Location and renovations: $110K to $200K

This is usually your biggest expense. You need a space, whether you're leasing or buying. Then comes the build-out: bar counter, plumbing, electrical, seating areas, building codes.

Renovations run $50K to $150K depending on your space's condition. A turnkey bar that's ready to go saves you here. A raw commercial space costs way more.

Licenses and permits: $15K to $25K

Your liquor license is the big one, and costs vary wildly by state. California runs $12K to $400K depending on the county. Texas might be $3K to $12K. You also need business licenses, health permits, and entertainment licenses if you're hosting live music.

Start the liquor license application immediately. Some states cap the number available, and approval takes 3 to 6 months.

Equipment and furniture: $75K to $150K

Here's what you're buying behind the bar: POS system ($1,500 to $5,000), ice machine ($2,000 to $8,000), under-bar refrigeration ($1,500 to $4,000), glass washer ($3,500 to $13,000), draft system for 4 taps ($3,000 to $6,000), and bar tools ($1,000 to $2,000).

Front-of-house needs tables, chairs, bar stools, lighting, sound system, and decor. Add kitchen equipment if you're serving food.

Buy used equipment where you can. Refrigeration and ice machines can cost half the price of new without sacrificing quality. Once you're open, managing bar schedules and shifts becomes just as important as the equipment itself.

Initial inventory: $10K to $15K

Stocking your bar means buying well spirits, call brands, premium bottles, beer, wine, mixers, and garnishes.

Start with 80 core SKUs instead of 200. Build inventory based on what actually sells. Over-stocking slow-moving bottles ties up cash you need elsewhere.

Working capital: $50K to $100K

This keeps your doors open while you build a customer base. Most bars take 6 to 12 months to become profitable. You need to cover rent, payroll, utilities, and inventory during that ramp-up.

This isn't optional. It's what separates bars that survive from the 59% that close within three years.

The total

Add it up: $174K minimum for a small bar, $425.5K for average, or $850K and beyond for a large venue in a prime location. Understanding the total investment required helps you plan realistically.

Your two biggest expenses (and how to control them)

Location and renovations eat up 50% of your budget or more. Here's where that money goes and how to keep it under control. These upfront costs determine whether you can afford to open. Here's where that money goes and how to keep it under control.

Leasing vs buying: What you'll actually pay

Leasing a space runs $110K to $550K in total startup costs. You'll pay a security deposit (typically 1 to 3 months rent), first month's rent, and possibly broker fees. Monthly rent runs $3K to $15K depending on your market. The upside: lower upfront costs, more flexibility, and an easier exit if things don't work out.

Buying a property means $175K to $850K in startup costs. You need at least 20% down plus closing costs. Your monthly mortgage might be lower than rent, but you're locked in. The upside: you're building equity and have full control long term.

Most first-time bar owners lease. It preserves capital for operations and lets you test your concept without betting everything on one location. If you're still in the planning phase, check out our complete guide to starting a business to understand the broader picture beyond just bar-specific costs.

Renovation costs: From cosmetic to complete overhaul

Cosmetic updates only: $5K to $10K. Fresh paint, new fixtures, basic lighting, and décor. Works if you're taking over a former bar that doesn't need major changes.

Moderate remodel: $50K to $100K. New bar installation, updated plumbing for sinks and taps, electrical work for equipment, new flooring, and bathroom upgrades. This is the sweet spot for most bar openings.

Major renovation: $150K to $250K and beyond. Full build-out including structural changes, commercial kitchen installation, complete HVAC upgrades, and creating the space from a raw commercial shell. Ground-up construction can push past $400K.

What drives costs up: Plumbing and electrical work are expensive. Every sink, tap line, and piece of refrigeration needs proper plumbing. Bar equipment pulls serious power, so electrical upgrades are mandatory. Commercial kitchens add $30K to $100K. ADA compliance and building codes can't be skipped.

The smartest way to save on location costs

Take over an existing bar. Turnkey operations start at $25K to $50K. The build-out is done, equipment is in place, and the liquor license might transfer.

Negotiate your lease like your business depends on it (because it does). Request a tenant improvement allowance of $20 to $50 per square foot. Ask for 1 to 3 months free rent during build-out. Push for graduated rent that starts lower in year one.

Landlords want good tenants. If you have a solid business plan and industry experience, you have leverage.

Licenses and permits: What you'll actually pay

Your liquor license will be one of your most expensive permits and the most time-consuming to get. Costs vary a lot by state, and some areas cap the number of licenses available.

Liquor license costs by state

The same license that costs $3,000 in one state can cost $400,000 in another. Here's what you're looking at in major markets:

• California: $12,000 to $400,000 (depends on county and availability) 
• New York: $5,000 to $200,000 (NYC is significantly higher than upstate) 
• Texas: $1,000 to $12,000 (relatively affordable) 
• Florida: $2,000 to $15,000 (varies by county) 
• Illinois: $5,000 to $75,000 (Chicago area runs higher) 
• Ohio: $2,000 to $8,000 (reasonable across the state) 
• Colorado: $500 to $10,000 (Denver area is mid-range) 
• Washington: $2,000 to $15,000 (Seattle runs higher) 
• Pennsylvania: $50,000 to $500,000 (notoriously expensive due to quota system) 
• Arizona: $1,500 to $5,000 (affordable)

Liquor license costs change frequently and vary by county and municipality. Make sure to check with your local Alcohol Beverage Control board for current rates.

Processing times range from 30 days to 6 months depending on your state and local municipality. On top of that, beer and wine only licenses run significantly cheaper than full liquor licenses. If your concept works with just beer and wine, you can save $5K to $50K right there.

Other required permits and licenses

Beyond your liquor license, you need several other approvals to operate legally:

• Business license: $50 to $400 annually. Required in virtually every city and county. Required in virtually every city and county. Use our business license assistant to find exactly what you need for your location.
• Health permit: $100 to $1,000. Covers food safety inspections if you're serving any food, even bar snacks.
• Building permit: $500 to $5,000. Required if you're doing any construction or renovation work.
• Sign permit: $50 to $500. Yes, most cities require a permit just to hang your sign.
• Entertainment license: $300 to $2,000 annually. Mandatory if you're playing music (even background music in some jurisdictions) or hosting live entertainment.
• Fire safety inspection: $75 to $200. Your space needs to meet fire codes and you'll get a maximum occupancy rating.

Insurance costs (annual)

Insurance isn't optional. Most landlords require it, and you need it to protect your business.

• General liability insurance: $2,000 to $5,000 per year. Covers customer injuries and property damage.
• Liquor liability insurance: $2,000 to $8,000 per year. Protects you if an intoxicated customer causes harm after leaving your bar.
• Property insurance: $1,000 to $3,000 per year. Covers your equipment, furniture, and inventory.
• Workers' compensation: Varies based on your payroll size and state requirements. Budget $2,000 to $5,000 annually for a small bar.

Total insurance budget: $5,000 to $15,000 per year.

Equipment and inventory you can't skip

Your equipment budget runs $75K to $150K depending on bar size and concept. Here's what you're actually buying.

Essential bar equipment

Behind the bar: POS system ($1,500 to $5,000), ice machine ($2,000 to $8,000), under-bar refrigeration ($1,500 to $4,000), glass washer ($3,500 to $13,000), draft system for 4 taps ($3,000 to $6,000), and bar tools ($1,000 to $2,000).

Front of house: Tables and chairs ($5,000 to $20,000), bar stools ($2,000 to $8,000), lighting and décor ($3,000 to $15,000), and sound system ($2,000 to $10,000).

Total equipment: $30,000 to $75,000.

Initial inventory

Well spirits and house wines ($2,000 to $4,000), call and premium spirits ($2,000 to $5,000), beer in kegs and bottles ($1,500 to $3,000), mixers and garnishes ($1,500 to $3,000).

Total initial inventory: $8,000 to $15,000.

{{banner-cta}}

Smart purchasing moves

Buy used equipment and save 40% to 60% on refrigeration and ice machines. Start with 80 essential SKUs instead of 200. Build inventory gradually based on what actually sells. Lease expensive equipment to preserve working capital.

Your POS system matters more than you think. Beyond ringing up sales, you need one that actually helps you run the bar. Homebase handles your employee schedules, tracks hours automatically, and runs payroll without the Sunday night spreadsheet panic.

Monthly costs: What it takes to keep your doors open

Your average bar runs about $20,000 in monthly operating costs. Here's the breakdown.

Fixed costs: Rent or mortgage ($5,000 to $8,000), utilities ($1,500 to $3,000), insurance ($800 to $1,500), POS and software ($200 to $400), licenses and permits amortized monthly ($300 to $600).

Variable costs:Labor typically runs 30% of revenue ($8,000 to $15,000 for bartenders, servers, barbacks, and manager), inventory replenishment around 25% of revenue ($6,000 to $8,000), credit card processing at 3% ($800 to $1,000), marketing at 3% to 6% of revenue ($750 to $1,500).

Want to calculate your exact labor costs? Our labor cost calculator helps you plan staffing budgets based on your projected revenue.

Total monthly: $20,000 to $35,000 depending on volume. These ongoing expenses are what new bar owners underestimate most.

The cash flow reality

Most bars take 6 to 12 months to become profitable. That's why you need $50K to $100K in working capital as part of your startup budget. It keeps you alive while you build your customer base.

Your revenue will swing with the seasons. Summer brings more customers. January and February tend to drag. Plan your cash reserves to handle the slow months without panic.

Labor is your biggest variable cost. The right scheduling software helps you stop paying for empty shifts and actually have enough staff when it gets busy. Homebase handles your schedules, time tracking, and payroll in one place so you're not juggling spreadsheets while trying to run a bar.

Three questions every bar owner asks

Once you see the costs, three questions come up immediately.

How much does a bar owner actually make?

Bar owners make $50,000 to $120,000 per year on average. Most bars generate $25,000 to $30,000 in monthly revenue with 5% to 10% profit margins. That translates to $2,500 to $5,000 monthly profit, or $30,000 to $60,000 annually. Owners who operate the bar themselves take home more since they're not paying a manager salary.

Year one often breaks even or shows small losses. Years two and three see consistent $50K to $80K owner income. Successful bars in prime locations can exceed $120K annually.

How long until you're profitable?

Most bars become profitable within 6 to 12 months, though it can take up to 2 years to see stable profits. Your timeline depends on location, initial investment, and how quickly you build a customer base.

Months one through three bring heavy losses from ramp-up costs. Months four through six hit break-even or small profits. Months seven through twelve see consistent profitability. Year two and beyond bring stable margins and growing revenue.

Strong pre-opening marketing, prime locations with foot traffic, and clear concepts speed profitability. Why bars fail: 59% close within 3 years, usually from running out of cash before reaching profitability.

What if I don't have $400K sitting around?

Most bar owners don't self-fund the entire startup. They use SBA loans, bank financing, investors, or combinations to cover the $175K to $850K needed. 

SBA 7(a) loans offer up to $5M with competitive rates but require solid business plans. Bank loans provide $50K to $500K for qualified borrowers. Equipment financing spreads costs over 3 to 5 years. Investors trade equity for capital, typically taking 20% to 40% ownership.

What lenders want: detailed business plans with financial projections, industry experience, good personal credit (680+ score), and 20% to 30% down payment from your own funds.

Six ways to cut costs without cutting corners

You can't cheap out on everything, but there are strategic places to save $75K to $150K without compromising your bar's success.

• Take over an existing bar. Turnkey bars start at $25K to $50K. Equipment and licenses are already in place, so you skip the lengthy build-out process. Saves $100K to $300K vs ground-up build.
• Buy used equipment. Restaurant equipment auctions and resellers can cut your costs in half on big-ticket items. Focus on refrigeration and ice machines. Saves $15K to $40K.
• Start smaller. Open with 1,000 to 1,500 square feet instead of 3,000. Go with a limited but focused menu. Expand as revenue grows. Saves $50K to $150K in initial investment.
• Negotiate your lease aggressively. Request tenant improvement allowances of $20 to $50 per square foot. Negotiate 1 to 3 months free rent. Ask for graduated rent that's lower in year one. Saves $10K to $50K first year.
• Build inventory gradually. Start with 80 core SKUs instead of 200. Order based on early sales data. Avoid over-stocking slow-moving spirits. Saves $3K to $8K in initial inventory.
• Use technology to reduce labor costs. Labor is typically 30% of your revenue, so this one actually moves the needle. Homebase stops you from overstaffing slow shifts and scrambling to cover busy ones. Your team clocks in from their phones, hours get tracked automatically, and you run payroll in minutes.

Combine three or four of these strategies and you can reduce your total startup costs by $100K to $200K. That's the difference between needing $450K and needing $300K to open.

Your bar, your way

Opening a bar takes serious capital. $174,000 to $850,000 depending on your concept, location, and size. Your biggest expenses are renovations at 40% to 50% of budget, followed by equipment and that crucial working capital buffer.

Thousands of bar owners make this work every year. They start with solid plans, secure smart financing, and find strategic places to cut costs without sacrificing the experience they want to create. Now you've got the real numbers. Next step: build your budget, explore financing options, and start making your bar dream real.

Don't let team management eat your profits

You're already spending $8K to $15K monthly on labor. Make sure you're not throwing money away on scheduling mistakes, missed clock-outs, and payroll headaches.

Homebase handles your schedules, tracks hours automatically, and runs payroll so you can focus on building your bar, not babysitting spreadsheets. It's free to start, and built specifically for bars and small businesses. Try Homebase for free.